A Limited Liability Partnership entails that the partners are limited in their liabilities for the firm’s actions, but are not responsible for another’s diligence or lack thereof. In addition to its simplicity, it limits the liability of partners, making it a preferred option for small businesses. As well as defining the scope and extent of LLP operations, an LLP agreement outlines the rights, duties, and obligations of its partners. The agreement clarifies the roles and responsibilities of the partners, their capital contributions, their profit sharing ratios, protocols for resolving disputes among the partners, and the closure of the firm.
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Changes to LLP agreements are easy.
Step 1– The LLP agreement must be amended by a resolution.
Step 2 – Submit Form 3 to the Registrar within 30 days of passing the resolution.
Form 3 details to be filled out
- Modification date of the agreement
- Change reason – whether it is due to:
- Changing business activities
- Changes in partnership(s)
- Contribution and profit sharing percentage of partners
- Changes in any other relevant details, such as:
- Partner’s rights and duties
- Partnership authority restrictions
- Managing and administering LLPs
- All partners must consent to an act/a certain number or percentage of partners must consent to an act
- Meeting procedures, including how they are called, held, and conducted
- Details of the indemnity clause
- In relation to a partner(s), details of the agreement
- The cessation
- Expelling and
- The resignation
- Dispute resolution
- Partners and LLPs
- The duration of the LLP
- Voluntary dissolution
- Other clauses related to the LLP agreement
5.The details of business activities after the change with respect to the LLP agreement. The main division of industrial activity after the change as per NIC-2004 (in light of the changed business activities).
- Change type (deletion/change)
- Partners’ details (DPIN / PAN), contributions & profit share percentage
- After the change in LLP agreement, the total amount of contributions
Form 3 documents to be attached
- The initial LLP agreement
- Changes to the LLP agreement
- Other documents
Step 3 – Submit Form 4 for a change in partner or designated partner
Form 4 is also required to be filed when the change is due to a change in partner(s)/designated partner(s).
Whenever a designated partner or partner is appointed, terminated, or changes their name, address, or designation, Form 4 must be filed.
The form requires details of each individual and corporate partner(s) and designated partner(s).
Form 4 documents to be attached
- Partner’s consent
- Cessation evidence
- Affidavit or proof of name change
- Copy of resolution of the company to become a partner in an LLP if the partner or designated partner is a company
- Name and address of individual nominated as representative nominee/partner in the resolution/authorization letter.