Over the years the business community has realized there is a need for a different form of business organization. One that is more freedom than a partnershipand fewer formalities than a company. Hence the Limited Liability Partnership (LLP) came into existence. An LLP agreement is a written document defining the agreement between the partners of a Limited Liability Partnership. It defines the rights and duties of all the partners towards each other and towards the firm.
Under the Limited Liability Partnership Act, the filing of an LLP agreement is mandatory while registering the firm within 30 days of the formation of the LLP. In the absence of the agreement all the rights and liabilities provided in Schedule, I of the act will apply to the partners and the LLP. A well-defined LLP agreement sets the solid foundation for the business. A comprehensive, detailed LLP agreement defines the roles and responsibilities of a firm very clearly.
Features of LLP agreement:
1.Name of the LLP: Firstly, LLP agreement contains the name of the limited liability partnership firm. According to the Act, the name must always end with LLP.
2.Date:It also contains the date of the agreement. The act states that the LLP agreement must be registered within 30 days after incorporation.
3.Contribution: Then we come to the partners’ contribution. The LLP agreement has the ratio of the capital invested by the partners, the profit sharing ratio and other provisions regarding the capital contribution if any.
4.Books of Accounts:The LLP agreement has the provisions related to the recording, storage, and maintenance of the books of accountand other important documents
5.Capital:It includes the particulars of the capitalaccounts and current accounts. For example, where the drawings of the partner will be recorded.
6.Disassociation: The agreement contains the terms of disassociation as well. If any partners want to withdraw from the LLP, then the procedure and process are listed out. Also, it contains the rights of the exciting partners, rights of the continuing partners, the division of firm assets etc.
Passport photo of all parties.
PAN card of all parties.
Aadhar card of all parties.
Utility bill of Electricity or Telephone.
Valid Address Proof of all the parties.
Valid Driving Licence of all the parties.
Terms and Conditions between the parties.
Other documents will be intimated through e-mail.
LLP Agreement can be called as Incorporation Document subscribed by at least two partners which shall have to be filed with the Registrar in a prescribed form. Contents of LLP Agreement, as may be prescribed, shall also be required to be filed with Registrar, online.
Minute book should be maintained to record minutes of meetings of partners and managing /executive committee of partners. However, there is no provision for regular meeting of members of LLPs.
Some of the Mandatory LLP Compliances: • Filing LLP Annual Return. Annual Return or Form 11 is a summary of an LLP's Partners and indication of change in the management. • Filing of Statement of Account & Solvency. • Filing of Income Tax Return.
Yes, a LLP agreement is a mandatory document and should be adopted within 30 days of its incorporation and where the partners have not executed it, the first schedule of the LLP Act will be applicable.
Only those LLPs whose annual turnover exceeds Rs. 40 lakhs or whose contribution amount exceeds Rs. 25 lakhs are required to get their accounts audited by a qualified Chartered Accountant.
The Central Government recently notified that the Limited Liability Partnerships (LLP) registered under the 2008 Act must be considered as a partnership firm or Firm under the Goods and Services Tax (GST) regime.