What is Change in Partners Overview
Process for Change in Partners
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Documents Required For Change in Partners
Benefits Of Change in Partners
FAQs On Change in Partners
Yes, the LLP agreement must be modified with terms of addition or removal by execution of the supplementary deed. All the details including the change of capital and change in terms and profit sharing ratio will be provided in the deed.
The Supplementary Deed must be filed within 30 days from effective date of change or from the date of execution (whichever falls earlier). The delay in filing levies additional fee of Rs 100 per day till the date of filing.
The essential difference between both types of partners is the accountability. Where the partner is responsible only for acts and omissions by himself, the Designated Partners are additionally responsible towards compliance and operational matters of the LLP, including penal provisions.
The LLP must appoint a new designated partner within 6 months from effective date. However, in case the LLP already has another partner, the status of such a partner can be changed to Designated Partner.
The stamp duty shall be paid according to the added capital in the LLP as per the rate prescribed by the respective state. Where there is the addition of capital while addition or removal, the Supplementary Agreement shall be executed by payment of Rs 100/- as stamp duty.
There are no limitations in terms of citizenship or residency to become a Partner. Therefore, the LLP Act, 2008 allows Foreign Nationals including Foreign Companies & LLPs to become LLP in India provided at least one Designated Partner is Indian Resident. The proposed Designated Partner shall hold valid DIN and not be disqualified.
For addition of Partner in the LLP, the consent of the proposed Partner shall be accorded in the prescribed Form. Where the person is to be added as a Designated Partner, he/she must procure a Digital Signature Certificate (DSC) to obtain Director Identification Number (DIN).
DIN is a unique number assigned by MCA to Individuals that allows one to become Director of the company or Designated Partner of any LLP. The DIN is permanently allotted and can be used for subsequent appointment in another company/LLP.
While addition, one may contribute the amount agreed by and between all the Partners including the present, in any form whether tangible or intangible. However, it is not mandatory to bring capital to the LLP.
The rights and liabilities of the new partner(s) will be governed by the LLP Agreement and Supplement Deed of the LLP. Where there are no specific rights/liabilities are prescribed or altered in the Supplement Deed, the rights and liabilities will be same as prescribed in the original LLP Agreement.
The rights and liability of the existing Partner will be as prescribed in the original LLP Agreement. Furthermore, the rights and restrictions can also be specifically mentioned in the Supplement Agreement with any amount of capital to be reimbursed and mode of payment.
In order to resign from the LLP, the Partner shall intimate about the intention to resign to the LLP and remaining partner. At least 30 days’ notice is required to be served by the resigning Partner for the stated purpose.
Once the deed is prepared by the professionals and confirmed by the partners, appropriate stamp duty is paid on the agreement. The notarization of the deed is followed by the signature of all partners reflecting their approval for the change.
Stamp duty is variable and based on the concerned State law of firm. It is calculated based on the capital contribution involved in the change. However, if there is no change in capital, the supplementary deed must be executed by payment of Rs 100/- towards stamp duty (included in package cost). The stamp duty in addition to said amount shall be payable separately.Whether change in constitution of partnership firm is required to be notified to RoF?If the original partnership deed is duly registered with Registrar of Firms, then any modifications must also be notified to the RoF after its execution.
The changes will be effective after signature of partners and notary on the deed. If a partnership deed is registered, the certificate of modification must be obtained after execution.
Addition of a new partner can be made in a manner prescribed by the effective Partnership Deed. The partner to be added should fulfill the requirement as prescribed in the deed if any. The change of partner in partnership deed must be reflected along with the date of addition, terms, and conditions of joining, etc.
The resigning partner should first intimate about his willingness to resign to existing partners through resignation letter. The notice period can be as decided and mentioned in the DIN. Further, all the partners including the exiting partner have to enter in agreement (supplementary deed) whereby all the conditions and fact of exit should be enumerated.
For addition or branch place or new principal office, a supplementary partnership deed for a change of address must be executed in a manner explained in the first FAQ.
The activities can be modified or updated as per the mutual agreement of the partners. All you need to do is explain about the new activities or the change to your executive and rest will be taken care and implemented through supplementary deed.
The name of the partnership firm can, of course, be changed, but with the consent of all partners as it implies to change in the constitution of a partnership firm. Further, after executing the changes, the firm must apply for updating the name in every registration obtained and also in the PAN card. The service of updating PAN is not included in given package.