Changes to LLP Agreement
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Introduction
An LLP agreement is an important document of LLP registration; it consists of the details of the LLP like name, business activities, date of incorporation, details of the partners, and other by-laws or constitutions of the LLP. LLP agreement is just like the MOA and AOA of the company, it contains everything of the LLP like its business activity and the way it will work. It is drafted, signed, and notarized within 30 days from the date of incorporation of LLP.
During the tenure of the LLP, various changes can be made to simplify the business operation of the LLP. Changes depend upon various reasons like when it is required, why it is required, etc. It is very important to make changes from time to time as it helps in the growth of the LLP and also gives strength to compete with the global market.
Some Common Reasons for Making Changes in LLP Agreement
- The functioning of an LLP business should be conducted within the rules & regulations explained & accepted in the LLP Agreement. To make some changes, one must make changes in the LLP Agreement. The actions can be changed by adding new interests or new clauses or by discontinuing previous ones.
- Capital is the most vital need of a Business, and it must be increased over time as the business grows. From the perspective of the Partners, the capital sharing ratio & the profit (loss) ratios are inseparably linked. A complimentary deed would be needed to affect both or any of them.
- The rights & responsibilities of the Partners can be altered based on their roles & requirements while their status remains intact. While altering such terms, most administrative powers or restrictions on a few activities are covered.
- Other vital clauses like the jurisdiction of the Limited Liability Partnership, the terms of resignation, the conditions of appointment, notice period & removal, the partnership duration & so on can be altered to meet the needs of the partners & the business. Clause modification, deletion, or addition may also be covered.
Some Most Common Changes that Occur in an LLP
- Following are some most common changes that occur in an LLP:
- Changes to the Agreement in general;
- Change in LLP Name;
- Changes to the LLP’s objectives;
- Change of LLP Registered Office within the jurisdiction of the ROC;
- Removal or resignation of an LLP Partner;
- Transmission of LLP rights in the vent of partner death;
- Shifting the registered Office or premise from one state to another state;
- Transmission of LLP rights in the case of partner death;
- Change in the LLP’s Profit & Loss Sharing Ratio;
- LLP sale to a completely new group of people.
What Documents Are Required to Change in LLP Agreement? (Checklist)
- Documents to accompany Form 3
- Original LLP agreement
- LLP agreement modification
- Additional deed
- Resolution concerning the proposed changes, which is passed at a meeting of the LLP Partners
- Form 4 documents to be enclosed
- Each of the partners’ consent
- A copy of the authorization/resolution that includes the name and address proof
- Evidence for the name change
- In the case of having a corporation as a partner a copy of the resolution is mandatory.
The Process For Alteration Of The LLP Agreement:
No changes can be made in the LLP agreement without the prior consent of all the partners of the LLP and prior approval of ROC. The steps for alteration are as follows:
Step 1 – Consent Of All Partners: Before the amendment of the LLP agreement consent of partners is required and it shall be in the form of a resolution passed in the meeting of the partners of the LLP.
Step 2 – Authorization: In the meeting of the partners a person shall be authorized for taking all the necessary steps in respect of such alteration. That person can be any designated partner of the LLP because the forms which are required to be submitted to the ROC shall be signed by the designated partner of the LLP
Step 3 – Execution Of Supplementary LLP Agreement: After passing the resolution in the meeting for the alteration the new supplementary deed shall be executed and the same shall be signed and notarized before submitting to the ROC.
The agreement shall be made on stamp paper and the value of the stamp paper of the agreement is according to the State Stamp Act. All the supplementary LLP agreements shall be executed on at least Rs. 100/- stamp paper except in case of changes in the capital as in this case the value of stamp paper depends upon the amount of capital.
Step 4 – Signed By The Partners And Witness: After notarization, the agreement shall be signed by the partner or designated partners on all the pages and it shall also get signed by the witness and their details shall be mentioned in the agreement in the witness column.
Step 5 – Submission Of The Agreement: After all the above steps, a final form shall be submitted to the ROC along with documents and fees. The documents which shall be submitted are:
- Copy of resolution passed in the meeting
- Copy of original agreement
- Copy of supplementary agreement
- Any other documents as may be required
These documents shall be submitted in Form 3 along with other forms and fees. The form name is always depending upon the type of changes and the fees for the same also vary from each other.
We can draft the amendment to the LLP agreement, which is a crucial document that outlines the proposed changes to the LLP agreement.
Step 6 – Approval from ROC: Once the changes are approved by the ROC they will be binding on all and they cannot be denied by either the partners or any other person.
We handle all the documentation and follow up with the Ministry of Corporate Affairs to ensure that the changes in LLP Agreement are registered with the Registrar of Companies at the earliest.
