prpri All about Contribution in Limited Liability Partnership (LLP) All about Contribution in Limited Liability Partnership (LLP)

Form/Manner of Capital contribution

As per the provisions of Section 32 of Limited Liability Partnership Act, 2008, contribution of a partner may consists of tangible, movable or immovable or intangible property or other benefit to the limited liability partnership, including money, promissory notes, other agreements to contribute cash or property, and contracts for services performed or to be performed. The monetary value of contribution of each partner shall be disclosed in the accounts of LLP in the prescribed manner.

Obligation to Contribute to Capital of LLP

As per the provisions of Section 33 of Limited Liability Partnership Act, 2008, the obligation to contribute to the capital of LLP by each partner shall be as per the subscriber sheet being filled by the Company to the Concerned Registrar of Companies at the time of the LLP Incorporation and the same amount shall be written in the LLP agreement which is filled by the Company to the Concerned Registrar of Companies.

There are 3 options to trat the excess amount; if a partner contributes in excess of the obligation being undertaken by him at the time of the Incorporation of LLP

(Explained with the help of an example)

Example:

If XYZ LLP has a total contribution of Rs. 1, 00,000/- being undertaken by the Partner A and B in equal proportion i.e. Rs. 50,000/- each but A has transferred the amount of Rs. 51,000/- in the XYZ LLP’s Bank Account stated the contribution. Therefore, A has contributed in excess of his obligation at the time of incorporation. Hence, the LLP shall have three options to trat this excess amount of capital contribution:

the LLP shall have three options to trat this excess amount of capital contribution

 

Refund/Payback of Contribution

When a Partner resigns from the office of partner of LLP, As per Section 24 of the Limited Liability Partnership Act, 2008, he shall receive an amount equal to his capital contribution from the LLP upon such resignation.

About the Author

ACS Divya GoelAuthor is Divya Goel, ACS working as Assistant Manager- Company Secretary with Neeraj Bhagat & Co. Chartered Accountants, a Chartered Accountancy firm helping foreign companies in setting up business in India and complying with various tax laws applicable to foreign companies while establishing their business in India. Author can be reached at info@neerajbhagat.com.

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Company: Neeraj Bhagat & Co.
Location: New Delhi, New Delhi, IN
Member Since: 28 Feb 2019 | Total Posts: 103
Neeraj Bhagat & Co. is helping foreign companies in opening up of Liaison/ Branch Office in India and complying with various tax laws applicable to foreign companies while establishing a business in India. Neeraj Bhagat is the founder of Neeraj Bhagat & Co. Chartered Accountants, a Chartered View Full Profile

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57 Comments

  1. Priyal says:

    We have a LLP wherein we want to bring someone as a capital partner (or sleeping partner). Can we place restrictions on that partner for reinvesting his share of profit again in LLP and not redeeming at his will ?

  2. Rahul sapkal says:

    Hello sir I want to know about the contribution amount, we are 3 partners for LLP, 2 are foreigners, my total contribution ratio is 30:50:20, amount is 25 lakhs , so from foreign 70% amounts will be coming by FDI.
    1. How much contribution amount should I mention?
    2. Total 17.5 lakh FDI i can withdraw later?
    3. What if i took 2 months salary while the registration process is going on?
    4. So after that the contribution amount is 23 lakh so what should I mention?
    5. How much should be the paidup capital?

  3. VISHNU NARAYAN KENJALE says:

    Whether. LLP can borrow money as a loan, from salaried person having NRE account in indian currency. Can he join as partner in the LLP engage in trading of petroleum product.is there any restriction.

  4. vikas shelke says:

    i have invested X amount in company’s asset(machines), now if somebody wants to enter into LLP with my firm , should we need to consider depreciation of assets value to calculate other partners contribution of investment in the company? or we should consider market value of assets to decide his contribution?

    thanks in advance for your time and help on this matter

  5. Meet says:

    Threshold limit for LLP audit of 25 lacs is to be applied on contribution.
    For this purpose, contribution is to be interpreted as initial contribution as mentioned in the LLP agreement or contribution amount as on the end of FY.
    Please assist on the above .

  6. Meet says:

    For LLP audit, the threshold limit of 25 lacs is to be applied on the contribution amount.
    How is the contribution for this purpose is to be interpreted. As Initial contribution (as mentioned in the LLP agreement) or contributions o/s as at the end of financial year.
    Kindly assist on the above matter

  7. Shruti Doshi says:

    What is the defination of Contribution in case of LLP? Audit is applicable if its Contribution exceeds 25 lacs, Then whether i need to do summation of Fixed as well as Current Capital contribution to check applicability of audit as per LLP Act?

