THE LLP's BUSINESS

The Business of the LLP

An LLP agreement typically defines the nature and extent of the LLP's permitted business activities. Any change to those activities may require the approval of a super majority of members (perhaps 75% or unanimity) under the terms of the agreement before it can be implemented.

The members may also mandate that an annual business plan and / or management accounts are prepared. The LLP agreement can set out this requirement and stipulate their contents.

Devoting time to the LLP and promoting its Business

Every member has the right to participate in the management of an LLP's business, unless the LLP agreement says otherwise.

This default position may not be suitable, particularly where some members have invested significantly more capital than others, or where it is desirable to adopt a company's management structure with designated members having more management control.

Be aware that exclusion from management could amount to unfair prejudice of the excluded member.

Although the law imposes certain general duties on members in relation to the LLP, an LLP agreement will usually clarify and augment these obligations, including specifying exactly how much time members agree to devote to the LLP.