LLP Agreement Modification Types in India

Things don't always work out between business partners, and at times the company can be profitable or unprofitable. Changes or amendments to an LLP agreement are required as a result of these factors.

A limited liability partnership is a combo of a corporation and a partnership. It possesses the characteristics of both of these types. As the term implies, partners have limited liability in the firm, which means that their personal assets are not used to pay off the company’s debts. It has become a very popular form of company in recent years, with many entrepreneurs opting for it. Because there are several partners in the firm, they are not liable or responsible for the actions of others. Each person is responsible for their own actions. The Limited Liability Partnership Act of 2008 governs all limited liability partnerships. LLP was first introduced in India in April 2009.

It is a legal entity that exists independently of its owners. It has the ability to enter into contracts and purchase property in its own name. The LLP structure is not only popular in India. It can also be found in countries such as the United Kingdom and Australia.

What Is a Limited Liability Partnership Agreement?

A limited liability partnership’s (LLP) agreement is similar to a company’s memorandum of association and articles of association. The nature of company activities, rights, duties, and obligations of partners are all described in the agreement.

Types of Changes Done in an LLP Agreement

• Change the name and activity of LLP
• Change the contribution, rights and duties of the LLP
• Change the ratio of capital contribution
• Change in the management structure of an LLP
• Change in registered address, profit sharing ratio, contribution
• Winding up/shut down/dissolved/defunctioning of LLP.

LLP Agreement Modification Types in India

The steps for making amendments to an LLP agreement are as follows, similar to the procedures for the registration of a company in India:

Step 1: A resolution needs to be passed to revise the LLP agreement.

Step 2: Form 3 is to be filed with the Registrar within 30 days of passing resolution

1. Date of modification in the agreement
2. Reason for change – whether the change is on account of
   • Change in business activities
   • Change of partner(s)
   • Change in partner’s contribution and percentage of profit sharing
   • Change in any other relevant details like
     • Rights and duties of partners
     • Restrictions on the authority of partners
     • Management and administration of LLP
     • Details of the indemnity clause
     • In relation to partner(s), details of the agreement related to admission, retirement, cessation, expulsion and resignation
     • Resolution of disputes between partners and the LLP
     • Duration of the LLP
     • Voluntary winding-up
     • Any other clauses related to the LLP agreement
3. Details of business activities after the modifications to the LLP agreement
4. The main division of industrial activity as per NIC-2004 (based on changed business activities)
5. Details of partner’s contribution and profit-sharing ratio after the change in LLP agreement
   • Type of change (deletion/ change)
   • Details of each partner (DPIN/ PAN), amount of contribution, and percentage of profit sharing
   • The total amount of contributions after the modifications to the LLP agreement.

Documents to be attached with Form 3 Initial LLP agreement Changed LLP agreement Any other document(s)

Step 3: File Form 4 for change in partner/ designated partner

• Form 4 must be filed simultaneously with Form 3 if the change is due to a change in a partner(s)/designated partner(s)
• Form 4 must be filed in the event of a designated partner or partner’s appointment, cessation, or change in name/address/designation
• Details of all individuals and corporations being appointed as partner(s) and designated partner(s) must be filled out on this form.

Documents to be attached with Form 4 Evidence of cessation Affidavit or any proof of name change If the partner or a designated partner is a company, a copy of a resolution of the company to become a partner in LLP Copy of resolution/authorization letter mentioning name and address of individual nominated as representative nominee/ partner.

Note: The amendments to the registration of llp company are only implemented and completed after the Ministry of Corporate Affairs approves them (MCA).

The Limited Liability Partnership contract can be found on the Ministry of Corporate Affairs website (MCA). The e-form can be downloaded, filled out, and then submitted, or it can be filled out directly online using a digital signing certificate. When filling out forms offline, the scanned document can be directly uploaded to the portal.

Conclusion

An LLP Agreement Modification Types should be carefully drafted to reflect the special needs of your LLP, so leave the drafting to our experts, so you can focus on your business while knowing that your expectations are being met. Get all legal information at Vakilsearch.