I have been asked to work with a small startup who say they will offer me a 15% share of their LLP for my expertise. However as far as I am aware an LLP does not have a shareholders agreement and can only have a deed of partnership.
They explain: Me: I seem to remember you saying the company was an LLP? LLP's do not have Shareholders Agreements?Can anyone explain further? I am confident they are incorrect and would like to know where I stand!
Them: of course LLP's have shareholders agreements...
Me: Pretty sure an LLP doesn't even have shares, one usually draws up a LLP Partnership Agreement
Them: An LLP is a partnership which can have multiple shareholders. The partnership agreement means that both Nicola and I have to be equally weighted partners, that does not mean to say that there cannot be other shareholders.
On my understanding (and I can recommend the Companies House website ) there's at the least some confusion of terms. LLPs have members, not shareholders, and they are governed first by partnership agreements. They're probably best known in the context of professional services firms such as accountants, who want to add limitation of liability to essentially the traditional partnership structure.
So you certainly need to clarify what you are being offered, and that should include reviewing all the agreements in place. Perhaps you are being offered membership and a share in the proceeds of the LLP, but that's not the only possibility.
It may be that the team has created an LLP as a temporary measure, and hope or plan to transition to a limited company at a future stage. On that basis, they may be maintaining either formally or informally some kind of agreement as to how shares in that prospective entity will be divided.
My advice would be to start by sitting down with them and asking them to explain how things work now, and what they are offering you - without getting too fussy about terminology. Turning that intention into agreement is the next step, and you will probably want to involve a lawyer, to ensure that everything (including correct legal terminology!) is put in good order.
You're right, UK LLPs don't have shares..., so they don't have shareholders, or share capital etc. They are probably getting their terminology mixed up. LLPs are owned by their members and the structure of the membership depends on what has been agreed - they might be salaried, they might take a portion of the LLPs profits or they might not take anything. So when they say 15% share, maybe they mean that they will make you a member that has the rights over 15% of the profits earned by the LLP.
Some blurb here on UK LLPs
Red Flag. Red Flag. Red Flag.
I couldn't agree with @Jeremy more that one should not get caught up in terminology. Focus on the desired outcome. What are they offering? What will your rights be? What will be your responsibilities and obligations be? Get it in writing. (And pay the $250 for a legal review)
But there are also several Red Flags that should be considered here:
Are these people you are ready to get married to? A partnership is a legal contract and the launch of a personal relationship.
There are lots of great questions on here about choosing a partner. I strongly advise checking them out.