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Do I understand correctly that his "new synthesis" relieves individual members of "joint and several" liability while giving them proportional ownership rights and liabilities?  Is this a provision of the current UK LLP?  Do you know the legal status of this concept in the US?

It is not the Corporate status but the Limitation of Liability that protects the members from liability, absent fraud or "culpable negligence" (my phrase).

An LLP is not legally a Partnership but a Corporate body - like a Corporation. The fiduciary duty of "Designated Members" of LLP's is analogous to that of Directors to Companies.

The nature of a "Corporate" body is that it encapsulates the collective common purpose agreed by its Members when they subscribe to its constitution.

Proportional ownership etc is only the "default" position set out in one single page of LLP regulations based upon partnership principles.

eg if members do not otherwise agree then the default is proportionally equal shares; and in the absence of membership provisions, all members must agree the admission of a new Member and so on.

Most people using LLP's specify in a tailor made LLP agreement how the rights and responsibilities are to be shared, and in my experience this document is an order of magnitude simpler than conventional agreements/ contracts because it is consensual in nature, not adversarial.

In the US the closest entity to a LLP is an LLC.  An LLC is not technically a "Corporate" body because while it does have a  legal existence independent of its membership, this is not a continuing legal existence and - like a lease - it must have a definite term.

But an LLC will serve as a framework quite well, all the same, for the sort of structures I have in mind.


"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Sat Jul 12th, 2008 at 12:05:15 PM EST
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