Limited Liability Partnership (LLP) is a unique legal business structure that combines the flexibility of a partnership with the protection of limited liability. In this article, we explore the features of LLP, its partner requirements, and the admission process for new partners.
Introduction to LLP
LLP stands for Limited Liability Partnership. It is a type of legal business structure that combines features of a traditional partnership with the limited liability mandate typically associated with corporations. In an LLP, each partner is not personally liable for the debts and obligations of the partnership, which means their personal assets are protected in case the business incurs debts or losses.
LLPs are commonly used by professional service firms, such as law firms, accounting firms, and consulting companies, where partners want to have the flexibility of a partnership structure while limiting their individual liability.
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LLP Partner Requirements
An LLP shall have a minimum of 2 partners and there is no limit on the maximum number of partners. In any case, there must be 2 designated partners at all times in an LLP who shall be individuals and at least one of them shall be a resident in India.
Who Cannot Be Appointed as a Designated Partner in LLP
- Companies, partnership firms, other LLPs and organisations
- Age less than 18 years
- A person of unsound mind
- A person adjudicated as an insolvent
- A person who has defaulted in payment to creditors
Admission of New Partner in LLP
Section 25 of The Limited Liability Partnership Act, 2008; Rules 10 & 22 of Incorporation of LLP Rules, 2009 shall be applicable in case a new partner/designated partner is admitted to LLP.
Forms for Admission of New Partner in LLP
1. Form-4 (Notice of appointment, cessation, change in name/ address/designation of a designated partner or partner and consent to become a partner/designated partner)
2. Form-3 (Information regarding limited liability partnership agreement and for the changes, if any, made therein)
Procedure to Add a Partner/Designated Partner
1. If a designated partner needs to be added, obtain their Digital Signature Certificate (DSC) and apply for Designated Partner Identification Number (DPIN) in Form DIR-3. For a partner addition, a PAN card is sufficient.
2. Once DPIN is allotted, convene a meeting of all existing partners of the LLP to pass a resolution for adding the new designated partner/partner to the existing partnership deed.
3. Prepare a supplementary deed to include the name of the incoming designated partner/partner.
4. Obtain consent from the incoming designated partner/partner.
5. File LLP Form-4 with the Registrar of Companies (ROC) within 30 days from the date of appointment.
6. After filing Form-4, submit LLP Form-3 (Information regarding limited liability partnership agreement and changes) with ROC within 30 days of the appointment, along with the supplementary deed and the original partnership deed.
Attachments
- Attested copies of PAN card, identity proof, and address proof of the incoming designated partner/partner
- Consent of the incoming designated partner/partner in Form 9
- Details of related entities in which the designated partner/partner is already a director/partner
- Optional: LLP Resolution
- Original LLP Agreement and supplemental agreement (if applicable for Form-3)
NOTE: Attachments in Form-3 shall be submitted in both PDF and Excel format. The Excel format is already provided in the new V3 form itself.
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Disclaimer: This blog is for informational purposes and should not be considered a solicitation for any purpose. For further clarification and expert guidance, contact the author at 9953808432 or via mail at cssinghaniaandassociates@gmail.com. The author is the founder of SINGHANIA & ASSOCIATES, a Practicing Company Secretaries Firm based in Delhi.
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