Limited Liability Partnership

According to Chris Cook, of the Open Capital Movement, the Limited Liability Partnership creates innovative possibilities for the development of a 'Cooperative Capitalism'.

From http://www.opencapital.net/theory.htm

"Out of the primeval Capital swamp there is emerging a new animal - the "Capital Partnership" - based upon a curious hybrid of a commercial company and a partnership, known as a Limited Liability Partnership (LLP). The LLP is already beginning to make its mark in the commercial world - examples include a recent initiative by the AIM listed company Numerica and a new property portfolio investment scheme by the well known businessman Tom Hunter - but has implications for financing enterprises of all types, in particular those in the field of public investment.

During the early 1990s, professional partnerships such as Arthur Andersen became concerned that their individual partners' acceptance of liability for their firm's actions put them individually at risk of bankruptcy. Long before Enron, the City persuaded Jersey's Parliament to draw up an Act creating the LLP -and the British Government, fearing an exodus of professional partnerships to Jersey, passed the Limited Liability Partnership Act in April 2001. For the first time anywhere in the world, it became possible to form a corporate body -an entity with a legal existence independent of its individual members - which had both collective limited liability and the mutual, co-operative characteristics of partnerships.

There are now over 7,000 LLPs around the country. In part, the growth is because they're so easy to create: two designated members must complete an application downloaded from the Companies House website, and pay £95. There is no Memorandum of Incorporation, no Articles of Association and no Shareholder Agreement. In fact there isn't even any requirement for any written agreement at all - although only the most trusting dispense with them - since simple "default" provisions based upon partnership law apply.

The LLP has two key attributes: firstly it is an "Open" Corporate body (NOT legally a partnership as one would expect from the name) in which any stakeholder, whether or not they are Investors may become Members, thereby aligning their interestswith other members. Secondly, the LLP makes it possible for those who invest Money in an enterprise or in Capital assets such as Land to be members of a "Capital Partnership" alongside the users of the Capital or Capital Asset thereby replacing the usual adversarial contracts between those who finance an enterprise or asset and those who utilise it.

In essence, all these stakeholders are brought inside the partnership, so their interests are aligned; it's quite a change from traditional structures, which pit stakeholders in competition against each other. The LLP delivers an ideal combination of the collective and the individual; it's flexible and easy to establish while its partnership characteristics are robust enough to make it attractive to the private sector." (http://www.opencapital.net/theory.htm)

With this new model:

"All that is necessary is to find investors prepared to share in the revenues generated by productive assets such as schools, hospitals and railways on the basis that they receive an agreed inflation linked rental in respect of the Capital used.

That is the measure of the "Open" form of Capital currently emerging - simply a proportional "share" of revenues for a period of time." (http://www.opencapital.net/theory.htm)