Change of Partner in LLP/Firm

A Limited Liability Partnership is run by its partners. From its management to the operation, the partners direct the LLP towards its goals and vision. New partners are added or existing leave; it does not affect the status of the LLP, but surely impacts the growth of the business and responsibilities of other partners. The change in partners and their details can be affected only after the approval from the Ministry of Corporate Affairs.

To add or remove a partner from LLP, the consent of other partners must be obtained, which is followed by a change in the LLP Agreement and application to MCA to approve the changes. The application to MCA must be filed within 30 days of effective date of the change.

About This Plan

While appointing/removing a partner for your llp/firm, you will need to adhere to a few procedures in accordance to the Government. TAXAJ experts will help you in the same.

Timeline

It Usually takes 2 to 4 working days.

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Services Covered

Who Should Buy

How It's Done

Documents Required

Services Covered

Obtain Digital Signature for new partner
Obtain DIN for new partner
Drafting of director appointment letter , Disclosure of interest, Board Resolution
Filing of Form 3 & 4

Who Should Buy

LLP/Firms that want to appoint/remove partner(s).
LLP/Firms that need assistance in quickly completing the partner change process with perfection

How It's Done

Purchase the plan
Provide details required for obtaining the Digital Signature and DIN
Receive DIN and Digital signature
Get secretarial services to draft director appointment letter, resignation letter, disclosure, resolutions
TAXAJ files Form 3 & Form 4 on your behalf

Documents Required

Name, Contact Number and Email Id of all the Stakeholders.
Directors Identification Number, if already.
Self Attested PAN, Aadhar & Passport size photo of all the Stakeholders.
Apostilled Passport, Mobile Bill and other KYC docs in case of NRI Stakeholder.
Specimen Signatures of all Stakeholders.
New Shareholding pattern (50:50 or 60:40) between the Stakeholders.

Why is the change of partners required?

Expertise with additional capital

Normally, a partner is appointed either for need of capital or the expertise. With increase in capital, the borrowing power of the firm increases with loan opportunities. Admission of a partner not only benefits in form of capital but also leverages the skills and knowledge. The diversity of knowledge and goodwill base helps the business to grow far.

Inability of the existing Partner

The existing partner of the LLP may not be able to contribute his full time after a certain period, whether due to retirement or other reasons. Although the exit of one partner may not affect the existence LLP, it must be dealt with by intimation to MCA and also the appointment of a new partner, if required.

Change in Terms of Partnership

It is an agreement between the partners, the terms can be changed mutually at any time. The change might impact the willingness of one or other partner. According to requirements and terms, need both, the addition or removal of a partner may arise. And consequently, the due process must be followed.

No. of Partners below the statutory limit

Every LLP requires maintaining minimum 2 Designated Partners all time. If due to the resignation of a designated partner from LLP, the total designated partners reduce below 2, the LLP must appoint a new designated Partner or change the position (status) of the existing another partner.

Who can become a partner in LLP?

a) An individual unless other disqualified

b) A company incorporated under the Companies Act 1956 or Companies Act 2013

c) A LLP incorporated under LLP Act 2008

d) A LLP incorporated outside India

e) A Company incorporated outside India

f) A Foreign National

Who can not become a partner in LLP?

a) An individual, if:

– he has been found to be of unsound mind by a Court of competent jurisdiction and the finding is in force;

– he is an undischarged insolvent; or

– he applied to be adjudicated as an insolvent and his application is pending.

b) A minor

c) A HUF

d) A Partnership Firm

e) An Association of Persons (AOP) or Body of Individuals (BOI)

f) An Artificial Judicial Person

g) A Corporate Sole

h) A Co-operative Society registered under any law for the time being in force

i) A body corporate which the Central Government may, by notification in the Official Gazette, specify in this behalf;

How to Add New Partner in LLP?

S. No.	PARTICULAR
1.	Documents require from new Designated partner	√ DIN / PAN of Partner √ Name proof and address proof of the person to be appointed including PAN of the same. √ Consent to act as partner (Form-6). √ Details of other partnership, directorship, if any.
2.	File form-4 [With in 30 days of such change]	ATTACHMENT – Consent of new partners (Form 6) – Copy of Resolution of LLP.
3.		In case change in LLP agreement is due to change in partners/ designated partner, Form 4 has to be filed along with Form 3 as Linked form within 30 days of amendment in the LLP Agreement.
4.	Execute supplementary agreement	Prepare the Addendum of Original LLP Agreement to give effect of admission of new partner.
5.	File form LLP-3	ATTACHMENT – Supplementary Agreement

How to Resign a Partner from LLP?

S.NO.	PARTICULAR
1.	A Partner of Company may resign upon	Happening of any event/ circumstances as mentioned in the LLP Agreement. Due to any reason by giving a notice in writing of not less than thirty days to other partner of his intention to resign as partner. Resignation of partner in Form-13.
2.	File form-4 [With in 30 days of resignation]	ATTACHMENT – Resignation Letter.
3.		In case change in LLP agreement is due to change in partners/ designated partner, Form 4 has to be filed along with Form 3.
4.	Execute supplementary agreement	Prepare the Addendum of Original LLP Agreement to give effect of Resignation of partner.
5.	File form LLP-3	ATTACHMENT – Supplementary Agreement

How to Retire a Partner from LLP?

A partner of a LLP may retire upon happening of any even/ circumstances as mentioned in the LLP agreement, which generally may be upon reaching a particular age. The requirement of outgoing partner has to be filed by the LLP.

S.NO.	PARTICULAR
1.	File form-4 [With in 30 days of Retirement]	ATTACHMENT – Retirement proof.
2.		In case change in LLP agreement is due to change in partners/ Form 4 has to be filed along with Form 3.
3.	Execute supplementary agreement	Prepare the Addendum of Original LLP Agreement to give effect of Retirement of partner.
4.	File form LLP-3	ATTACHMENT – Supplementary Agreement

How to Remove/Expel a Partner from LLP?

A partner of a LLP may be removed/ expelled as per the LLP agreement. If the agreement is silent on this issue then Schedule I would be applicable to the LLP and it says that majority of partners can’t expel a partner. In other words, consent of all partners would be required to expel a partner.