Limited Liability Partnership

Suppose you start a business with a partner and you are working with some variables beyond your control, you’d naturally want to ensure that in the unfortunate event of the business getting into a legal situation, your personal assets are not sued for damage. At the same time, you also want your ‘arrangement’, for the lack of a better word, to be a bit customized and structured, and roles and responsibilities relatively well defined. If such were your requirements, you’d normally opt for an LLP, which not only is a formal structure with written partnership agreement but also protects your personal assets from being part of any lawsuit.

As opposed to a limited partnership, in which one partner has all the decision making power while other partners have a financial stake only, all partners in an LLP usually share responsibility and the decision making power. But, as Spider Man’s Uncle Ben so eloquently said, “with great power, comes great responsibility”, all partners in an LLP share power, and the liability, albeit limited – as the name suggests. But enforcing these shared powers, and more importantly shared liabilities, will require a well-written agreement, including the essential information with respect to the partners, capital investment, gain-share ration, dispute resolution process, and eventually the mechanism to close the firm, among other things.