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There could be various reasons behind one’s decision to appoint or remove a designated partner in a LLP. There must be proper record of any such function and all the necessary documents must be submitted to the Ministry of Corporate Affairs to get legal sanction for this move.
Resignation or Removal of Partner
A Partner in a LLP may terminate to be a partner of a LLP in conformity to the LLP agreement signed between the Partners. If the LLP agreement doesn’t carry any restrictions, then a Partner in a LLP can chose to leave from a LLP by giving his notice of resignation in writing before a period of 30 days to the other Partners in the LLP.
In the following conditions, a LLP Partner automatically gets disqualified to be a Partner in the LLP:
A Partner in a LLP will be regarded as a Partner unless other Partners have received written notice about the intent of the partner to resign or a notice is filed to the Registrar.
Rights and Liabilities of Partner on Removal or Resignation
Any Partner who decides to stop working as a Partner of the LLP due to death or insolvency is permitted to the following from the LLP:
A Partner in a LLP can also handover his right to share the profit and losses of the LLP and receive distribution in accordance with the LLP Agreement. In case of removal or resignation of a Partner from a LLP, then the LLP partnership agreement can have dissimilar provisions in regard to the rights of the leaving Partner.
On removal or resignation or cessation of a Partner in a LLP, whatever liability suffered while the person was a Partner in the LLP shall not be cleared and meant to continue.
LLP Form 4
In order to apply the resignation or removal or cessation of Partner from LLP, LLP Form 4 needs to be filed within 30 days of removal or resignation or cessation of Partner. Form 4 should be signed by a Designated Partner of the LLP and must be filed along with a Certificate from a Chartered Accountant or Company Secretary or Cost Accountant in practice. The Chartered Accountant or Company Secretary or Cost Accountant must verify that the books and records of the LLP have been found to be correct and precise.
At Trademark Bazaar, we follow the best practices in regard to the removal of a designated partner from the LLP. Over the years, we have handles many such cases and assure you that it would be a smoother process.
How many partners are required to incorporate an LLP?
A minimum of two partners are required to form an LLP. There is no maximum limit on number of partners. (Section 6(1) of the LLP Act, 2008)
What could be reasons behind the removal of a designated partner in an LLP?
Removal or resignation of a Partner from an LLP can happen for many reasons. A Partner may cease to exist as Partner in the LLP in the following scenarios:
How the removal of partner in LLP takes place?
A Partner may be removed from LLP only if the agreement provides such clauses or in the above-mentioned scenarios only. Until then, a majority of Partners cannot vote out a Partner from LLP.
What is the procedure of removal of an LLP partner?
The partner needs to file a notice of resignation 30 days in advance of the intention. Other Partners must accept the resignation and all balances and debts must be settled as per agreement.
Are there any complexities involved in the removal procedure?
The procedure of removal or resignation of Partner from LLP is simple, although one should be prepared for the complexities it involves. Such as: