A limited liability\npartnership or an LLP is regulated by the limited liability partnership act of\n2008. It is a unique business structure which has characteristics of a\npartnership and a private limited company. An LLP how to separate and distinct\nlegal entity which is separate. It has perpetual existence, which means that an\nLLP shall continue to exist irrespective of its partners’ change, removal, or\nresignation. It can own assets, incur liability, sue, and be sued in its own\nname. There is no minimum paid-up capital requirement to start an LLP. When\ncompared to a company, an LLP is required to meet very few compliances and\nrequires minimal expenses to be formed. Just like the shareholders of a company,\nthe liability of the partners of an LLP is restricted to the extent of the\ncontribution to the partnership’s assets, is not unlimited, and shall not\nextend to the partners’ personal assets. For an LLP to be duly residing in\nIndia, it must have at least two directors, and one of them must have been\nliving in India period of 182 days. In this article, we will discuss change in\npartners of an LLP.<\/p>\n\n\n\n
A change in partners of an\nLLP can occur either by the removal or resignation, appointment or death,\ninsolvency, or insanity of any of the partners of the LLP. Any change in\npartners often LLP can only be carried out by following the norms prescribed by\nthe ministry of corporate affairs.<\/p>\n\n\n\n
Section 25 of the Limited\nLiability Partnership Act, 2008 deals with \u201cLLP registration<\/a><\/em><\/strong> of Change\nin Partners\u201d. <\/em>To add or remove partners from the LLP or make any change in\nthe name or address of any partners requires taking the consent of the other\npartners present and then making the necessary changes in the LLP agreement.<\/p>\n\n\n\n The Limited Liability\nPartnership Act of 2008 provides for change in partners of an LLP by the\naddition of a new partner or by the resignation or removal of a partner. Any change\nin an existing partner\u2019s name or address also counts as a change in partners,\nwhich is required to be intimated to the Registrar of companies.<\/p>\n\n\n\n Certain documents are\nrequired to be filed with the Registrar of companies by the new designated\npartner. These documents include the following:<\/p>\n\n\n\n Form-4 Must be filed within\n30 days of the addition of the new partner. The form must be attached with the\nconsent of the new partners as provided under Form-6 and a copy of the LLP\nresolution appointing such partners. If changes have been made in the LLP\nagreement due to change in partners or designated partners, Form-4 must be\nfiled along with Form-3 within 30 days from the date when the amendments were made\nin the LLP agreement. A supplementary agreement is also required to be executed\nby preparing an addendum to the original LLP agreement to provide effect to the\nappointment of the new partner. The supplemental agreement shall be attached to\nForm LLP-3. <\/p>\n\n\n\n Resignation of a partner\nfrom an LLP can occur due to a specific event or any circumstance that has\nalready been mentioned in the LLP agreement. A partner can also resign by\ngiving a notice in writing to the other partners informing them of her decision\nto retire. The notice should be at least that 30 days after the resignation of\nthe partner of an LLP is filed under Form-13. <\/p>\n\n\n\n Form-4 must be filed within\n30 days from the date on which the resignation was tendered. The form should be\nattached to the resignation letter. If changes have been made in the LLP\nagreement due to change in partners or designated partners, Form-4 must be\nfiled along with Form-3 within 30 days from the date when the amendments were made\nin the LLP agreement. A supplementary agreement is also required to be executed\nby preparing an addendum to the original LLP agreement to provide effect to the\nresignation of the partner. The supplemental agreement shall be attached to Form\nLLP-3.<\/p>\n\n\n\n Retirement of a partner\nfrom an LLP can occur due to the happening of a specific event or any\ncircumstance (generally reaching a particular age) which has already been\nmentioned in the LLP agreement. There are certain forms and documents\npertaining to the outgoing partner that the LLP must file. Form-4 must be filed\nwithin 30 days from the date on which the retirement came into effect. The form\nshould be attached with valid proof of retirement. If there have been changes\nmade in the LLP agreement due to change in partners or designated partners, Form-4\nmust be filed along with Form-3 within 30 days from the date when the\namendments were made in the LLP agreement. A supplementary agreement is also\nrequired to be executed by preparing an addendum to the original LLP agreement to\nprovide effect to the retirement of the partner. The supplemental agreement\nshall be attached to Form LLP-3.