Salaried Members: Condition B: What type of influence is relevant to the test?
The purpose of Condition B is to exclude from being Salaried Members those individuals who have a real say in the business. The test is applied on the basis of a realistic view of the facts of that case.
All relevant information must be considered in applying this condition including agreements between the partner and the firm, the LLP Agreement and any contracts between the firm and its investors.
Because if the flexibility of the LLP structure and the fact that businesses do vary, it is not possible to say what “significant influence” is.
The following are examples of the kind of decisions which might be involved in appropriate cases. This is not intended to be a prescriptive or definitive list and it is not necessary that the same people are involved in all the decisions. Nor would having significant, or even controlling, influence over just one of them necessarily mean that the member has significant influence over the firm as a whole:
- appointment of new members
- deciding where the firm conducts its business
- deciding the firm’s areas of business
- strategic decisions
- deciding on business acquisitions or disposals
- management of key contracts relating to the firm generally (e.g. with the bank)
- appointment of key personnel
- allocation of roles to key staff
- decisions on important financial commitments
- formulating the firm’s business plan
- approving major new clients or investments, especially where this is a regulatory requirement
- deciding the firm’s marketing strategy.
However merely being able to vote, or to express a view, on such matters would be unlikely, in itself, to constitute significant influence.
An administrative role does not give “significant influence” over the affairs of the LLP. Examples of administrative decisions that do not give significant influence might include:
- payment of and issuing invoices
- detailed HR questions and those relating to non-key staff
- completing tax returns
- dealing with suppliers
- management of premises
- dealing with routine compliance.
Please note that this is not an exhaustive list.