The Limited Liability Partnership is governed primarily by the provisions of the Limited Partnership Act, 2008 (LLP Act, 2008) and secondary, by the clauses mentioned in the Limited Partnership Agreement.

However, with respect to the addition or removal of the designated partner or partner in the Limited Liability Partnership, there is no restrictions as such in the LLP Act, 2008 given and therefore, we need to check whether any restriction with respect to change of partner/designated partner of the LLP is mentioned in any of the earlier executed agreement and the procedure for the same.

WHO IS ELIGIBLE TO BECOME A PARTNER IN AN LLP?

The below can act as partners in an LLP:

  • An Individual unless disqualified
  • A Body Corporate which includes:

1. Indian Company

2. Companies incorporated outside India

3. LLP registered in India

4. LLP incorporated outside India

5. A foreign national can be appoint as Partner

WHO IS PROHIBITED TO BECOME A PARTNER IN LLP?

The below cannot act as partners/designated partners in an LLP as they are not covered in the definition of Individual/body corporate:

  • An individual, if he has been found to be of unsound mind by a Court of competent jurisdiction and the finding is in force, undischarged insolvent or he applied to be adjudicated as an insolvent and his application is pending.
  • Minor
  • HUF
  • Partnership Firm
  • AOP/BOI/ Artificial Judicial Person
  • Co-operative Societies
  • A body corporate which the Central Government may, by notification in the Official Gazette, specify in this behalf.

Addition & Cessation of PartnerDesignated Partner in LLP

HOW CAN A PERSON BECOME A PARTNER OF AN LLP?

Persons, who subscribed to the “Incorporation Document” at the time of incorporation of LLP, shall be the partners of LLP. Subsequent to incorporation, new partners can be admitted in the LLP as per the conditions and requirements of LLP Agreement. However, generally following is the procedure: 

  • DPIN required in case of Designated Partner 

If the Designated Partner already have a DIN, then a new DPIN is not required. Otherwise, he has to apply the same through e-Form DIR-3.

For applying DIN, first we need to obtain the digital signature of applicant and require the following documents:

1. Self-attested PAN card

2. Self-attested Aadhar card

3. Mobile No and Email No

4. Photograph

  • Hold the Partners/Designated Partners Meeting

The next step is to add a new partner/ designated partner is to hold a Meeting with the designated partners, including partners as may be mentioned in the LLP Agreement and take partner’s approval or consent for appointment of new partner or resignation of existing partner, as the case may be, in the LLP.

 The resolution shall be passed by all the partners as per the terms & condition of existing LLP Agreement.

  • Execution of Supplementary Agreement

Prepare the Supplementary Agreement of the original LLP Agreement to give effect of admission or cessation of new partner. Please note that the same needs to be meticulously drafted keeping in mind the terms and conditions agreed on between the partners for such admission or cessation.

  • File LLP Form 4 

For change in partners, the LLP should file Form 4 within 30 days from the date of admission or cessation. The Form should contain a statement of consent and interest in other entities by the newly inducted partner and the resignation letter by the ceased partner, as the case may be.

  • File LLP Form 3 

Form 3 is required to be filed for Information with regard to limited liability partnership agreement and changes.

So, we have to update admission/cessation of partner over the LLP Agreement and submit the same to MCA for approval of the changes. 

Further, it is pertinent note that in both the cases i.e., admission or cessation of partners, LLP Form 4 and LLP Form 3 shall be filed as linked form. 

IS REMOVAL/ EXPULSION OF PARTNER FROM LLP BEING POSSIBLE?

A Partner in an LLP cannot be removed by a majority of Partners unless the LLP agreement expressly provides such powers to the partners. If the Agreement is silent on this, then Schedule I would be applicable to the LLP which says that the majority of partners cannot expel the partners and only, consent of all partners would be required.

FAQ’s (FREQUENTLY ASKED QUESTION)

Q.1 Is contribution from the Designated Partner/ Partner necessary in form of capital?

Ans. It is not mandatory to bring capital in the LLP but in addition, one may contribute in accordance with the decision taken by all the Partners.

Q.2 What is the time period to file the supplementary deed with MCA? 

Ans. The Supplementary Deed shall be filed to MCA within 30 days from the effective date of change or from the date of execution (whichever is earlier). The same is generally same to the date of the supplemental deed.

Also, the delay in filing of the supplementary deed shall levy an additional fee of Rs 100 per day till the date of actual filing.

Q.3 What is to be done if one Partner has left and there is only one partner left in the LLP? 

Ans. As per Section 6 of the Act, every LLP shall have at least 2 partners. And if at any time the number of partners of an LLP is reduced below 2 and the LLP carries on business for more than six months while the number is so reduced, the person, who is the only partner of the LLP during the time that it so carries on business after those 6 months and has the knowledge of the fact that it is carrying on business with him alone, shall be liable personally for the obligations of the LLP incurred during that period.

In short, the LLP is required to appoint a new partner within maximum 6 months from the effective date.

Q.4 Whether stamp duty is required to be paid on supplementary deed?

Ans. The duty amount shall be paid over the added capital in the LLP as per the rate prescribed in the respective state.

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{The author i.e., Mrs. Kajal Goyal is a Company Secretary in Practice at M/s. Kajal Goyal and Associates and can be reached at (M) +91-9999952595 and (E) [email protected]}

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KAJAL GOYAL AND ASSOCIATES, is a Company Secretary proprietorship firm, offering its expertise and one stop solutions for all Corporate compliance requirements to the clients with a strong emphasis on ethics and ‘being on toes’. Capable delivering services related to Companies Act, FEMA, Re View Full Profile

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