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How to Change Partners in an LLP in India: A Step-by-Step Guide
In this article we will discuss about How to Change Partners in an LLP, Changing partners in a Limited Liability Partnership (LLP) is a regulated procedure in India, governed by the provisions of the Limited Liability Partnership Act, 2008 and rules made thereunder. The process involves a number of steps, from obtaining the consent of existing partners to filing the necessary forms with the Ministry of Corporate Affairs (MCA). Here’s a comprehensive guide to help you understand and execute this process smoothly.
Step 1: Convene a Meeting of Existing Partners
Convene a meeting of the existing partners to discuss the proposed changes in the LLP’s partnership. It’s crucial to obtain the consent of the existing partners for the change. The decision must be recorded in the form of a resolution.
Step 2: Obtain Consent from the Incoming/Outgoing Partners
Once the existing partners have approved the change, you must obtain written consent from the incoming partner(s) who is/are willing to join the LLP and from the outgoing partner(s) who is/are willing to leave the LLP.
Step 3: Execute Supplementary LLP Agreement
Draft a supplementary LLP agreement that sets forth the terms and conditions of the new partnership structure. This agreement is an amendment to the original LLP agreement and should be executed on a non-judicial stamp paper of requisite value, as per the state laws.
Step 4: File Form 3 with ROC
File Form 3 (Information with regard to limited liability partnership agreement and changes, if any, made therein) with the Registrar of Companies (ROC) within 30 days of executing the supplementary LLP agreement. This form contains information about the amendments to the LLP agreement.
Document Checklist for Form 3:
- Signed supplementary LLP Agreement
- Consent of new partners
- Consent for resignation from outgoing partners
Step 5: File Form 4 with ROC
Form 4 (Notice of appointment, cessation, change in name/ address/ designation of a designated partner or partner. and consent to become a partner/designated partner) must be filed with the ROC within 30 days of the change in partnership to provide notice of the appointment of a new partner and the resignation or cessation of an old partner.
Document Checklist for Form 4:
- Consent to act as a partner or designated partner (from the new partner)
- Resignation letter (from the outgoing partner)
- Identity and address proof of the incoming partner
Step 6: Update LLP Stationery and Other Records
Once the ROC has approved the changes, update all business stationery, official records, and other places where the old partnership details are listed. This includes letterheads, invoices, the LLP’s official website, and signs if applicable.
Step 7: Inform Banks and Other Concerned Authorities
Inform all banks where the LLP holds accounts about the change in partnership. Provide them with the updated partnership agreement and resolutions, as required. Also, notify any other concerned authorities or government bodies about the change in the structure of the LLP.
Conclusion
Changing partners in an LLP requires careful attention to legal requirements and prompt filing of necessary documents. Always ensure that you adhere to the deadlines and keep a copy of the filed forms and acknowledgement receipts from the ROC for your records. It’s often advisable to seek professional help to navigate the process to prevent any legal issues that might arise due to non-compliance with the statutory requirements.
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