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LLP Partner Change

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LLP Partner Change Service

Many LLPs after incorporation change partners either by induction new one for resignation of existing partner. The change of a partner required compliance of LLP law regulation and filing in time to effect changes in the records of registrar.

Our LLP Partner change service cover

  • Free consultancy service 
  • Verification of existing LLP agreement
  • Documentation for partner induction/cessation
  • Prepare guidelines for execution of documents.
  • Prepare LLP from for filing with Registrar of Companies
  • File required form with Registrar of Companies
  • Make necessary changes in the exiting LLP Agreement.

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Partner Admission

LLP can admit new partners into the LLP in accordance to LLP Agreement. The requirements in LLP agreement have to be complied with for admitting a partner into the LLP.

Admission of a new partner to LLP requires consensus among partners and it results in dilution of partners' equity and management rights in the LLP.

Partners shall consider the following points before taking a decision:

  1. What will be the contribution from new partner?
  2. What could be the future profit sharing ratio after admission of new partner?
  3. Will the new partner contribute to LLP or buy a stake from existing partners?
  4. Will the new partner will be a designated partner or not?
  5. What are the management rights of new partner?
  6. What are the specific responsibilities of the new partner in the LLP?

Many of these decisions lead to amendment of the LLP Agreement which involves drafting of customised LLP agreement and other documents.

Cessation of Partner

Unlike the shareholder in a Limited Company, a partner of an LLP can resign and leave the LLP at any time. To complete the cessation, the partner has to be dissociated with regard to economic as well as management rights in LLP.

A partner can resign from the LLP by giving notice to other partners. Transfer of rights in LLP alone will not help a partner to cease to be a partner in LLP. This is because in an LLP, partners always have management rights. The partner should be resigned or dismissed as per LLP agreement in order to complete the cessation process. The economic rights cease when partnership rights are assigned to another or duly settled by LLP. The management rights cease when the partner resigns or is dismissed.

Points to be considered before resignation of a partner from an LLP:

  1. Provisions of LLP Agreement regarding resignation of a partner
  2. Status of economic rights of partners after resignation
  3. Settlement and assignment of economic rights
  4. Re-distribution of partner rights, if any

Process of cessation of partners from LLP:

  • Follow the procedures set out in the LLP Agreement
  • Submit notice of resignation by resigning partners to all partners
  • Decide the method of distribution, if any
  • Approval of resignation by partners
  • Amendment to LLP Agreement.

Who can be admitted as a partner to LLP?

Only individuals and body corporates can be admitted as partners in an LLP

How a person can be admitted as partner to LLP?

Admission of a partner to LLP happens in accordance with LLP Agreement. Usually, LLP Agreement provides procedures for admission. As per LLP law, every new partner shall give his consent for appointment before admission.

Is admission of a partner a complicated process?

No, it is a simple process. The process varies depending on the provisions in the LLP Agreement.

What are the rights of a partner in LLP?

Generally the partner of an LLP has economic as well as management rights in LLP. Economic rights enable him to participate in profits and losses of LLP and management rights assure participation in management of LLP.

What does a partner get after admission to LLP?

A partner admitted to the LLP gets economic as well as management rights in LLP.

Is it possible to admit a foreign national as a partner in LLP?

Yes. Subject to approval from central government a foreign national can be admitted as a partner in LLP

How can a partner of LLP resign?

A partner can resign from a partnership as per the process set out in LLP Agreement.

How can a partner of LLP resign from an LLP that has only 2 partners?

An LLP should have 2 partners at any point of time. If there are only 2 partners, the continuing partner needs to admit another partner to LLP. Only thereafter can one of the existing partners resign.

How can a partner of LLP be dismissed?

A partner can be removed or dismissed from LLP as per the process set out in LLP Agreement.

Is it mandatory to give notice to existing partners for resignation from LLP?

LLP act provides that unless LLP agreement provides otherwise, a partner can resign from LLP by giving notice in writing to other partners. In all other cases, it must be as per LLP Agreement.

What will happen to the rights of a deceased partner in LLP?

The LLP Rights will be vested as per LLP Agreement. In case the LLP agreement is silent as to vesting, all economic rights will be vested with legal heirs of deceased partner.

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