Changes In Limited Liability Partnership
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Services we provide under Changes In Limited Liability Partnership
- Add Designated Partner
- Changes to LLP Agreement
- Close the LLP
Designated Partner in LLP – Overview
At least two partners are required to serve as designated partners in a Limited Liability Partnership (LLP). These partners must be included by name in the LLP partner agreement and have a Designated Partner Identification Number. It is possible to add or subtract the appointed partner. When compared to other forms of company registration, these are simpler to apply for and require less compliances.
The number of partners has no upper limit. Additionally, there are no limitations on entering or leaving an LLP. It is simple to join or quit. Additionally, the ownership can be easily transferred from one person to another. Read through to find out more about adding a designated partner in LLP.
Role of Designated Partner in LLP
While adding a designated partner in LLP, the partner should be aware of his/her duties and responsibilities to be followed while in the period of holding the partnership.
- The Designated Partner of the LLP is authorised to attach his signature on the Statement of Account and Solvency, form – 8, which is a declaration.
- The LLP must file annual returns with the Registrar within a specified period of 60 days from the date of closure of the financial year. If this isn’t implemented, every Designated Partner will be imposed with a fine exceeding Rs 10,000.
- If there is any need, then the Designated Partner may file the returns of documents.
- The Designated Partner must support the authority with the necessary documents, information, signing any requirements, etc. by extending his/her co-operation to the inspector on inquiry or inspection.
- When an investigation conducted by an inspector takes place, then a Designated Partner is responsible to reimburse the expenses.
Eligibility of Designated Partner in LLP
A person has to fulfil the specific requirements in case he wants to enrol himself as a designated partner with an LLP. Let us have a look at some of the primary requirements to be eligible to become a designated partner in an LLP:
- The individual must be at least 18 years old.
- Any individual or body corporate can be eligible to be a partner in an LLP.
- The individual who wishes to become a partner must have a unique identification number (For instance, Aadhaar Card)
- Every LLP must have a minimum of two designated partners.
- The person should be in a sound mind.
- The person shouldn’t be involved in fraudulence.
- There is no maximum limit for the number of partners in a limited liability partnership.
- At least one designated partner must be an Indian national who resides in India.
- The other Designated Partners must also provide a consent letter stating their proof and other documents.
- The individual should not have adjudged bankruptcy in the last 5 years.
- One who has not properly closed the payment settlements with any creditors in the last 5 years and also hasn’t made an agreement regarding the same with them.
In case if the partner has changed his/her name or address, then the partner shall inform the LLP of any modification made in his/her name or address within a period of 15 days of such revision. It’s the LLP firm’s responsibility to file such details with the Registrar within 30 days of such a change in the Form 4.
Appointment of Designated Partner in LLP
The best thing about LLPs is that partners can be added or removed anytime. However, the designated partner should be made fully aware of his roles and responsibilities before adding him to the LLP. In order to add a partner in an LLP, you have to follow the steps mentioned below:
- DIN and Digital Signature have to be obtained and processed for adding a designated partner. We will obtain its consent letter.
- Through the partnership deed, the decision to add a designated partner will take place in a meeting.
- The new partner’s name will be added to the supplementary partnership deed.
- We help you draft the partnership deed.
- Following the appointment, within 30 days, the new partner must file form-4. You must submit this form along with both the additional and original deed.
- After this process, form-3 should be filed and processed along with the partnership deed within 30 days of the appointment.
- Once all the procedures are done, the new designated partner’s name will be added to the LLP and viewed on the MCA (Ministry of Corporate Affairs) website.
Change in LLP Agreement Overview
The LLP agreement is a basic legal document that controls the LLP and its overall operations. The partners must follow the terms of the agreement and not breach any of them. By having a mutual agreement from the partners, the LLP agreement can be altered at any instance after the registration. Changes in activities, capital, or responsibilities and rights are among the most common reasons for change. A complementary agreement is usually incorporated additionally with the original agreement to alter the clauses. In order to make the changes a stamp duty has to be paid. Any form of modifications in the agreement should be reported to the ROC within 30 days of modification.
The Most Common Changes That Occur In an LLP
- Changes to the agreement in general
- The LLP’s name change
- Changes to the LLP’s objectives
- Change of LLPs registered office within the jurisdiction of the ROC
- Shifting the registered office from one jurisdiction to another
- Shifting the office from one state to another state
- Introduction of a new LLP partner
- Resignation or removal of an LLP partner
- Transmission of LLP rights in the event of partner death
- LLP sale to a completely new group of people
- Changes in the LLP’s profit and loss sharing ratio.
Some of the Most Common Reasons for Making Change in LLP Agreement
The functioning of an LLP business should be conducted within the rules and regulations explained and accepted in the LLP agreement. In order to make some alterations one must make changes in the LLP agreement. The actions can be altered by adding new interests or new clauses, or by discontinuing previous ones.
Capital is the most important need of a business, and it must be increased over time as the business grows. From the perspective of the partners, the capital sharing ratio and the profit (loss) ratios are inextricably linked. A complementary deed would be required to affect both or any of them.
Partners’ rights and responsibilities can be changed based on their roles and requirements while their status remains intact. While changing such terms, most administrative powers or restrictions on a few activities are covered.
Other important clauses, such as the jurisdiction of the LLP, the terms of resignation, the notice period, the conditions of appointment and removal, the duration of the partnership, and so on, can be changed to meet the needs of the partners and the business. Clause addition, modification, or deletion may also be covered.
