Limited liability LLP Agreements mean any written agreement between the partners of the Limited Liability Partnership or between the Limited Liability Partnership and its partners which determines mutual rights and duties of the partners and their rights and duties in relation to that limited liability partnership [section 2(1)(0)]. It is compulsory to make and execute a LLP agreement within 30 days of the incorporation of LLP. The value of stamp paper on which the LLP agreement must be printed or stamp duty to be paid on the LLP agreement is dependent on the state of incorporation and amount of capital contribution from the partners

DRAFT OF LLP AGREEMENT

THIS Agreement of LLP made at ………… this……………….. Day of …………………. 20…………BETWEEN ………………. S/o ……………….. R/o………………………. residing at…… which expression shall, unless it be repugnant to the subject or context -thereof, include their legal heirs, successors, nominees and permitted assignees and hereinafter called the FIRST PARTY, and ………………. S/o ……………….. R/o………………………. residing at…… which expression shall, unless it be repugnant to the subject or context thereof, include their legal heirs, successors, nominees and permitted assignees and hereinafter called the SECOND PARTY, and THAT THEY BOTH SHALL BECOME Partners who shall be Designated Partners on incorporation of the  LLP to carry on the partnership business as a Limited Liability Partnership (LLP) registered under the provisions of Limited Liability Partnership Act, 2008 (LLP Act) with a view to shall the profits/losses on the following terms DEFINITIONS : In this agreement unless the context otherwise requires :-

“Accounting year” means the financial year as defined in the Limited Liability Partnership Act, 2008. “Act” or “LLP Act” means the Limited Liability Partnership Act, 2008

“Business” includes every trade, profession service and occupation. “Designated Partner” means any partner designated as such.

“LLP” means the limited liability partnership formed pursuant to this LLP Agreement.

“LLP Agreement” means this Agreement or any supplement thereof determining the mutual right, duties and obligations of the partner in relation to each other and in relation to LLP.

“Partner” means any person who becomes a partner in the LLP accordance with this LLP Agreement

1. Name: Limited Liability Partnership shall be carried on in the name and style of M/s…….. LLP and hereinafter called as …X. LLP.

2. Business: The Partnership business shall  be _                             until and unless changed as per the mutual decision of all the partners of the LLP at the time of the decision

3. Place of Office: The partnership business shall be carried on at the under mentioned address, which shall also be its registered office……………………………………….. The business shall also be carried from such other places as may be mutually decided by the partners from time to time.

4. Duration : The Partnership shall commence from the date of registration of the firm, and shall continue to operate in accordance with the provisions of LLP Act, 2008 and rules framed there under, until termination of this agreement with the the mutual consent of all the

5. Contribution: The Contribution of the LLP shall be Rs……… (Rupees ……….. only) which shall be contributed by the partners in the following First Party …..% i.e. Rs .……. (Rupees ………….. only)     Second  Party ……% i.e. Rs ……… (Rupees……. only)The further Contribution if  any required by the LLP shall be brought by the partners in their profit sharing ratio.

6. Number of Designated Partners: The maximum number of designated partners appointed for the LLP shall be as mutually agreed between the partners initially at the time of incorporation of LLP or as decided by the designated partners of the LLP from time to time

7. Sleeping Partners: All the partners other than those appointed as the designated partners of the LLP shall be sleeping partners, and they shall not interfere with the day to day conduct of business of the

8. Common Seal: LLP shall have a common seal to be affixed on documents as defined by partners under the signature of any of the Designated

9. Immovable Properties: The immovable properties purchased by the LLP shall be clear, marketable and free from all encumbrances.

10. Audit: The Statement of Accounts and Solvency of LLP mad each year shall be audited by a qualified Chartered Accountant in practice in accordance with the rules prescribed under section 34(3) of the LLP act, 2008, namely, rule 24 of the LLP Rules & Forms, 2008. It shall be the responsibility of the Designated Partners of the LLP to comply with Rule 24 of the

11. Remuneration to Partners: No partners shall be entitled to any remuneration for taking part in the conduct of the LLP’s

12. Drawings: Each partner may draw out of the partnership funds as drawings from the credit balance of his income account. Such drawls shall be duly accounted for in the yearly settlement of accounts and divisions of profits of the partnership at the end of each financial

13. Interest on Capital or Loan : Interest at the rate of__ % per annul on the capital contributed or loan given or credited as given by each of the partners and standing to his credit as on the first day of each calendar month for the previous month out of the gross profits of the partnership business shall be credited in the respective accounts, and such interest shall be cumulative such that any deficiency in one financial year shall be made up out of the gross profits of any succeeding financial year or years.

