Incentive arrangements for an LLC

Copyright © 2025 LexisNexis
Produced in partnership with Stephen Diosi of Mishcon de Reya
Practice notes

Incentive arrangements for an LLC

Copyright © 2025 LexisNexis

Produced in partnership with Stephen Diosi of Mishcon de Reya

Practice notes
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What is an LLC and how is it different to other forms of business organisation?

A limited liability company (LLC) is a legal form of business organisation in the US.

A US LLC is essentially a hybrid entity, combining certain features of both a corporation and a partnership. A US LLC is akin to a private limited company in the UK in that it affords its owners limited liability protection, while having the added benefit (subject to elections made by a specific entity) of being potentially fiscally transparent (like a partnership) for tax purposes. For those LLCs who are deemed or elect to be tax transparent, all profits and losses pass directly to their owners, who are members rather than shareholders, and tax is therefore imposed on the LLC members as opposed to on the entity itself.

However, despite the potentially advantageous tax status of LLCs, the question of how members of LLCs are treated for tax purposes in different jurisdictions is not always straightforward. As an example, the taxation of UK LLC members and income

Stephen Diosi
Stephen Diosi

Head of Employee Incentives, Mishcon de Reya

Stephen leads the Employee Incentives team at Mishcon de Reya. He has significant experience advising on the strategy, design, implementation and compliance of UK and global employee incentive arrangements, including long term incentive plans, all-employee share plans, HM Revenue and Customs tax-advantaged plans, management incentive plans and growth share and joint ownership plans. Stephen also advises on all related corporate, tax and trusts aspects, corporate governance issues, disclosure of directors' remuneration and share dealing regulations.

In addition, Stephen works with companies on the impact that corporate actions have on their incentive arrangements and has acted on many public takeovers, mergers and acquisition, public to private transactions, initial public offerings, capital raising activities and private equity deals.

Stephen also advises on contractual disputes and tax investigations relevant to incentives arrangements.

Stephen works with a wide range of businesses across several industry sectors, including financial services, natural resources, entertainment, aerospace and transport and for companies that are listed on the London Stock Exchange, AIM and overseas exchanges, together with private equity houses, private companies and owner-managed businesses.

Stephen is a contributor to Volume 14(1)B Employment of the Encyclopaedia of Forms and Precedents.

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Jurisdiction(s):
United Kingdom
Key definition:
Limited Liability definition
What does Limited Liability mean?

Arises due to the legal separation of a business entity from those who own it. The liability of the shareholders of a company limited by shares is limited to the amount unpaid, if any, on the shares held by them. This distinguishes companies from sole traders and general partnerships.

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