CHANGE IN CONTRIBUTION OF PARTNERS IN LIMITED LIABILITY PARTNERSHIP
By now we all are aware about the nitty-gritty of Limited Liability Partnership (“LLP”). Now, let’s understand what need to be done if partners want to change in their capital investment.
Contribution of capital is not simply investing hard money, but it also includes tangible properties, intangible properties or other forms of resources like negotiable instrument i.e. promissory notes.
Change in capital contribution leads to amendment in LLP agreement which is main charter of the LLP.
To record the changes in capital contribution E-form 3 must be filed with ROC within 30 days from the date of modification in LLP agreement along with minutes of meeting where decision regarding change in capital contribution in LLP has been taken.
Other Points to be kept in mind:
- It is obligatory to disclose the amount of contribution in LLP account.
- If the contribution is received in kind (other than cash), it has to be valued by registered valuer e.g. a practicing chartered Accountant, a practicing cost accountants or any valuer approved by government.
- Change in contribution does not lead to change in profit sharing ration unless LLP agreement specifies in this regard.
Stamp duty has to be paid on an increased in contribution