It is surprising that the current legislation gives little guidance to a member or partner of a Limited Liability Partnership (“LLP”) who wishes to leave his LLP in the absence of an LLP agreement. While there are still a number of options to deal with this situation, many of them depend on cooperation among the remaining members of the LLP. This is often the case where you want some decisions to be subject to a simple majority vote and others require a higher threshold or even unanimity. The standard legal provisions stipulate that “any difference resulting from ordinary matters related to the activity of the limited liability company may be decided by the majority of the partners, but without the agreement of all the members, there can be no change in the nature of the operations of the limited liability company”. This in turn is quite vague (what are “ordinary cases”?) and a written agreement can explicitly define the different types of decisions that require a greater degree of consent. If the remaining members/partners wish to continue the transaction and know of a potential buyer for the outgoing member`s share, a member`s interest purchase agreement may also be drawn up. This process requires legal advice, as some detailed negotiations will take place for an agreement, especially if the company has been in operation for some time. Similarly, an LLP specialized accountant may be needed to value assets and liabilities with the right allocation. There is no duty of good faith between members.
Members may decide to provide fiduciary duties in the LLP agreement itself. Options for an LLP member/outgoing partner without an LLP agreement If there is no registered LLP agreement, the provisions of Annex I of the LLP Act 2008 apply to all partners. These provisions are as follows, an LLP differs from a limited liability company in that there are no shares to sell to other members. When a member withdraws, he simply waives his right to other shares of capital or profits. In the absence of an agreement, an outgoing member is not entitled to any payment (with the exception of unused winnings). . . .