14. Business transaction of partner with LLP : A partner may lend money to and transact other business with the LLP, and in that behalf the Partner shall have the same rights and obligations with respect to the loans or other business transactions as a person who is not a

15. Profits : The net profits of the LLP shall be divided in the following proportions:

To the said —————        %

To the said —————         %

16. Losses: The losses of the LLP including loss of capital, if any, shall be borne and paid by the partners in the following proportions:

To the said —————       %

To the said —————         %

17. Bankers: The bankers of the partnership shall be———– Bank,– branch and/or such other bank or banks as the partners may from time to time unanimously agreed upon.

18. Accounting year: The accounting year of the LLP shall be from 1st April of the year to 31st March of subsequent year. The first accounting year shall be from the date of commencement of this LLP till 31st March of the subsequent

19. Place of keeping books of accounts: The books of accounts of the firm shall be kept at the registered office of the

20. Division of Annual profits of LLP: As soon as the Annual Statements of Accounts and Solvency shall have been signed by the Partners and the same duly audited and the auditor rendering his report thereon, the net profits, if any of the LLP business, shall be divided between the partners in the proportion specified in and in accordance with the provisions of this

21. Term of validity of deed: Duration of this Agreement shall be_ years beginning from the date first above mentioned, subject to the condition that this deed may be extended further by mutual consent in writing of the Parties hereto upon such terms and conditions or with such modifications as may be mutually agreed upon between them.

22. Arbitration: In the event of any dispute or differences arising between the parties hereto either touching or concerning the construction, meaning or effect of this Deed or the respective rights and liabilities of the parties hereto, or their enforcement there under, it shall be first settled amicably through discussions between the parties and if not resolved then otherwise referred to the arbitration of a Sole Arbitrator if agreed upon, failing which to the Sole Arbitrator as appointed by the Court in accordance with  the provisions  of  the Arbitration and Conciliation, Act 1996. The arbitration proceedings shall be conducted at New Delhi in English language.

23. Auditors: The Auditors of  the firm shall be           _ having their  office at…………… The auditors shall be responsible for all the accounts/taxation related tasks of the firm including but not limited to income tax, VAT, preparation of balance sheet/ assets and liabilities/ profit and loss of the LLP etc.

24. The legal advisors of the firm shall be Sever ability: This deed constitutes the entire understanding/agreement between the parties taking precedence over and superseding any prior or contemporaneous oral or written understanding. Unless otherwise provided herein, this deed cannot be modified, amended, rescinded or waived, in whole or part except by a written instrument signed by all the parties to this deed. The invalidity or unenforceability of any terms or provisions of this deed shall not affect the validity or enforceability of the remaining terms and provisions of this deed, which shall remain in full force and effect

DISCLAIMER: THE ARTICLE IS BASED ON THE RELEVANT PROVISIONS AND AS PER THE INFORMATION EXISTING AT THE TIME OF THE PREPARATION.IN NO EVENT I SHALL BE LIABLE FOR ANY DIRECT AND INDIRECT RESULT FROM THIS ARTICLE. THIS IS ONLY A KNOWLEDGE SHARING INITIATIVE.

THE AUTHOR CAN BE REACHED AT VINAYAK.CHARU@GMAIL.COM AND AT 6283643738

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2 Comments

  1. vswami says:

    INSTANT
    Firstly, no knowing or guess why such a wrire-up was considered to be of any use to any reader.
    Secondly , following recitals in the suggested drft. do not seen to make any sense:
    1. “………………………..which expression shall, unless it be repugnant to the subject or context thereof, include their legal heirs, successors, nominees and permitted assignees and hereinafter called the……………….,”

    comment : A partnership is a contract agreement entered into by ‘índividuals’, in a personal capacity, if so, the cited recital is not but misconceived.

    2. -“7. Sleeping Partners: All the partners other than those appointed as the designated partners of the LLP shall be sleeping partners, and they shall not interfere with the day to day conduct of business of the…”
    “23. Auditors: The Auditors of the firm shall be _ having their office at…………… The auditors shall be responsible for all the accounts/taxation related tasks of the firm including but not limited to income tax, VAT, preparation of balance sheet/ assets and liabilities/ profit and loss of the LLP etc.”

    commernt: such recitals are apparently uncommon to be found in any legally drafted standard (ised) document.
    The writer, a CA, could have desirably made some study , even if he cnsidered that any such article would serve any purpose for whom inended !
    Over to..
    courtesy

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