LLP (Limited Liability Partnership) is a company where all partners(depending on the jurisdiction) have limited liabilities. Here, in an LLP, one partner is not responsible or liable for another partner’s misconduct or negligence. It is one of the top choices for small and medium sized businesses due to its simplicity in functioning and limited liability to partners.
LLP existence and running does not solely depend on either of the partner. For instance, with the demise of a partner in a Partnership Company may cause the company to disintegrate; whereas, in LLP, it may not halt to exist in such a case. The partners of an LLP may keep changing but it will not affect the LLP’s continuity. The partners liability in LLP is limited to the amount of capital invested and there is no minimum limit to the amount of capital to be invested.
The main document required for the making of an LLP Company is an LLP agreement which is an agreement made between the partners of the firm. It carries information regarding the partners, capital contribution, profit sharing ratio, board meetings, protocols for dispute resolution, closure of the firm, etc, hence,drafting the agreement is of much importance.
Procedure for Changing LLP Agreement
Any change within the agreement must be intimidated to the Registrar as the LLP agreement is part of the registration procedure.
Any change in the LLP agreement must be met with approval from all the partners.
- Step I. A resolution must be passed to state the same.
- Step II. A form must be filed within 30 days of the amendment with an attachment of the certified copy of the minutes of the meeting where the decision of the amendment was taken.
- Step III. The authorized personnel must duly sign the form.
- Step IV. The Registrar will verify submitted form and the necessary changes will be made.
IS THE LLP AGREEMENT MANDATORY FOR ALL LLPS?
– No, the LLP agreement is not mandatory for all LLPs. However, certain provisions will automatically apply in the absence of an LLP agreement.
HOW MANY AMENDMENTS CAN BE MADE WITH THE LLP AGREEMENT?
There is no limit to the LLP agreement amendment. It can be amended multiple times.
IS THERE A STANDARD FORMAT OF AN LLP AGREEMENT?
There is no standard format of an LLP agreement that fits all types of LLPs. Every LLP agreement is unique, although certain types of clauses of the agreement may remain similar in all LLP agreement.
HOW MANY PARTNERS ARE REQUIRED TO EXECUTE AN LLP AGREEMENT?
Minimum is 2 partners is required to execute a LLP agreement. However, if a large number of partners exist, it would be advisable to incorporate the company with 2 partners and add more partners post incorporation.