Change in LLP Agreement in Surat
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What is a Change in LLP Agreement?
A Limited Liability Partnership (LLP) functions based on a legal document called the LLP Agreement or LLP Deed. This agreement defines the roles, responsibilities, and operational framework of the LLP and its designated partners. Every designated partner is legally bound to follow the terms of this agreement.
However, businesses evolve over time, and changes may be required in the LLP Agreement due to modifications in business activities, partner structure, financial arrangements, or other clauses. In such cases, the LLP must notify the Registrar of Companies (ROC) and execute a Supplementary Deed containing the amendments.
Why is an LLP Agreement Important?
An LLP Agreement is a legally binding document that governs the operations and decision-making processes of an LLP. It serves the same purpose for an LLP as a Memorandum of Association (MOA) does for a company. All designated partners must comply with its terms and conditions.
Key Provisions in an LLP Deed
An LLP Agreement typically includes the following essential elements:
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LLP Name and its registered office address.
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Names and addresses of all designated partners.
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Primary business activities of the LLP.
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Other permitted activities.
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Clauses regarding admission or retirement of partners.
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Guidelines for financial management, including account maintenance and financial statements.
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Profit and loss sharing ratio among partners.
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Additional terms and conditions mutually agreed upon by partners.
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Dissolution clause, defining how the LLP will be dissolved if required.
If any of these provisions need to be modified, an amendment in the LLP Agreement is required.
When Should You Amend an LLP Agreement?
An LLP Agreement may require modifications in several situations, such as:
Change in business activities or expansion into new domains.
Addition or removal of partners.
Change in the registered office address.
Modification of profit-sharing ratios among partners.
Change in capital contribution.
Revised operational rules, decision-making, or dispute resolution clauses.
Alterations in the dissolution process.
To ensure legal compliance, all such changes must be documented and filed with the ROC.
How to Make Changes in an LLP Agreement?
The process for voluntary strike off involves several steps:
Step 1: Pass a Resolution
- A resolution must be passed by the designated partners to approve the proposed changes.
- This resolution should be recorded in the minutes of the meeting.
Step 2: Draft and Execute a Supplementary Deed
- The amendments must be included in a Supplementary LLP Agreement.
- All designated partners must sign the supplementary deed, and it must be notarized.
Step 3: File Form-3 with the ROC
- Form-3 must be filed with the Registrar of Companies (ROC) within 30 days of passing the resolution.
- Required documents for Form-3:
- Original LLP Agreement
- Notarized Supplementary LLP Agreement
- Any other supporting documents (if applicable)
Step 4: File Form-4 (If Partner Changes Are Involved)
- If the amendment involves adding or removing a partner, Form-4 must be filed along with Form-3.
- Required documents for Form-4:
- Consent letter from the new partner (if applicable).
- Proof of cessation of a partner (if applicable).
- Affidavit or official proof of name change (if applicable).
- Company resolution if the partner is a corporate entity.
- Authorization letter specifying the representative partner.
What Happens When You Don't File the Forms on Time?
If you don’t submit the required forms by the deadline, you’ll face penalties:
Late Fee:
You’ll have to pay INR 100 for each day you delay filing.
On the Company:
INR 1,000 per day, subject to a maximum of INR 10 Lakhs.
On Every Officer in Default:
INR 1 Lakh, plus INR 100 per day of delay, subject to a maximum of INR 5 Lakhs.
What is a Director Identification Number (DIN)?
A Director Identification Number (DIN) is an 8-digit unique identification number issued to directors of companies. It is a mandatory requirement under the Companies Act and has lifetime validity.
Compliance and Deadlines
An LLP Agreement typically includes the following essential elements:
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The Supplementary LLP Agreement must be executed and filed with the ROC within 30 days of passing the resolution.
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Failure to file within this timeframe may result in penalties under the LLP Act.
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The ROC may request additional documentation or clarifications before approving the changes.