Limited Liability Partnerships

[dan]

Following on from a couple of other discussions, it was suggested that it would be good to have a topic specifically on Limited Liability Partnerships.

I know there are some people how work in, or know a lot about LLP's. Others, like myself, do not know too much about these.

An area of particular interest to me is how LLP's can be used in raising finance for Co-operatives.

[MJR]

I know there are some people how work in, or know a lot about LLP's. Others, like myself, do not know too much about these.

Anything in particular besides the finance-raising (which others can comment on more - we're mostly funded by labour, not capital) that you want to know?

In general, TTLLP is a LLP because we wanted to keep costs low, but still wanted to incorporate and we were trying to implement cooperative principles without realising what they were. Drawbacks have been the failure of many organisations (particularly banks and CDBs) to accept this form in their services. We're also a problem for cooperative federations because our rules need not be public, and we're a problem for some lazy/thoughtless researchers because technically we have zero employees and they use "employees" as an alias for "workers" (which it isn't).

[ChrisCook]

Brilliant.

You used an LLP because:

(a) you can, and
(b) it works.

You identified a few of the problem areas eg bank accounts.

Here, there is nothing to stop the "founders", either:

(a) informally - individually, jointly/together; or
(b) formally through (say) a company limited by guarantee,

operating a bank account as the "custodian" of the LLP money as it flows through.

ie the LLP itself need not open the account, but its members may agree who it is who will.

I advocate such a "Custodian" member within a generic LLP template, alongside "Capital" members (who introduce money, or "money's worth" eg IP in your case) and "Operator" members who get paid for their time.

Capital and Operator members then simply share the production and/or revenues. (if there are any)

That is a model that scales indefinitely, but frankly, with a 2 or 3 man operation where there is mutual trust, you maybe don't need more than a one page statement documenting your relationship - if that.

This statement could incorporate the Cooperative principles.

As for the transparency issue, you could simply put the LLP agreement on the website, open to inspection. However, it would be trivial to extend the template LLP to incorporate a loose "club" of customers and potential customers as a "Customer" member.

That way you don't need adversarially negotiated sales terms and conditions, and you could also have a customer representative in an advisory role in an LLP governance.

Also you've put your finger on one of the most radical aspects of LLP's. Quite simply, they make employment = Labour workingforCapital, redundant. In this model Labour works with Capital.

I see the LLP as a framework, not an organisational form. It may be sued to enable a form of "legal XML" linking disparate legal persons (individuals and organisations) andjurisdictions (I've been involved in two cross-border LLP's already) in the same way that XML links disparate hardware and software.

Law is Code: "Open Corporate" LLP agreements will IMHO be part of the Semantic Web.

I wrote this

http://www.mondovisione.com/index.cfm?s ... l&id=38754

six years ago from a background in global markets - I was a Director of the International Petroleum Exchange, for what that's worth - and it's where the LLP made its first appearance...

There's lots of other stuff on http://www.opencapital.net but it's mainly background. I may be operating "charitably", but I still have to live.

ie I'm now a "Not for Loss" ...

[ChrisCook]

When I said "sued" I meant "used"...

[MJR]

Here, there is nothing to stop the "founders", either:
(a) informally - individually, jointly/together; or
(b) formally through (say) a company limited by guarantee,
operating a bank account as the "custodian" of the LLP money as it flows through.

Just on this one aspect: using a CLG would negate some of the reasons we use an LLP; and bank money laundering rules hinder use of personal accounts for the business.

Our preferred solution in general has been to use business banking services from a building society who adapted their rules to cooperate with us (and other LLPs). They've also done the right thing when dealing with a complaint from us, even though a business can't be a member and none of the partners are members of that society at present.

In short, three cheers for building societies! Now, if only they offered credit card services themselves...

[ChrisCook]

Of course.

I'm merely pointing out the possibilities.

Conventional bank accounts operated by LLP's are at last coming onto the banks' radar screen. You can imagine what it was like a even a couple of years ago...

The LLP I'm involved in doesn't even use a written LLP agreement: the LLP default regulations are essentially based upon partnership principles and its purely an invoicing vehicle.