What Documents Are Required to Change in LLP Agreement? (Checklist)
To modify an LLP agreement, the following documents are required:
- Documents to accompany Form 3
- Original LLP agreement
- LLP agreement modification
- Additional deed
- Resolution concerning the proposed changes, which is passed at a meeting of the LLP Partners
- Form 4 documents to be enclosed
- Each of the partners’ consents
- A copy of the authorisation/resolution that includes the name and address proof
- Evidence for name change
- In case of having a corporation as a partner a copy of the resolution is mandatory.
Process to Make Changes in LLP Agreement
By reaching out to vakilsearch you can easily make changes in your LLP agreement. Change your agreement in three simple steps.
1. Reach out to Experts
- Access our website and fill out a form
- Get on call with the experts
- Provide basic information and documents
2. Get expert assistance
- Deliver all the required signed documents
- Resolutions and documents will be drafted
- Supplementary LLP agreement drafting will be done
- PAy the stamp duty as per the advice
3. Altered LLP Is Incorporated
It only takes upto 12 to 15 working days* based on the government’s registration process!
Closing an LLP – Overview
For closing an LLP, a resolution has to be filed by directors of the company with the Registrar of Companies, within 30 days of its passing. Within 15 days of passing the resolution the statement of assets and liabilities after the closure of accounts, to the date of winding up of the LLP, attested by at least two partners must be submitted. A report of the valuation of company assets must be prepared. Once this has been done, the majority of partners need to make a declaration to the effect that the LLP has no debts or that it is in a position to pay all debts within a specified period, not exceeding one year from the date of winding up of the company.
While registering for a business, you have different options like LLP or Limited Liability Partnership. If you have registered your company as LLP, then you would be required to file mandatory returns whether it is doing business or not. In case you fail to file the returns, then the LLP will be subjected to penalties under the LLP Act, and the partners in the firm will be liable to the same penalties. Hence, filing returns becomes a mandatory act in the case of LLP.
So, if you are not planning to file the return and close the LLP for certain reasons, then it must be closed as per the LLP Act. Spinach Laws is a popular name when it comes to registration or closure of the LLP.
If you are willing to close the LLP, then it must meet the following conditions:
- The LLP should be inactive for a period of at least 1 year, or it should be inoperative from the date of establishment.
- The second condition is that the LLP should not have any assets on the date of application.
Moreover, there is detailed paperwork that needs to be done. The first thing that you need to do is to submit the application along with the required fees and affidavit along with consent from all partners of LLP. In addition, for the closure of LLP, you need to submit the IT return and a Statement of Accounts (of the last 30 days) from the date of application.
At this point, you must know that the closure of LLP can take up to two months, provided the partners are quick to complete the procedures involved.
Checklist for Closing Down an Llp
- The LLP to be closed down should not have commenced business after incorporation.
- The LLP to be closed down has not been engaged in any business for the past year.
- The LLP to be closed down has no assets and liabilities.
How to Close LLP in India
Step 1:Resolution for Closure of Llp
A special resolution has to be passed by all or ¾’thof the partners of the company, agreeing to dissolve the partnership.
Step 2: Form No. 1
Within 30 days of passing the resolution for closure of llp, form no.1 is filed with the Ministry of Corporate Affairs (MCA) with a copy of the resolution,
Step 3: No Debt Declaration
At least two members of the LLP have to declare that it has no debts or liabilities. Or if it does, it will be settled within one year from the commencement of winding up.
Step 4: Form 4 & Value of Assets
Form No. 4 along with a report of the value of LLP’s assets has to be submitted to the registrar within 15 days of filing the forms and a statement declaring that the LLP is not being closed to cheat anyone.
Step 5: Creditor Consent
The next step is to acquire consent from the creditors of the LLP, to wind up the business. For this purpose, at least ⅔’rd of company creditors have to provide consent.
Step 6 – Filing Form 6
Within 14 days of receiving consent from creditors, an advertisement has to be filed in the local newspaper. In case if the LLP has assets or liabilities, a liquidator is appointed and his/her statement needs to be filed using form 6.
Step 7: Filing Form 9
Prepare the LLP’s final account statement, and submit them along with form 9 to conclude all formalities.
Spinach Laws Procedure for Winding Up
Form 24 LLP
Form 24 will be filed with the Registrar of Companies along with the declaration from the partners. In addition, you need to submit indemnity bonds and an affidavit stating that the information is true to the knowledge of all the partners.
Public Notice
The Registrar of Companies will publish a notice on its website stating the contents of the application, for a period of one month.
Removal Of LLPs Name
After one month, the Registrar of Companies will remove the LLP’s name from the register and publish a notice in the Official Gazette, thereby legally closing/dissolving the LLP closure documents format.
Documents Required from Partners & Designated Partners For Closing An LLP
Partners need to submit the following documents for closure of llp:
- PAN Card of Partners- Apart from the application form and indemnity which needs to be submitted to the registrar, for the closure of LLP, you are also required to submit PAN cards of all the partners and designated partners of LLP.
- Aadhaar Card of Partners- Similar to PAN card, another document that needs to be submitted for closure of LLP is the Aadhaar card of all the partners and designated partners of LLP
- Latest Address Proof of Partners- In addition to the above mentioned two documents, the latest address proof of all the partners of LLP is also needed to be submitted.
- Consent letter- For the closure of LLP, you would also be required to get the consent letter signed by all the partners and submit it along with form and fees.
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