LLP Agreement Example: How to Draft an Effective Limited Liability Partnership Agreement
When starting a limited liability partnership (LLP) with one or more partners, it`s essential to draft an LLP agreement that outlines the rights and obligations of each partner, as well as the policies and procedures that will govern the partnership. An LLP agreement is a legal document that sets out the relationship between each partner, the nature of the business, and the terms of the partnership.
Here`s an example of an LLP agreement that can serve as a guide when drafting your own:
1. Partnership Name and Purpose
The agreement should identify the name of the partnership and the primary purpose of the business. This section should also outline the specific services or products that the partnership will offer.
2. Partner Contributions
This section outlines the contributions that each partner will make to the partnership. This can include capital contributions, labor, services, or property. It should also detail the ownership percentage of each partner.
3. Management and Decision Making
The LLP agreement should specify how the partnership will be managed and decision making responsibilities. It should clearly define who will be responsible for the day-to-day operations of the business, how decisions will be made, and how disputes will be resolved.
4. Profit and Loss Allocation
This section outlines how profits and losses will be allocated among the partners. It should state whether profits will be distributed equally or in proportion to the respective ownership percentage of each partner.
5. Provisions for Withdrawal
The LLP agreement should set out the process for a partner to withdraw from the partnership. It should also specify the conditions that must be met for a partner to be expelled from the partnership.
6. Provisions for Dissolution
This section outlines the conditions that must be met for the partnership to be dissolved, including the consent of all partners, bankruptcy, or the death of a partner.
7. Intellectual Property Rights
The LLP agreement should clearly identify the intellectual property rights of each partner and the partnership, including any trademarks, patents, or copyrights.
8. Non-Compete Clause
The LLP agreement should include a non-compete clause that prevents partners from competing with the business during the term of the partnership or after the partnership has been dissolved.
9. Liability and Indemnification
This section outlines the liability of each partner and the partnership, including any indemnification provisions that may be included.
10. Governing Law and Jurisdiction
The LLP agreement should specify the governing law and jurisdiction that applies to the partnership.
Conclusion
An effective LLP agreement is a critical component of a successful limited liability partnership. It sets out the terms and conditions that govern the partnership and provides a framework for decision-making and dispute resolution. By following the example above, you can create an LLP agreement that is tailored to the specific needs and requirements of your partnership.