Procedure for Adding Partner in LLP
February 11, 2019
LLP Agreement Format for Removal of Partner
February 12, 2019
Removal of Partner From LLP
Removal new partner in LLP situation arises when of LLP partner want retire. Below procedure for Removal Partner from LLP need to be followed as per LLP Act 2008. Existing partner need to give consent in writing and File form 4 & 3 with necessary attachments. This whole procedure may time upto 3-7 working days for completion. In this article we provided 3 step Procedure for removal Partner from LLP.
General Reasons for Removal of Partner
LLP Business is carried by mutual understanding and as per LLP agreement. There can number of valid reasons for removal of partner from LLP. Generally LLP agreement have such terms. A few situation where It give rise to take action for removal of partner.
- Fraud in business
- Negligence in roles and responsibilities
- Violation of Law
- Lack of funding
- Bankruptcy or insolvency of general partner
- Change in scope of work of LLP
- Retirement or resignation of a partner
- Breach of financial data
- Breach of Trust
- Inability to perform obligations, as defined in the LLP agreement
List of document for Removal Partner from LLP
- Existing LLP Agreement
- Consent letter
- Resolution for Authorizing partner
- Resignation letter
- DIN & DSC of Authorized Partner
Resignation of Partner from LLP
Resignation of Partner from LLP required to be done as per LLP Act 2008 and LLP Agreement. By mutual consent partner can resign from LLP. Consent from all partner need to be executed on LLP letter head along with other necessary documents. In case LLP agreement is not having restriction for resignation then partner can resign by giving notice in 30 days to other partners.
When a LLP Partner would automatically cease to be a Partner in the LLP ?
In following situation LLP partner automatically cease to act as Partner in LLP.
- On dissolution of the LLP
- On death of the Partner
- If the Partner is declared to be of unsound mind
- If the Partner is adjusted as an insolvent or declared as insolvent.
For removal of partner it is important to issue notice in writing. Unless partner receive notice in writing , it will be not considered as resignation.
Removal of Partner from LLP
Firing of Partner from LLP by Majority
There can be various reasons for removal of partner from LLP. Legal documents need to be submitted at ministry of corporate affairs. By submitting documents to MCA necessary legal proceeding is done for removal of partner. If partner ceases to be partner of LLP then he/she can be removed from LLP with written consent. However A Partner from a LLP cannot be fired by other partner unless the LLP agreement have provided such powers to partners. Hence it basis to note that LLP agreement is key document for firing partner by majority of other partners.
3 Step Procedure for Removal/ Resign Partner From LLP
For removal of Partner from LLP, incoming partner shall apply first for Digital signature Certificate (DSC). After DSC New Partner shall apply for DIN (Director Identification Number). Government (MCA) fees for DIN registration is Rs. 500/-. Writing Consent of exiting partners is required. Also firm need to prepare document for removal of partner. Same procedure shall be applicable in case Change in Partner status from Partner to Designated Partner.
- Pass resolution for admission of Partner
- Execute Amendment to LLP Agreement
- File an Application for approval of change Form 4 & Form 3
Step 1 : Pass resolution for Removal of Partner
Partner shall pass written resolution after conducting meeting with partner. By this resolution partners authorize one of partner on behalf of LLP & firm to act for legal proceedings. Partner whos is authorized to carry legal formalities of change in partner shall hold valid DSC & DIN number.
- Execute Resolution of Letter Head of LLP
- Resolution of required Signature of existing partners and authorized partner
- Details about subject matter
- Affix Stamp of LLP
Status of existing partner about DIN can be check online at http://www.mca.gov.in/mcafoportal/showEnquireDIN.do.
Step 2 : Execute Amendment to LLP Agreement
As per LLP Act 2008 , LLP Agreement is source document base for carrying business. This document need to amended and necessary filing need to be done in case of removing / resigning partner. This agreement contains information about partner who is resigning , terms of resigning , effective date of resignation etc. This deed need to be signed by removing and existing partners. LLP need to ensure that it have minimum two designated partners for carrying business.
- It should contains terms & Condition towards removal of Partner.
- Previous LLP agreement can be amended through Supplementary agreement
- In case there is no change in capital this agreement can be executed on Rs.100/- stamp paper
- In case there is change in capital contribution of LLP then bond value applicable as per Stamp Act provisions.
This supplementary agreement shall have sign of existing partner and removing partner
Step 3 : File Form 4 & Form 3 towards Removal of Partner From LLP.
Ministry of Corporate Affairs given Form 4 for intimating changes in partners of LLP. This is PDF form which need to filed online. This require . Certification form Practicing Chartered Accountant or Company Secretory of CMA is required.
Attachments to Form 4 of LLP
- Consent to act as partner/ designated partner
- Resolution for Authorizing partner
- Consent letter from Removing / retiring partner
- Other Optional attachments
After execution of supplementary agreement for removal of partner. This agreement need to be submitted with in 30 days to MCA. This required certification from Certification form Practicing Chartered Accountant or Company Secretory of CMA. For failure to do compliance of Form 3 there is late filing fees of Rs. 100/- per day applicable.
Attachments to Form 3 of LLP
- Existing LLP agreement
- New supplementary LLP Agreement
- Optional attachment of if any
Fee/Cost for Removal of Partner in LLP
For Filing of removal of partner in LLP cost involved is towards Government filing fees of Form 4 and Form 3. And Certification cost of Professional CA/CS/CMA who certifying documents.
Conclusion
For removal partner in LLP along with necessary documents and DIN & DSC may time upto 3-7 working days. All documents need to uploaded for removal of partner in soft copies of MCA. We provide export services towards LLP Related matters.
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