Corporate structure
Limited Liability Partnership
Partnership economics with limited liability for the partners
In short
An LLP has separate legal personality and gives its partners limited liability while keeping the flexibility of a partnership agreement for profit sharing and governance. Professional firms use it most.
- Liability
- Limited for partners, subject to their own negligence
- Governing law
- DIFC Limited Liability Partnership Law
- Minimum owners
- 2 partners
- Minimum capital
- No statutory minimum
- Audit
- Accounts required, audit depending on size and activity
Best suited to
- Law firms, accountancy practices and consultancies with partner structures
- Joint ventures where profit sharing does not follow capital
- Groups that want partnership flexibility without unlimited liability
Watch out for
- Requires at least two partners at all times
- The partnership agreement does the work that Articles do in a company, so it needs proper drafting
Where an LLP earns its place
When the economics do not follow the capital. Partnerships routinely allocate profit by contribution, seniority or performance rather than by shareholding, and an LLP agreement handles that cleanly where a company's articles and dividend mechanics get awkward.
The cost is that almost everything sits in the agreement. There is less statutory default to fall back on, so a thin agreement creates more problems in an LLP than thin articles do in a company.
Questions
Can an LLP be a DFSA Authorised Firm?
The DFSA generally expects Authorised Firms to be companies. Check the position for your specific activity before choosing an LLP if authorisation is in the plan.
Not sure which DIFC licence you need?
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