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UKSolicitorJA
UKSolicitorJA, Solicitor
Category: Law
Satisfied Customers: 4312
Experience:  English solicitor with over 12 years experience
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My daughter is part of a 3 person LLP which provides sporting

Resolved Question:

My daughter is part of a 3 person LLP which provides sporting training holidays in the Algarve and in the UK. The company is about 4 years old and she has been a 13% share holder 2 years (after investing £15,000 which we can effectively write off now). The company has never made a profit and she has drawn about £2500 in total over the time she has worked with them.
The relationship has broken down and she is the subject of severe pressure (possibly bullying) from the major shareholder. She wants to get out now. The LLP agreement they have states a 6 month notice contract.
Can she walk out now?
She has been threatened with a 'Bad Leaver' notice and is concerned this will affect her future ability to get a job or be a director in any new company. Is this a true concern?
I'm concerned mental and physical well being at the hands of the major shareholder. How can she limit her liability to any debt? If the company incurs more debt over the next 6 months how can she prevent being liable ? The third member of the partnership is the fiancée of the major shareholder.
Submitted: 2 years ago.
Category: Law
Expert:  UKSolicitorJA replied 2 years ago.
,

Does her partnership agreement say that she needs to give 6 months notice to retire?
Customer: replied 2 years ago.

Yes.

Do you want me to send you a copy of the original agrrement?

Will it be secure and confidential to do so?

Expert:  UKSolicitorJA replied 2 years ago.
This is a public form. Please do not send the original agreement if you wish to keep it confidential.
Customer: replied 2 years ago.

OK I won't send it but the relevant section is;


1. Retirement and death

1.1 Any Member may retire from the LLP by giving not less than 6 months' written notice to the LLP of his intention to retire from the LLP and the date of expiration of that notice is his Leaving Date.


1.2 A Member is deemed to retire from the LLP:


(a) on the Accounting Reference Date next following the birthday on which he attains the age of 65 (or if before that birthday the LLP has agreed with the Member in question to substitute a later birthday, then on the last day of the Accounting Reference Date next following that birthday); and


(b) immediately if the LLP serves written notice on him requiring him to retire as a Member after the court has made an order or appointed a deputy under section 16 of the Mental Capacity Act 2005.


1.3 A Designated Member may resign his designation by giving 3 months' written notice to the LLP and on expiration of that notice he continues as a Member of the LLP but his designation as a Designated Member terminates, except that, where his resignation would reduce the number of Designated Members of the LLP to one, his notice does not take effect until the Members appoint a new Designated Member.


1.4 Where a person dies while he is a Member, his Leaving Date is the date of his death.

Expert:  UKSolicitorJA replied 2 years ago.
Assuming that she is not a Designated Member, It seems that she must give 6 months notice of retirement before she may leave the partnership, otherwise she will be in breach of contract.

She may walk out now without giving the 6 months notice but she may face a breach of contract claim from the other two members.

Her personal liability is limited to the sum, if any, which she agreed with the other members to be liable for on the winding up of the LLP. The LLP is a separate legal entity from her and she would not be personally liable debts of the LLP save as what she agreed her liability would be in the event of winding up.

Hope this helps
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