Company structures and intellectual property – what do agri businesses need to know?

4

Dec

2025

Farmers have traditionally favoured partnerships for their farming business because of their simplicity and low associated admin, but as agri businesses diversify, more are looking at alternatives to protect assets and formalise ownership and growth. Benazir Mir, solicitor in the Corporate and Commercial team at Sydney Mitchell, looked into the pros and cons at the firm’s recent Succession and Diversification seminar.

Historically, farmers looking for a business structure that is simple and straightforward to administer have used a partnership structure. However, as more are looking to diversify to secure their future, many more are adopting limited liability partnerships (LLP) and/or limited company status.

What are they?

In a nutshell:

Limited Liability Partnership (LLP) is set up with partners who manage the business directly, enjoy limited liability, and are taxed personally on their profits.
Limited company (Ltd) is a separate legal entity where directors manage, shareholders own, and both company profits and dividends are taxed separately.

Both offer five key benefits:

Protect the farming family assets from business risk;
Offer better tax planning opportunities;
Make succession for the farm business easier;
Improve credibility with banks and suppliers; and
Allow profits to be retained for reinvestment.

What are the pros and cons?

Both company structures also offer certain pros and cons.

For LLPs:

Pros

Flexible profit-sharing between partners
Each member taxed individually
Simple for existing family partnerships to convert
Still offers limited liability

Cons

No separate company tax (can be higher overall tax)
Less familiar to banks and investors
Harder to retain profits efficiently

For Limited Companies:

Pros

Corporation tax may be lower than income tax
Easier succession (transfer shares gradually)
Strong asset protection and professional image
Can retain profits to reinvest in land or machinery

Cons

More paperwork (accounts, Companies House)
Dividends and directors’ salaries must be managed
Slightly higher cost to run

Shareholder Agreements

A Shareholder Agreement is the “Prenup” of the business, not least as it sets expectations before issues arise.

Specifically, this is because it sets out the business’ ownership, voting rights of these individuals and their roles.

It includes a Dividend Policy, making it clear how dividends - that is profit and non-profit - will be shared among the owners.

Future planning is also covered by a Shareholder Agreement, to include exit terms for owners, and as part of this, what will happen if one of them wants to sell. This is especially important in family farms because it provides family protections including restrictions on sales to outsiders such as pre-emption rights so that family gets priority in buying shares before they are sold outside of the group.

Is IP important to diversified farms?

More and more farms across England and Wales are diversifying, and among the top business of choice is artisan gin production, with farmers using their own barley, wheat, or botanicals to create their own version of the popular spirit.

This is great diversification, but it moves the farm into a completely different legal landscape where branding and Intellectual Property matters as much as the crop.

For example, if you come up with a great name and you don’t trademark it, someone else could register that name first and stop you using it. The same goes for the logo, bottle design and even label artwork.

A gin should be treated like a pedigree bull - you’ve raised it, it’s valuable and it needs protection!

To register a UK trademark with the Intellectual Property Office costs about £170 online, and it’s usually approved within three months. If the farm business is collaborating with a distiller, it is important that the contracts clearly say who owns the recipe and brand rights.

Once IP protection is secured, not only does the farm have a drink in its portfolio, but it also means a brand has been built that adds real, transferable value to the farm business.

For any diversification, farmers are urged to carefully consider the value of the diversified business and in turn, the real safeguarding benefits available from IP and trademark protections.

The ‘Succession and Diversification - protecting the next generation’ event was hosted by Sydney Mitchell at Becketts Farm, one of the West Midlands agri business diversification success stories, and a fourth generation family business, in November 2025.