It is a combination of a corporation and a partnership, so it has the characteristics of both. What are the steps involved in changing an LLP agreement? Partners have limited liability in the firm, which means their personal assets are not used to repay company debts, as the name implies. In recent years, it has become a very popular form of business, with many entrepreneurs opting to incorporate it. There are several partners in the company, so they are not liable for the actions of others. Limited liability companies are governed by the Limited Liability Partnership Act of 2008. In April 2009, the first limited liability partnership was introduced in India. Each individual is responsible for his or her actions.
The limited liability partnership (LLP) structure is not just popular in India. It is also prominent in other countries such as the United Kingdom and Australia since it is a legal entity that exists independently of its owners. It is capable of entering into contracts and purchasing property on its own behalf.
What Is a Limited Liability Partnership Agreement?
A partnership agreement (LLP agreement) is a type of contract that specifies the nature of the partnership activities, as well as the rights, duties, and obligations of the partners in a limited liability partnership. It is similar to the memorandum of association and articles of association of a company.
The Types of Changes Made to LLP Agreements
- LLP is renamed and its activities are changed
- LLP contributions, rights, and responsibilities are changed
- Capital contribution ratio should be changed
- Reorganization of a Limited Liability Partnership
- Contribution, profit sharing ratio, and registered address changes
- Dissolving/winding up/closing/defuncting of LLPs.
LLP Agreement Change Procedure
LLP agreements can be amended as follows:
Step 1: It is necessary to pass a resolution in order to revise the LLP agreement.
Step 2: Submit Form 3 to the Registrar within 30 days of passing the resolution.
- Modification date of the agreement
- An explanation for the change – whether it is a result of
- Activity changes in the business world
- Partnership(s) change
- The percentage of profit sharing and the contribution of partners have changed
- Please let us know if any other relevant details have changed
- Involvement of partners and their rights
- Limitations on partners’ authority
- Managing and administering LLPs
- Indemnification clause details
- A statement detailing the details of the partner(s)’ agreement regarding admission, retirement, cessation, expulsion, and resignation
- Partner-LLP dispute resolution
- Amount of time that the LLP will last
- Involuntary dissolution
- LLP agreement clauses that may apply
- Information about the changes made to the agreement and the business activities that followed
- Based on changed business activities, the main division of industrial activity according to NIC-2004
- After the change in the LLP agreement, contributions and profit sharing ratios are detailed
- Changing type (deleting/changing)
- Contribution amount, profit-sharing percentage, and DPIN/PAN of each partner
- After changes to the LLP agreement, the total amount of contributions.
The following documents are attached to Form 3
- The initial agreement of the LLP
- Agreement for LLP changed
- Document(s) of any other type
- In the event that there is a change in a partner(s)/designated partner(s), Form 4 must be filed simultaneously with Form 3.
- Any change in name, address, or designation of a designated partner or partner must be reported on Form 4
- Please fill out this form with details about each individual and corporation named as Partner(s) and Designated Partner(s).
1. How long will it take to amend the LLP Agreement?
To modify an LLP agreement, there are only a few steps to follow. The first step is to pass a resolution in order to revise the agreement. The second step is to file Form 3 with the Registrar within the 30 day period following the resolution’s passage.
2. When will the changes made in the LLP Agreement become effective?
A change made to the LLP Agreement shall become effective as of the date of execution or at the effective date specified in that agreement. However, the same can only be accomplished after the Registrar has approved the application submitted in the concerned form by the LLP Partner to make the changes.