PM257100 - LLPs that are members of a group

ITTOIA/S863C

The test in Condition B is whether that individual, as a member, has significant influence over that LLP.

In some cases, the LLP is effectively part of a group.

In this situation the test is applied on the basis that whilst they may take the views of a parent body into account, the members will exercise the powers and duties placed upon them under the LLP Agreement.

The question then is, does that individual as a member of that LLP have significant influence over that LLP.

Example

This example looks at who has significant influence when the LLP is effectively a subsidiary in a group.

The FOR LLP consists of individuals A, B & C, an unconnected corporate member FOR Ltd, and individual D, an employee of FOR Ltd. The strategy of the LLP is decided by the four individuals. On issues of importance to the FOR Group, FOR Ltd will indicate its views to the individual members.

The four individuals together decide the investment strategy. Although they will take into account the views of the FOR Group, their duties to the LLP mean that they have to make the decisions. All four individuals fail Condition B and are not Salaried Members.

It is understood that D has been appointed as representative of the FOR Group.

Although representing the Group, D is not its agent and holds significant influence in his own right. This can be contrasted with the position where FOR Ltd was also a member and D used their vote in a representative capacity.