ADD OR REMOVE A PARTNER (LLP)
The LLP partners are in charge of carrying out the LLP business. Minimum 2 individuals are required to act as the designated partners. These partners must have the Designated Partner Identification Number. To add a Partner to the LLP, you must get a digital signature certificate (DSC) and the Director Identification Number (DIN). DIN can be obtained for any person over the age of 18 years. The DIN applicant’s nationality or residence status is not relevant.
ADVANTAGES OF LLP
(i) is organized and operates on the basis of an agreement.
(ii) provides flexibility without imposing detailed legal and procedural requirements
(iii) enables professional/technical expertise and initiative to combine with financial risk-taking capacity in an innovative and efficient manner.
DIS-ADVANTGAES OF LLP
(i) LLPs may have limited access to capital because they cannot issue stock or other securities to raise funds.
Ensuring compliance with these obligations not only maintains the legal status of the LLP but also helps in building transparency, credibility, and financial accountability.(ii) LLPs may not be suitable for businesses that plan to go public or need to raise large amounts of capital, as they are not able to issue stock.
(iii) While LLPs offer limited liability to most partners, some partners may have unlimited liability if they are involved in the management of the business and are deemed to be “designated members.”
DOCUMENTS REQUIRED TO APPOINT A DESIGNATED PARTNER
- Self-Attested Aadhar
- Self-Attested PAN Card
- Passport in case of Non-Resident Indian or Foreign National
- Passport Size photograph
- Digital Signature Certificate (DSC’s)
- Latest Bank Statement/Telephone/Mobile bill/Electricity bill or Gas bill
- Email Id and Contact Number
- Director Identification Number (DIN) for new partner
WHO CANNOT BECOME A PARTNER/DEISGNATED PARTNER IN LLP
- Minor
- HUF
- Partnership Firm
- Co-operative Society
- Association of Person/Body of Individual/Artificial Judicial Person
- Person of unsound mind declared by Court or Undischarged Insolvent or Person who has applied to be adjudicated as an insolvent and his application is pending.
MINIMUM AND MAXIMUM NUMBER OF PARTNERS AND DESIGNATED PARTNERS
A minimum of two partners will be required for formation of an LLP. There will not be any limit to the maximum number of partners.
Appointment of at least two “Designated Partners” shall be mandatory for all LLPs. “Designated Partners” shall also be accountable for regulatory and legal compliances, besides their liability as ‘partners, per-se”
PROCEDUE FOR APPOINTMENT OF DESIGNATED PARTNER/PARTNER
1)Director Identification Number (DIN)/Designated Partner Identification Number (DPIN)
Apply for DIN by filling E-form DIR-3 in case new partner does not hold DIN, following documents are required for acquiring DIN:-
- Passport Size Photograph
- Self-Attested PAN & Aadhar
- Passport, in case person does not have Aadhar
- Email ID
- Contact Number
- Digital Signature Certificate (DSC) of new partner and existing Designated Partner.
2)Hold a meeting and Pass Resolution for the following Purposes
- For admission of New Partner
- For amending Original LLP Agreement and preparation of Supplementary Agreemen
- For authorizing a partner for filling requisite forms with MCA.
3)Execution of Supplementary LLP Agreement.
4)File E-Form 3 and its linked E-form 4 on V3 MCA Portal with following attachments
- Supplementary LLP Agreement in Form 3
- Form 9(Consent to become Partner/ Designated Partner), Consent of all existing partners for admission of New Partner and CTC of Resolution in Form 4.
CESSATION OF EXISITING DESIGNATED PARTNE
The removal or resignation of a partner must be properly documented, and the necessary filings with the Ministry of Corporate Affairs must be made in order to affect the partner’s dismissal or resignation.
WAYS OF CESSATION
- By way of resignation
- By way of removal of partner
REASONS OF EXIT BY WAY REMOVAL OF PARTNER
- Misconduct of partner i.e. frauds, unethical behavior or breach of partnership agreements.
- Underperformance
- Retirement
EXIT BY WAY OF RESIGNATION
Partner can resign by giving at least 30 days’ notice in writing to other partners.
DOCUEMENTS REQUIRED FOR RESIGNATION
- Supplementary LLP Agreement
- Resolution for taking notice of resignation letter received
- Form-13: Resignation Letter
- Proof of firm’s acceptance of partner’s resignation letter.
