Limited Liability Partnership is a form of organization that can be formed by minimum 2 members and maximum 200 members. This form of company combines the features of both the company and the partnership firm. The legal identity of the limited liability partnership firm is separate from its partners just like companies. Further like the partnership firms, the LLP functions according to the LLP agreement. Some circumstances may arise wherein the need to add them or remove the partners may arise. Some of these circumstances are stated below-
1. Alteration in terms of the agreement between the partners.
2. Resignation and retirement of partners.
3. Alterations in responsibilities of the partners.
4. The inability of the partner to perform functions as stated by LLP agreement.
5. The requirement to appoint professional in the specific field of operations of LLP.
Procedure of addition/removal of partners
Every limited liability partnership firm is required to follow the below-mentioned steps for the addition and removal of partners in Limited Liability Partnership.
1. The person proposed to be the partner of the limited liability partnership is required to obtain a director’s identification number. In case the person already possesses a valid director identification number he shall give the same and notify the LLP to process his addition.
2. If any partner desire to give resignation, the said person shall provide a Notice to the LLP for a minimum period of 30 days.
3. As required by the limited liability partnership agreement the partners are required to pass a resolution to bring changes in the Limited Liability Partnership. Moreover through the resolution passed any one of the designated partners shall be allowed to act on behalf of the LLP and its Partners. Further, the authorized partners shall also hold a valid Digital Signature Certificate to file the application with the Registrar.
4. Including the name of the partner to be added or removed a supplement deed to the LLP Agreement shall be executed by the Partners. Appropriate steps must be taken to ensure that the clauses, terms, and conditions relating to addition/removal of partner-provided in the LLP Agreement are complied with by the supplement.
5. The supplement agreement shall be executed on payment of Stamp Duty as required. The stamp duty payable will be decided based on the capital changed or introduced during the change. In case, there is no addition of the capital in the LLP during the change, the said agreement shall be executed by payment of Stamp Duty amounting Rs 100/- only.
6. After executing the supplement agreement facilitating the addition or removal of partner an application shall be filed with MCA to approve the changes of partner. A company secretary or the charted accountant assistance must be obtained in order to file an application. The application shall be filed in the prescribed forms, i.e. LLP Form 3 & LLP Form 4.
7. Following documents must be attached to the application-
Notice of Resignation/ removal (when applicable)
Resolution passed at the meeting of Partners;
Original LLP Agreement; &
Supplement Deed to LLP Agreement
8. The application is required to be filed within 30 days of the effective date of change or execution of an agreement, whichever falls earlier. In case the LLP fails to file the application within the prescribed period, an additional fee will be levied at Rs 100 per day of delay.
9. The registrar may review the application of addition and removal of the partners. If the registrar is satisfied by the application filed he may grant the approval for the changes. Here, the changes shall be effective only after the approval received from the Registrar. Further, once the changes are approved by the registrar they will have retrospective effect.