A Limited Liability Partnership is for the corporate business form which offers the advantages of limited liability to the partners at low compliance costs. LLP also allows the partners to organize their internal structure like a traditional partnership. An LLP is a legal entity, liable for the full extent of its assets. The liability of the partners, however, is limited.
Procedure to add a partner in an LLP
Once online LLP registration is finished and there is a requirement for adding new partners in LLP. The procedure for Adding Partner in LLP should be followed according to Section 7 of the LLP Act 2008. The current partners needs to give assent recorded as a hard copy and File form 4 and 3 with essential attachments. This entire methodology might require some time up to 5-7 working days for finishing.
There can be various reasons for the addition of a partner in a Limited Liability Partnership.
- Invest Capital In LLP
- Retirement of existing partner
- Change in role & responsibilities of LLP
- For Expansion LLP Business
- Mutual consent of Partners
- Family-run LLP Business
Who Can Become Partner in LLP?
- An LLP incorporated under LLP Act 2008
- An individual unless other disqualified
- A company incorporated in India.
Stepwise procedure for adding a partner in LLP
For adding an LLP partner, the incoming partner shall apply first for Digital signature Certificate and Partner Director Identification Number. Written Consent of existing partners is required. Also, the firm needs to prepare a document for the addition of a new partner.
1. Pass resolution for admission of Partner.
2. Execute Amendment to LLP Agreement.
3. File an Application for approval of change Form 4 & Form 3.
Step 1: Pass resolution for admission of Partner
It is required to pass the resolution after conducting a meeting with a partner. This Resolution for admission of Partner authorizes existing partner to act on behalf of LLP & all Partner’s. Existing and remaining partner who is authorized for legal formalities shall hold a valid DSC and DIN Number. Important Few Points Resolution for admission of a partner.
1. Execute Resolution on Letter Head of LLP
2. Resolution of required Signature of existing partners and authorized partner.
3. Details about the subject matter
4. Affix Stamp of LLP
Step 2: Execute Amendment to LLP Agreement
LLP carries businesses as per the terms and conditions of the agreement. This is a source document that has information about Capital, Profit & loss sharing ratio, roles & responsibilities of Partners, etc. The supplement LLP Deed Agreement shall be executed by an existing partner and a new partner. This agreement may have information about the partner’s capital, roles, duties etc.
Check LLP Format for the addition of Partner.
- It should contain terms & conditions towards the admission of Partner.
- Old LLP agreement can be amended through Supplementary agreement
- In case there is no change in the capital this agreement can be executed on Rs.100/- stamp paper
- In case there is a change in the capital contribution of LLP then bond value applicable as per Stamp Act provisions.
- This supplementary agreement shall have a sign of existing partner and a new partner.
Step 3: File Form – 4 & Form – 3 intimating for Change of Partner in LLP
- Form 4 of LLP shall be filed online to the Ministry of Corporate Affairs for intimation of Change in Partner of LLP. This form needs to be signed digitally by the use of DSC of an existing partner.
- Form 3 of LLP shall be for filing of new partnership deed.
- Form-4 is focused on cessation, change in name/ address/ designation and appointment of a designated partner or partner and consent to become a partner/designated partner/ Notice of appointment, cessation, change in name/ address/ designation. Certification of Form is required by Practicing Chartered Accountant or Company Secretary or CMA.