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Fixed Share Partner

What is a fixed share partner?

There is no set definition of a fixed share partner, but in general terms, fixed share partnership can have a number of features. Fixed share partners will generally take a predetermined portion of the profits made by the partnership, and this sum will generally be taxed using schedule D. In some cases, they may also receive a share of equity.

When it comes to voting rights, it may be that a fixed share partner does not carry the same weight as a full equity partner. They may be given less of a say in what goes on within the business, and these decisions will be made by either the full partners or a committee. However, this will vary depending on the organisation.

In some cases, a fixed share partner may be aiming to eventually switch to equity status. For this to happen, each firm will need that partner to demonstrate different attributes before this progression can be made.

While the exact requirements change depending on the business, in all cases the fixed share partner should be able to demonstrate their business development abilities and possess a client network that has been carefully cultivated throughout their career.

In an LLP, there is a similar role of equity member, which is treated in much the same way as that of a fixed share partner.

Becoming a fixed share partner

Organisations look to recruit fixed share partners for a variety of reasons. Firstly, it may be a means of providing a stepping stone to full equity status, allowing an assessment of a partner’s abilities and whether or not they would be a suitable candidate for a share of the partnership capital going forward. Additionally, businesses are always on the lookout for talent, especially those that have a good quality portfolio.

Of course, these opportunities could also come about for the same reasons as any job becomes available, such as someone leaving or retiring. However, regardless of whether a business is actively looking to recruit or not, it is often the case that if someone with the right skill set comes along they will look to accommodate them anyway.

If you would like more information on becoming a fixed share partner, or if you need advice on how to become a salaried partner, you can contact Ralli Partnership Law solicitors on 0161 832 6131, or fill out our online form.

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