What if LLP partners do not want to guarantee money?

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I have been asked to become a partner in a yet-to-be incorporated LLP. As part of that, I’ve been asked by the other partners for a guarantee. I’m not at all keen on the idea. What happens if a partner such as myself would rather not give a guarantee? Is that permitted?

Answers

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It all depends on the terms of the partnership agreement. If providing a financial guarantee is a prerequisite for membership, it’s unlikely that you will be allowed to become a member without doing so.

When an LLP is first set up, the LLP members invest capital in the business. This is the limit of their personal liability for business debts. If you are joining an LLP after it has been set up and will not be contributing capital like everyone else, you would normally be expected guarantee money in the event of insolvency.

I would advise speaking to an accountant or solicitor before making any decisions.

a year ago
 

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