  8. Richa Sharma says:

    Greetings Ma’am

    I have a query..Please resolve.
    We have a LLP and contibution of partners increase or decrease due to admission/resignation of partners.
    How to reflect this contribution?
    One year it can be 100000 or another year it can be 90000.
    It will remains fixed or will it change?

  9. Ankitha says:

    Can a LLP exist for two years without actually receiving any contribution from its partners? There is only obligation towards contribution for Rs.100000/- as per LLP agreement. Further, there is no financial transactions also in the LLP.

  10. KAMAL JAIN says:

    One Private Limited Company is converted into LLP having share Premium and reserve of Rs.1.50 crore. The contribution of Partners is Rs.10 Lac. As the contribution is less than Rs.25 Lac, is it required to get itself audited as its reserve are Rs.1.50 cr.

  11. Sreelakshmi says:

    Ma’am,
    For an LLP, if the capital contribution is less than 25 lakhs, audit is not required..
    So, my doubt is how to ascertain capital contribution?
    Is it the closing balance or the annual contribution received..?

  12. Amol K says:

    In case of LLP, if 2 partners do not want to share the financial liability or responsibility, then is it possible for them to still get profit share at high percentage..Of contribution is 90:5:5 ratio..As the 3 rd partner has brought in all funds and the project allotted is on account of the first two partners..Hence these partners want to take money /share and leave..
    .

  13. Alok says:

    One of the partner is not working / contributing towards business activities (not a sleeping partner) and not willing to resign. So does not want to work but wants to eat his share of profit.

    How can the other two partners remove the 3rd partner legally ? What is the procedure. The LLP agreement does not have any specific mention on this. Please advise what legal actions can be taken.

  14. Srikar S says:

    Hi Mam, Can the partner bring in stock of books to LLP in the form of partner’s capital?? If yes, whether any form is required to be filed?
    (the stock of books value is 2 Lacs & within the present capital contribution limit). Please help.

  15. Vaibhav says:

    Hi..
    Can you tell me. When partner exist from LLP and received amount from incoming partner.
    Let see Initially contribute 5000000 capital and 4000000 loan and now received 1.25 cr.
    Can we taxable excess amount in hand of partner?

    Thanks

  16. manoj says:

    In LLP can partners take their contribution back with out resignation and death ? is there any provisions with respect to this

  17. Prateek garg says:

    A partner may bring in money either as contribution or as unsecured loan. which option is better.

    In a project of around Rs. 2 crores would it be better to register the LLP with entire amount of 2 crore as contribution or register the LLP with a lesser amount of contribution say Rs. 10 Lakh and later bring in balance amount as unsecured loan from Partners to LLP

  18. Nidhi Parekh says:

    In LLP at the time of incorporation partners informed contribution 50000 each but one partner has deposited 25000 only. What should be done in such case.
    Also can partners frequently deposit amount in LLPs current account for business purpose. Is the LLP required to file 3 for increase in contribution even though partners deposit amount for day to day activities

  19. Nidhi Parekh says:

    In LLP at the time of incorporation it was mentioned partners will be contribute 50000 each However out of both partners one partner has contributed 25000. What should be done in this case?
    Also can partners deposit money in LLPs current account for business purpose frequently for business purpose for that is LLP required to file form 3 for increase in contribution

  20. Sahil says:

    Dear Mam..
    I’m planning to open an LLP. If I select that my capital contribution would be a total of 10,000/- ie. 5000/- each. & the profit sharing would be 50-50 What does this mean actually.

    I need advice on the financial aspect kindly let me know how canni reach to you for Getting financial Advice.

    Regards

  21. Sahil says:

    After some days of incorporation of LLP within the Capital of Rs. 1 Lakh as stated in LLP Agreement, all the partners add 3-4 Lakhs in the bank account of LLP for more efficient working of LLP, Then again the agreement will be submitted or it will be OK?

  22. Neeraj Bhagat & Co. says:

    If the partner adds more capital into the Bank Account of LLP, that capital will be added to initial capital and profit sharing ratio will be adjusted according to new capital structure of the LLP.

  23. SOUMYAKANT DAS says:

    What if a partner introduced some more capital after few years? Will this amount be added to initial fund and profit sharing adjusted or the present valuation of the company is taken to consideration to distribute the ownership %

  24. Rohit Sharma says:

    Can the excess amount contributed by partner be shown as variable or fluctuating capital and the same can be treated as Reserve and Surplus while filing up Form 8 of the LLP??
    Please suggest.

    Thanks

  25. Rahul Thapliyal says:

    We have a Limited Liability Partnership. Wherein we wants to introduce to new designated partners. So in that case new designated partners should bring his contribution or existing partners can transfer his share to new partners . Please suggest what to do.

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