LLP Agreement is a document which helps to determine the rights, duties and obligation of Partners while governing the operations and management of the LLP. The Agreement describes the relation of Partner(s) inter-se and with the LLP.
An LLP Agreement is a key document governing the operations, administration and management of the Limited Liability Partnership. This vital document is registered with the Registrar of Companies (LLP) after incorporation and online LLP Registration with MCA within 30 days of receipt of the Certificate of Incorporation.
While running the business after registration of LLP with number of partners, various changes are to be adopted in order to make the policy of operations more simplified and standardised while allotting obligations to the specified partner and benefiting him with few other rights combined with additional liability or obligation. Where the need arises for change of any right, liability or any clause as per the business requirement after LLP Formation, the LLP shall look forward for change in LLP Agreement.
Why to change Limited Liability Partnership Agreement?
Below listed are situations which involves change of LLP information and need to change LLP Agreement arises:
- Change of Business Activities of the LLP
- Change of any of the clause of the LLP Agreement
- Change of Capital Contribution by the Partners in the LLP
- Addition of capital in LLP
- Reduction in capital of LLP
- Change in ratio of capital introduced by the Partner(s)
- Change in Management structure of the LLP
- Change of terms or conditions for
- Addition of Partner;
- Appointment of Partner;
- Expulsion of Partner;
- Retirement of Partner; or/and
- Resignation of Partner
- Change in Profit (loss) sharing ratio of the Partner(s)
- Modification of any rights and liabilities of the Partner in the LLP
- Change of duration of LLP where the LLP is incorporated for specified period of time
- Any other change whether addition, alteration or deletion of clause in the LLP Agreement.
How to change Limited Liability Partnership Agreement?
What are the steps involved?
Accord consent of Partners:
First step for amendment of LLP Agreement is to get the assent of the Partners of the LLP. The consent shall be accorded by way of passing a resolution at the meeting of the Partners conducted.
Authorisation to Designated Partner:
At the meeting conducted, authorisation to one of the designated partner shall be provided in order to take necessary steps to fulfil the requirement of appointment of professional and filing of application with the MCA.
Execution of Supplementary LLP Agreement:
The LLP Agreement of the LLP can be amended after registration of LLP in India by way of entering into Supplementary Deed of the LLP. Execution of the Supplementary Deed shall be made by way of payment of stamp duty as applicable.
Requirement of Stamp Duty:
Where the change of Agreement is caused due to addition of Capital Contribution in the Limited Liability Partnership (LLP), the payment of stamp duty shall be made as required by the concerned State Stamp Act. The Stamp Duty payable on the LLP Agreement varies based on the State Stamp Act. The Stamp Act of the State where the Registered Office of the LLP is situated will be attracted to decide the amount of stamp duty payable.
Where the change of LLP Agreement does not include the change of Capital, the Supplementary Deed shall be executed by payment of Rs 100 towards the Stamp Duty.
Validity of the Supplementary Deed and LLP Agreement:
The Supplementary Deed will remain in force till the validity of the LLP Agreement of the Limited Liability Partnership.
The terms and conditions prescribed in the original LLP Agreement will continue to be in force until and unless any of them is altered or expressly excluded by the Supplementary Agreement.
Signature of Partners:
The parties involved in the Agreement shall put signatures at the respective place provided in the Supplementary deed to the LLP Agreement along with the initials on rest of the pages.
Attestation by Witnesses:
The Supplementary Deed to the LLP Agreement shall be attested by at least two witnesses to the Agreement. Here, the witnesses to the Agreement can be any individual other than the Parties to the Supplementary Agreement.
Filing of Application with MCA:
An Application for approval of the Supplementary Deed of LLP shall be filed in LLP Form 3 by payment of fee prescribed on portal assigned for filing. The application shall be filed after affixing the Digital Signature Certificates (DSC) of the Designated Partner (as authorised in this regards by passing the resolution) and Practising Professional such as Company Secretary or Chartered Accountant.
Below listed documents which shall accompany the application to be made for change of LLP Agreement:
- Original LLP Agreement;
- Supplementary Deed to LLP Agreement;
- Resolution passed in the meeting of Partners; and
- Any other document(s) as may be required.
The application in form prescribed above shall be filed within 30 days of the execution of the Supplementary LLP Agreement. On failure of filing the e-form within 30 days of the execution, the penalty of Rs 100 will be levied for each day of delay.
When the changes in LLP Agreement will be effective?
The changes to be caused by the Supplementary LLP Agreement shall be effective only after receipt of approval from MCA for the application filed in this regards. However, on approval of application, the changes will be effective since the date of execution or effective date of change(s).
A Limited Liability Partnership Agreement is the charter of the Limited Liability Partnership (LLP). The said agreement can be updated or altered at any time after the online LLP Registration in India as per the latest requirements arise during the existence of the LLP. The dynamic nature of the industry and field of operations may require changes and updating LLP Agreement from time to time.
Where the Limited Liability Partnership Act, 2008 does not restrict the changes in the LLP Agreement post LLP registration in India, it requires the approval of the Registrar of Companies (LLPs) for any change(s) proposed. The LLP Agreement at any time shall not override the provisions of the Limited Liability Partnership Act, 2008 and any other Act as may be applicable to the LLP from time to time.