LLC Operating Agreement in the UK
The UK has no limited liability company of the American kind, so there is no operating agreement. Two structures do the equivalent work: a limited liability partnership under the Limited Liability Partnerships Act 2000, governed by a members' agreement under section 5, and a private company limited by shares under the Companies Act 2006, governed by its articles plus a shareholders' agreement. The articles are public and the agreement is not.
Governing law
The Limited Liability Partnerships Act 2000 governs the internal arrangements of an LLP, and the Companies Act 2006 governs the constitution of a company limited by shares. Neither provides for an LLC or an operating agreement.
What a llc operating agreement has to contain in the UK
The mutual rights and duties of the members of a limited liability partnership, and of the LLP and its members, are governed by agreement between the members, or between the LLP and its members, or in the absence of agreement as to any matter by default provision made by regulations.
An agreement made before incorporation between the persons who subscribe their names to the incorporation document may impose obligations on the limited liability partnership, taking effect at any time after its incorporation.
For a company, on formation, if articles are not registered, or so far as registered articles do not exclude or modify them, the relevant model articles form part of the company's articles.
A company may amend its articles by special resolution, so the constitution of a UK company cannot be varied by a side agreement in the way an operating agreement is amended by member consent.
The provisions of a company's constitution bind the company and its members to the same extent as if there were covenants on the part of the company and of each member to observe those provisions.
Form, notarisation and registration
A copy of every resolution or agreement caught by Chapter 3 of Part 3, which includes an agreement agreed to by all members that would otherwise have required a special resolution, must be forwarded to the registrar within 15 days.
What catches drafters out
Translating LLC vocabulary directly. A UK LLP has members whose mutual rights come from the section 5 agreement, and a UK company has shareholders and directors, so manager-managed, membership interests and distributions have no statutory anchor.
Leaving gaps in an LLP agreement. Where the members have not agreed on a matter, section 5(1)(b) applies the default provisions made by regulations rather than leaving the point open.
Assuming an incorporation with no bespoke articles has no constitution. Section 20 of the Companies Act 2006 applies the relevant model articles by default, so the company is governed by terms the founders may never have read.
LLC Operating Agreement in the UK: common questions
- What is the UK equivalent of an LLC operating agreement?
- There is no direct equivalent because the UK has no LLC. The closest analogues are a members' agreement for a limited liability partnership and the articles of association plus a shareholders' agreement for a private company limited by shares. Section 5 of the Limited Liability Partnerships Act 2000 provides that the mutual rights and duties of LLP members are governed by agreement between the members, or between the LLP and its members, failing which default regulations apply.
- What governs a UK company that has no bespoke articles?
- The model articles. Section 20 of the Companies Act 2006 provides that on the formation of a limited company, if articles are not registered, or if articles are registered so far as they do not exclude or modify the relevant model articles, the relevant model articles form part of the company's articles. Under section 33 the constitution binds the company and its members as if each had covenanted to observe it, and under section 21 it can be amended only by special resolution.
- Is an LLP members' agreement public?
- The Limited Liability Partnerships Act 2000 does not require the members' agreement itself to be filed; section 5 simply makes it the governing document. For companies the position differs: section 30 of the Companies Act 2006 requires a copy of every resolution or agreement caught by Chapter 3 of Part 3, which includes agreements agreed to by all members that would otherwise have needed a special resolution, to be forwarded to the registrar within 15 days.
Sources
Every statement on this page is drawn from one of these. All were fetched on .
The same document elsewhere
Other UK documents
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