Members' participation rights are the rights of a member against the LLP that arise under the members'
agreement (for example, in respect of amounts subscribed or otherwise contributed remuneration and profits).
Members' participation rights in the earnings or assets of the LLP are analysed between those that are, from
the LLP's perspective, either a financial liability or equity, in accordance with section 22 of FRS 102. A
member's participation rights including amounts subscribed or otherwise contributed by members, for example
members' capital, are classed as liabilities unless the LLP has an unconditional right to refuse payment to
members, in which case they are classified as equity.
Once an unavoidable obligation has been created in favour of members through allocation of profits or other
means, any undrawn profits remaining at the reporting date are shown as ‘Loans and other debts due to
members’ to the extent they exceed debts due from a specific member.