Process Of Adding A New Partner In A Limited Liability Partnership | Ebizfiling

  

  Introduction 

 

You must add new partners to your LLP after completing the online LLP registration process. The process for adding a partner to an LLP must be followed, as per Section 7 of the LLP Act, 2008. The existing partner must file forms 4 and 3 with all required attachments and give written consent. The full process could take up to 5-7 working days. This blog will help readers to know "What is Limited Liability Partnership (LLP)?" "Who is a partner?" "Format for LLP agreement" "What is the process for adding a new partner in an LLP?"




 

 What is a Limited Liability Partnership? 

 

A business where only 2 members (which can be extended up to 5 Designated Partners (without DIN)) are required and no maximum limit is specified with the characteristic of limited liability to the partners is referred to as a Limited Liability Partnership.

 

 Who can become a partner in an LLP? 

 

A person can be a partner of an LLP when:

 

  • A person who is not disqualified under any law.

  • A person must have attained the age of majority.

  • A person should be a resident of India.

  • An LLP is incorporated in accordance with the Companies Act, 2013 and LLP Act, 2008.

 

 LLP agreement format for adding a new partner   

 

This Agreement is made and executed at _____________ on this _______ day of ____________.

 

  1. Mr. (Existing Partner A), son of __________________ residing at ___________.

 

  1. Mr.(Existing Partner B), son of ___________, residing at ___________________ (here in after collectively called the Existing Partners) of the one part;

 

  1. Mr. (New Partner A), son of___________ residing at________________ (hereinafter called the New Partner) of the other part;

 

Whereas the Existing Partners are carrying on the business of __________________________________under the name and style of__________ LLP (Registration No. ____________ at _____________ in terms of Limited Liability Partnership Agreement dated ______________.

 

 Now, this Deed Witnesseth as Follows:   

 

  1. This agreement is supplemental to the Limited Liability Partnership Agreement made and executed between the Existing Partners.

 

  1. From the date thereof, the said new partner shall eligible to be a partner with the Existing Partners subject to the terms and conditions of the LLP Agreement except in so far as the same are varied by this LLP agreement.

 

  1. The capital of the LLP shall be _________contributed by the parties thereto in the manner below mentioned:

 

  • Partner A Contribution

  • Partner B Contribution

  • Partner C Contribution

 

  1. The partners shall be entitled to share the profits and bear the losses of the LLP in proportion to their respective shares in the LLP.

 

  1. Except as modified by this agreement, the LLP Agreement of date _________________________ shall hereafter be read and construed as if the same had been executed by the Existing Partners and New Partner hereto.

 

 Process of adding new partner in an LLP 

 

1. Pass a resolution for the entry of the new partner

 

It is necessary to pass the resolution after holding a meeting with a partner. This Partner Admission Resolution authorizes current partners to act on behalf of the Limited Liability partnership and all partners. Any existing partner who is authorized to complete legal compliance must have a valid DSC and DIN Number. Consider the following points when accepting the resolution for a new partner:

 

  • The resolution should be written on paper on the letterhead of the LLP.

  • Get the signatures required for authorized and current partners.

  • In-depth knowledge of the subject.

  • Apply the LLP Stamp.

 

2. Execute the LLP agreement amendment

 

LLP must conduct its operations in accordance with the terms and conditions of the LLP agreement. This is a source document that includes information about capital, profit-and-loss sharing percentages, duties and responsibilities of partners, and more. The LLP Deed Supplement shall be executed by the existing partner and the new partner which will include information about the capital, roles, and responsibilities, etc of the new partner. If a partner has been added, check the LLP agreement format:

 

  • It should include the rules and requirements for admission of the new partner.

  • Current LLP agreements can be modified using supplementary agreements.

  • If the capital does not change, this agreement can be executed on Rs.100/- stamp paper.

  • According to Stamp Act rules, the bond value becomes applicable if there is a change in the LLP's capital contribution.

  • Finally, the new LLP agreement needs to be signed by both the old and new partners.

 

3. Submit Forms 4 and Form 3 for notifying change of partner in LLP

 

The LLP should notify the Ministry of Corporate Affairs about the change of partner in the partnership firm. For this, the partnership firm should file Form 3 (Information for LLP agreement and change) and Form 4 (Notice the change in the information of partners). These forms should be filed electronically. These forms are also signed digitally by an existing partner using his/her DSC. The forms must be certified by a professional chartered accountant, company secretary, or CMA.

 

 

 

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