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Admission of a new partner + increase in capital of llp

CS Vinita Kulkarni (CS + IPR + Teaching) (143 Points)

25 November 2013

Dear All,

We want to admit a new partner in LLP whoes profit sharing ratio is fixed and does not depend upon his capital contribution (As he is admitting late).

The Capital clause in LLP agreement says that the Capital of the LLP should be Rs. 1,00,000 (which is already contributed by the exising Designated Partners) which is now going to be incresed with the admission and contribution of the new partner.

Secondly, His profit sharing percentage is fixed and it will not depend upon his Capital Contribution whereas the agreement says that the PSR will depend upon the contribution of the Partners.

My qustion is "Do we need the change the LLP agreement or a MOU will be sufficient between the new partner and the LLP?"

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For increase in contribution by way of introduction of new partner(s), the following

steps are involved:-

1)To check whether the LLP agreement specifies the procedure for modification of the LLP Agreement for introduction of a new partner.

2)If yes, to modify the LLP Agreement, by following the procedure prescribed in the LLP Agreement, for modification of the Agreement for introduction of a new partner.

3)If the LLP Agreement is silent about the procedure to be followed for modification of the Agreement for introduction of a new partner, to pass a resolution by taking consent of all the partners for modification of the Agreement for introduction of a new partner and increase in contribution which is brought in by the new partner. [Clause 7 of First Schedule to the LLP Act, 2008]

4)If the new partner shall also be a designated partner of the LLP, such person shall obtain Designated Partner’s Identification Number (DPIN) from the Central Government by making an application electronically in Form 7 to the Central Government, and payment of a fee of Rs. 100/- [Section 7(6) of the LLP Act, 2008, Regulation 10(1) of the LLP Rules, 2009 and Clause 4(e) of Annexure A to the LLP Rules, 2009]

5)The proposed Designated Partner shall give his prior consent to act as a designated partner and intimate his DPIN, in Form 9, to the LLP. [Section 7(3) of the LLP Act, 2008 and Regulation 7 and 10(8) of the LLP Rules, 2009]

6)Filing of Form 4, by the LLP with the Registrar, within 30 days from the date of appointment of the designated partner / partner, along with the requisite fees, as mentioned above. [Section 7(4), 25(2)(a) of the LLP Act, 2008, Regulation 8, 10(8), 22(2) and 22(3) of the LLP Rules, 2009 and Clause 3 of Annexure A to the LLP Rules, 2009]

7)Filing of Form 3, by the LLP with the Registrar, within 30 days from the date of modification of the Agreement along with the requisite fees, as mentioned above. [Section 23(2) of the LLP Act, 2008, Regulation 21(1) of the LLP Rules, 2009 and Clause 2 of Annexure A to the LLP Rules, 2009]

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