As the name implies, limited liability partnerships combine the qualities of corporations and partnerships. They have limited liability in the company, which means that their personal assets cannot be used to pay off the company’s debts. Due to the fact that there are several partners in the firm, they are not legally liable or responsible for one another’s actions. Since it is a very popular company structure in recent years, many entrepreneurs are opting for it. A limited liability partnership was first introduced in India in April 2009 under the Limited Liability Partnership Act of 2008.
This legal structure is not only used in India. It is also popular in Australia and the United Kingdom. It is an independent legal entity that can enter into contracts independently of its owners.
How Does a Limited Liability Partnership Agreement Work?
As in a company’s memorandum of association and articles of association, the limited liability partnership agreement describes the nature of the company’s activities, rights, duties, and obligations of its partners.
An LLP agreement can be amended in several ways
- LLP’s activity and name are changed
- LLP rights, duties, and contributions changed
- Capital contribution ratio should be changed
- Organizational changes in LLPs
- An address change, a change in the profit-sharing ratio, or a change in contributions
- Liquidation, dissolution, or defunct of a limited liability partnership.
The Procedure for Changing an LLP Agreement
change in LLP partners can be amended by the following procedure:
Step 1: The LLP agreement must be revised by a resolution.
Step 2: Within 30 days of passing the resolution, Form 3 must be filed with the Registrar
- Modification date of the agreement
- Change reasons – the reasons for the change
- Activities of the business have changed
- Changing partner(s)
- The percentage of profit sharing and the contribution of the partners have changed
- Other relevant details may need to be amended, such as
- Involvement of partners and their rights
- Partnership authority restrictions
- Administration and management of LLPs
- Clauses pertaining to indemnification
- A description of the agreement regarding admission, retirement, cessation, expulsion, resignation and expulsion for the partner(s)
- Partner-LLP dispute resolution
- A LLP’s duration
- Dissolution of the company on its own volition
- The LLP agreement may contain any other clauses
- After the agreement was changed, details of business activities were provided
- Based on changed business activities, NIC-2004 divided industrial activity into the following categories:
- Changes to the LLP agreement and partners’ contribution and profit sharing ratios
- Modification type (deletion/modification)
- Partners’ DPINs and PANs, contribution amounts, and profit sharing percentages
- After the changes to the LLP agreement, the total amount of contributions.
Attached to Form 3 are the following documents:
- Agreement establishing the LLP
- Agreement changed for LLP
- Additional document(s)
Step 3: Submit Form 4 for change of partner/designated partner
- If there is a change in the partner(s)/designated partner(s), Form 4 must be filed simultaneously with Form 3.
- After a partnership is formed, ceased, or a partner’s name, address, or designation changes, Form 4 must be completed.
- Forms for partner(s) and designated partner(s) must be filled out for all
Form 4 documents to be attached
- Symptoms of cessation
- Affidavits or proofs of name changes
- The company’s resolution to become a partner in the LLP if the partner or designated partner is a company
- A copy of the resolution/authorization letter naming the individual nominated as a representative nominee or partner, as well as the nominee’s name and address.
- Corporate and individual entities.