Deed of Limited Liability Partnership
Limited Liability Partnership combines the advantages of a partnership with limited liability. Forming an LLP requires executing an important document known as the LLP deed or LLP agreement. The following document describes the rights, responsibilities, and functions of partners to ensure effective business administration.
What is an LLP Deed?
The Limited Liability Partnership Deed is a legal contract that governs the internal operations of the LLP. It defines the relationships between the partners and specifies decision-making methods, benefits sharing, and dispute resolution mechanisms. For Registering LLP connect with the Registration Guru to complete the Registration process.
Why is an LLP Deed Important?
1 Legal Structure: Clarifies the roles and responsibilities of each partner.
2 Dispute Resolution: Setting clear guidelines reduces disagreements.
3 Operational Framework: Establishes guidelines for profit distribution, capital investment, and management decisions.
4 Liability Limitation: Defines the level of liability of each partner.
5 Regulatory Compliance: Ensures compliance with the Limited Liability Partnership Act 2008.
Essential Clauses in an LLP Deed
1 LLP Name
· Specifies the legally accepted name of the LLP in India by the Ministry of Corporate Affairs (MCA).
2 Partners and Contributions
· The names of the partners are listed as well as their capital contributions.
· Specifies the form of contribution.
3 Profit and Loss Allocation
· Determines the ratio of profit and loss sharing among partners.
4 Partners' Rights and Responsibilities
· Each partner’s authority, rights, and obligations are described in detail.
· Covers the steps for adding and uninstalling partners.
5 Decision-Making Guidelines
· Outline of an approach to corporate decision-making and resolving differences.
6 Financial Management and Banking Operations
· It determines how money transfers and accountants in banks will be managed.
7 Meeting and Voting Procedures
· Determines the frequency of meetings and the voting rights of each participant.
8 Partner Registration and Expulsion
· Describes the contributions under which a partner may resign or be terminated.
7 Conflict Resolution
· Contains provisions for resolving disputes through arbitration or review.
8 LLP Dissolution
· Outlines the process for winding up the Limited Liability Company, if necessary.
Steps to Register an LLP Deed
1 Drafting the LLP Deed: The deed should be prepared in collaboration with a legal expert.
2 Stamp Duty Payment: The LLP deed agreement is required to be executed on stamp paper as per the state rules.
3 Notarization: Legal authentication via notarization may be required.
4 Filing with MCA: Within 30 days of incorporation of the LLP, submit the deed on the MCA portal using Form 3.
5 Approval and Compliance: MCA evaluates and approves the submitted deed.