PROCEDURE FOR RESIGNATION
1.Taking note of the resignation letter that is received to existing partners.
2.Hold a meeting for below purposes-
- Finalizing partners liability, assets
- For amending Original LLP Agreement and preparation of Supplementary Agreement
- For authorizing a partner for filling requisite forms with MCA.
3.Execution of Supplementary LLP agreement.
4.File E-Form 3 and its linked E-form 4 on V3 MCA Portal with following attachments-
- Supplementary LLP Agreement in Form 3
- Form 13(Resignation Letter), Consent of all existing partners for admission of New Partner and CTC of Resolution in Form 4.
AUTOMATIC REMOVAL OF A PARTNER
A partner would automatically cease to be a partner in the Limited Liability Partnership in the following circumstances:
- When the partner passes away
- When the LLP is dissolved,
- If the partner is found to be mentally ill,
- If the partner is declared insolvent or is adjusted as an insolvent.
Unless other partners have received written notice of the partner’s intention to resign or a notice has been provided to the registrar, a partner in an LLP will be deemed a partner
REMOVAL OF AN LLP PARTNER BY WAY OF MAJORITY VOTING
Unless the LLP agreement clearly allows it, a partner in an LLP cannot be dismissed by a majority of the other partners. A partner can be withdrawn from an LLP if the LLP agreement allows for it, and Form 4 must be filed to do so.
RIGHTS AND OBLIGATION OF THE LLP PARTNER'S REMOVAL OR RESIGNATION
In case of removal of partner due to death or insolvency, the following benefits are entitled to the next to kin of that partner:-
- The total capital contribution made by the partner
- Rights to share in the accumulated earnings after subtracting accumulated losses (if any) as the date the partner ceases to be a partner.
If the LLP partner has resigned or been removed by other partners, the rights and obligations differ from those mentioned earlier.
It is essential to note that if the partner is removed or resigned, the liability incurred will remain effective and not be dismissed.
FAQ’s (FREQUENTLY ASKED QUESTION)
1. What are the restrictions in respect of minimum and maximum number of partners in
LLP?
A minimum of two partners will be required for formation of an LLP. There will not be any limit to the maximum number of partners.
2. What are the qualifications for becoming a partner?
Any individual or body corporate may be a partner in a LLP. However, an individual shall not be capable of becoming a partner of a LLP, if—
(a) he has been found to be of unsound mind by a Court of competent jurisdiction and the finding is in force;
(b) he is an undischarged insolvent; or
(c) he has applied to be adjudicated as an insolvent and his application is pending
3. Do we have to obtain DPIN to be appointed as designated partner
Yes, DPIN has to be obtained for appointment as a Designated Partner.
4. What are documents required for becoming partner or designated partner
Below documents are required:
PAN, Aadhar
Latest Bank Statement/Telephone/Mobile bill/Electricity bill or Gas bill for address proof
Passport size photo
Email ID & Contact Number
DSC (Digital Signature Certificate)
5. What are the forms for appointment or resignation of partners/Designated Partner?
E-form 3 and 4 LLP is to be filed for this purpose with the MCA.
6. Do we need to make a Supplementary agreement to LLP agreement?
Yes, for any changes in the LLP, Supplementary Agreement is must to make.
7. What is Time-period to file the Supplementary Agreement with the MCA?
It has to be filed within 30 days from the effective date of change or from the date of execution (whichever is earlier).
8. Whether stamp duty is required to be paid on supplementary deed?
Yes, as per the rate prescribed in the respective state.
9. Is there any penalty or late fee for delay in filling the Supplementary Agreement with the MCA?
Yes, Rs. 100 per day till the date of actual filling is levied as an additional fee.
10. Attachments of appointment of Partner/Designated Partner?
Supplementary LLP Agreement in Form 3
Form 9(Consent to become Partner/ Designated Partner), Consent of all existing partners for admission of New Partner and CTC of Resolution in Form 4.
11. Attachments for Cessation of Partner/Designated Partner?
Supplementary LLP Agreement
Resolution for taking notice of resignation letter received.
Form-13: Resignation Letter
Proof of firm’s acceptance of partner’s resignation letter
