Change in LLP Agreements
Limited Liability Partnership or famously known as LLP is a company where all partners have limited liabilities. Here, one partner is not responsible for other partners’ diligence or negligence. Due to its simplicity in functioning and limited liability to partners, it is one of the top choices for small and medium sized businesses.
The existence and running of LLP does not solely depend on either of the partner. For example, with the demise of a partner in Partnership Company may cause the company to disintegrate; whereas, in LLP, it may not cease to exist in such a case. The partners of an LLP may keep changing from time to time and it will not affect the LLP’s continuity. The liability of partners in LLP is limited to the amount of capital invested and there is no minimum limit to the amount of capital to be invested.
An LLP agreement is one of the main documents required for the making of an LLP Company. It is an agreement made between the partners of the firm. Hence, drafting the agreement is of much importance as it carries information regarding the partners, capital contribution, profit sharing ratio, board meetings, protocols for dispute resolution, closure of the firm, etc.
Procedure for Changing LLP Agreement
As the LLP agreement is part of the registration procedure, any change within the agreement must be intimidated to the Registrar. There is a simple procedure to be followed in case of change in LLP agreement.
Any change in the LLP agreement must be met with approval from the partners.
- A resolution must be passed to state the same.
- Next, a form must be filed within 30 days of the amendment attaching the certified copy of the minutes of the meeting where the decision of the amendment was taken.
- The authorized personnel must duly sign the form.
- The Registrar will verify submitted form and the necessary changes will be made.
Frequently Asked Question
No, the LLP agreement is not mandatory for all LLPs. However, certain provisions will automatically apply in the absence of an LLP agreement.
There is no standard format of an LLP agreement that fits all types of LLPs. Every LLP agreement is unique, although certain types of clauses of the agreement may remain similar in all LLP agreement.
There is no limit to the number of times an LLP agreement can be amended.
The legal minimum is 2 partners to execute a LLP agreement. However, if a large number of partners exist, it would be advisable to incorporate the company with 2 partners and add more partners post incorporation.