Resignation of Partner from Limited Liability Partnership (LLP)

Limited Liability partnership (LLP) is hybrid of partnership and company. It is a partnership but comes with limited liability i.e. in the case of dissolution of business the partner’s personal property is not put at stake, only the property owned by business are attached. In India, it is introduced in 2008.

The Limited Liability Partnership Act 2008 was published in the official Gazette of India on 9 January 2009 and has been in effect since 31 March 2009 and later further amendments, substitutions etc. are being introduced through publication in Official Gazette from time to time.

The Limited Liability partnership required atleast two members with no upper limit on maximum number of partners. A Limited Liability partnership is made by Limited Liability partnership Agreement with a contribution depending upon the partners at the time its incorporation which further can be changed anytime as per the discretion of partners.

During the course of business in Limited Liability partnership, many at times event arises when changes takes place in a Limited Liability partnership like:-

• Admission of partner
• Resignation of Partner
• Change in capital contribution
• Death of partner, etc.

Let’s discuss about our topic that is Resignation by partner. Any partner can resign from the Limited Liability partnership by giving notice to firm and partners. The remaining partner will take suitable action on same keeping in mind the minimum number of partner would be left after resignation of one partner, capital contribution and so on. Generally, resignation of partner lead to change in Limited Liability Partnership Agreement, as the going partner withdraws his/her capital from Limited Liability Partnership.

The resigning partner shall be entitled to:-

1. An amount equal to the capital contribution of the former partner actually made to the Limited Liability Partnership and
2. His/her right to share in the accumulated profits of the Limited Liability Partnership

PROCEDURE:

• Taking note of resignation letter received by the remaining partner.
• Convening a meeting for same and discussing about other important aspects like liability, capital, debts and so on of resigning partner and finalising the same.
• Drafting and execution of supplementary Limited Liability Partnership Agreement.
• Filing of LLP Form 3 and LLP Form 4 within thirty (30) days from the date of event. Form LLP 3 is form change the LLP Agreement and Form LLP 4 is for Change in partners/ designated partner

DOCUMENTS REQUIRED:

• Supplementary Limited Liability Partnership Agreement
• Resolution for taking note of resignation of Partner
• Resignation Letter
• Proof of acceptance of resignation letter by firm

Once, the forms LLP 3 & 4 are filled the registrar shall take the note of same and would approve the Forms if everything filled is fine.

SUMMING UP

 The compliances of Limited Liability Partnership (LLP) from incorporation to yearly filings and other event based filings are reasonable and simple. But if not observed on time can put penalty on the partners as well as firm.

LIMITED LIABILITY PARTNERSHIP (LLP) HAS MANY ADVANTAGES LIKE:-

• It is more flexible to organize the internal structure of LLP. Comparatively, it is complex to organize the internal structure of a company.
• There is no maximum limit for the number of partners in LLP. In the private limited company, shareholders are limited to the extent of 200 shareholders.
• Raising and utilization of funds depends on the partners will. Funds can be bought and utilized only as per the norms listed under the Companies Act, 2013.
• LLP is exempt from Dividend Distribution Tax (DDT). In contrast, a company has to pay DDT on dividend distribution.
• No requirement of compulsory audit: All the companies, whether private or public, irrespective of their share capital, are required to get their accounts audited. But in case of LLP, there is no such mandatory requirement.
• Negligible charges in formation and compliances.

Disclaimer:– The above article is bird view on the topic of resignation of Partner from Liability Partnership (LLP) is for informational purpose. The author in no case, shall liable for any direct, indirect, special or incidental damage resulting from, arising out of or in connection with the use of the information.

(The Author is Corporate Consultant and provides varied array of services including Start-ups, Secretarial, Legal, Trademark, taxation, Audit, GST, Book keeping and other ancillary advisory service in Delhi, Chandigarh as well as The National Capital Region (NCR) and can be contacted through email id:- triptishakyacs2017@gmail.com or Mobile Number: 91-8178515005)