<\/p>\n\n\n\n Removal of a partner from\nan LLP can occur due to a specific event or any circumstance already provided\nfor in the LLP agreement. A partner of the LLP can be removed by majority\nvoting when such a removal clause has been provided for in the LLP agreement. The\nremoval can occur due to a breach of trust or due to gross negligence by the\npartner in the conduct of the LLP\u2019s business or due to the inability to perform\nthe obligations of the LLP as is provided for in the LLP agreement or due to\nany fraud on the part of the partner committed while conducting the LLP\u2019s business.<\/p>\n\n\n\n There are also situations\nwhen a partner can automatically be removed from the LLP. This can happen on\nthe death of the partner or when the partner has been declared insolvent, or\nthe partner has been declared insane or on the dissolution of the LLP.<\/p>\n\n\n\n Section 25 of the LLP Act\nstates that any change in the address or name of a partner must be reported to\nthe LLP within 15 days of such change. Every partner is required to update the\nchange in their name or address by filling out Form 6 of the LLP. The provision\nalso states that when a person becomes a new partner or ceases to be a partner,\nthe partners are required to file a notice within 30 days of such change with\nthe Registrar. Any change in the partner\u2019s name or address shall be notified to\nthe Registrar within 30 days of such change. <\/p>\n\n\n\n The notice required to be\nsent as mentioned above shall be submitted with the prescribed fee and in such\nform as is prescribed. The notice must also be signed by the designated partner\nof the limited liability partnership and shall be authenticated in the\nprescribed manner. If the notice pertains to an incoming director, it shall\ncontain a statement by the partner that she consents to become such partner and\nshall be signed by her and authenticated in the prescribed manner. <\/p>\n\n\n\n Section 25 also provides\nfor the penalty for non-compliance with the provisions of this section. If any\nlimited liability partnership does not comply with the provisions of the\nsection pertaining to notice regarding a new person becoming a partner or any\nperson ceasing to be a partner or when there is any change in the part in a partner’s\nname or address, such limited liability partnership and every designated\npartner will be liable to pay a penalty which shall not be less than \u20b92000\nand can extend up to \u20b925,000. <\/p>\n\n\n\n Section 25 also provides for\nan outgoing partner or any person who ceases to be a partner of a limited\nliability partnership to file notices with the Registrar herself if she has\nreason to believe that the LLP will not comply with the provisions of this\nsection and file a notice with the Registrar as mandated. Suppose any such\nnotice is filed personally by such partner, in that case, the onus is on the\nRegistrar to obtain a confirmation from the limited liability partnership in\nthis regard unless the limited liability partnership has already filed notice. However,\nsuppose the limited liability partnership grants no confirmation to the\nRegistrar within 15 days pertaining to the person ceasing to be a partner, in\nthat case, the Registrar is required to register the personal notice sent by the\noutgoing partner or the person ceasing to be a partner. <\/p>\n\n\n\n A Limited Liability Partnership is governed by The Limited Liability Partnership Act of 2008<\/strong>[1]<\/strong><\/a><\/sup>. Any LLP partner change must be registered with the Registrar of companies as is provided for in Section 25 of the LLP Act. Non-compliance with the mandates of Section 25 can lead to incurring fines of up to \u20b925,000 both by the LLP and the designated partners.<\/p>\n\n\n\nChange in Partners in an LLP<\/h2>\n\n\n\n
Appointment of new partners\nin the LLP<\/h3>\n\n\n\n
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Resignation of Partners\nfrom the LLP<\/h3>\n\n\n\n
Retirement of Partners from\nthe LLP<\/h3>\n\n\n\n
Removal of Partners from the\nLLP<\/h3>\n\n\n\n
Section 25 of the LLP Act \u2013 Change in Partners<\/h2>\n\n\n\n
Conclusion<\/h2>\n\n\n\n