Every Limited Liability Partnership (LLP) incorporated in India is governed by the Limited Liability Partnership Act, 2008, the Limited Liability Partnership Rules, 2009, and the LLP Agreement (also referred to as the LLP Deed).
The LLP Agreement is a legally binding document executed on stamp paper, defining the rights, duties, and obligations of partners. Due to evolving business scenarios, an LLP may require modifications in its agreement to accommodate new business needs, regulatory requirements, or operational changes. Such modifications are carried out through a Supplementary Agreement.
Changes in the LLP Agreement may be required under various circumstances, including but not limited to:
a. Addition of a New Partner – When a new partner is admitted to the LLP.
b. Resignation or Removal of an Existing Partner – When an existing partner exits the LLP.
c. Change in Capital Contribution or Profit-Sharing Ratio – Adjustments in partners’ investments or profit-sharing proportions.
d. Modification of Business Activities – When the LLP diversifies or alters its primary operations.
e. Change in Management Structure – If there is an alteration in the designated partners or managerial hierarchy.
f. Modification of Rights and Liabilities of Partners – Adjustments in the authority, duties, or responsibilities of partners.
g. Alteration of Any Other Clause – Any other modifications required due to regulatory changes, mutual consent, or business needs.
• All partners must convene a meeting to discuss the proposed changes.
• The agenda must specify the nature and necessity of the modification.
• The partners must reach a consensus, either through voting or mutual agreement.
• Once agreed upon, a Supplementary Agreement is drafted.
• This agreement must be executed on stamp paper of the appropriate value, as per the Indian Stamp Act.
• The Supplementary Agreement must be numbered sequentially (e.g., Supplementary Agreement 1, 2, 3, etc.).
• All partners must sign the agreement in the presence of witnesses.
• The LLP must file Form LLP-3 on the MCA (Ministry of Corporate Affairs) portal within 30 days of executing the agreement.
• Required attachments:
o Original LLP Agreement
o Supplementary Agreement
o Resolution of Partners’ Meeting
• Upon successful submission, the changes are reflected in the LLP Master Data on the MCA portal.
• Ensure compliance with the Limited Liability Partnership Act, 2008 and relevant state stamp duty laws.
• The changes must not violate existing partner rights or third-party agreements.
• Partners must ensure that modifications align with business objectives and financial viability.
Example 1: Addition of a New Partner
XYZ LLP, originally formed with two partners, decides to induct a third partner. The existing partners execute a Supplementary Agreement, specifying the new profit-sharing ratio and responsibilities. After executing the agreement, they file Form LLP-3 within the stipulated time.
Example 2: Change in Business Activities
ABC LLP, initially engaged in IT consulting, decides to expand into software development and e-commerce. The partners modify the LLP Agreement through a Supplementary Agreement, mentioning the expanded scope of business. This change is then filed with the ROC via Form LLP-3.
A well-maintained LLP Agreement ensures smooth operations and legal compliance. Timely updates through Supplementary Agreements help LLPs adapt to changing business environments while maintaining transparency and regulatory adherence.
For professional assistance in LLP Agreement modifications, partner additions/removals, or regulatory compliance, reach out to us on email: info@returnfilings.com or on whatsapp: https://wa.me/919910123091 to ensure a seamless process with expert guidance.
