Removal or Resignation of Partner from LLP
A Partner in a Limited Liability Partnership (LLP) can be removed or he/she would like to resign for various reasons. The removal or resignation of a Partner must be properly recorded and filed with the Ministry of Corporate Affairs to effect the Partner removal or resignation.
A Partner in a LLP may cease to be a partner of a LLP in accordance with the LLP agreement between the Partners. If the LLP agreement doesn’t have any restrictions, then a Partner in a LLP can resign from a LLP by providing notice of resignation in writing not less than 30 days to the other Partners in the LLP.
A Partner in a LLP cannot be removed by a majority of the other Partner unless the LLP agreement expressly provides such powers. If the LLP Agreement provides such power, a Partner can be removed and Form 4 must be filed to effect the removal.
In the following circumstances, a LLP Partner would automatically cease to be a Partner in the LLP by operation of law-
- On death of the Partner
- On dissolution of the LLP
- If the Partner is declared to be of unsound mind
- If the Partner is adjusted as an insolvent or declared as insolvent.
The resigning partner shall be entitled to:-
- An amount equal to the capital contribution of the former partner actually made to the Limited Liability Partnership and
- His/her right to share in the accumulated profits of the Limited Liability Partnership
PROCEDURE:
- Taking note of resignation letter received by the remaining partner.
- Convening a meeting for same and discussing about other important aspects like liability, capital, debts and so on of resigning partner and finalising the same.
- Drafting and execution of supplementary Limited Liability Partnership Agreement.
- Filing of Form 3 and Form 4 within thirty (30) days from the date of resignation/removal. Form 3 is filed for change in the LLP Agreement and Form LLP 4 is filed for Change in partners/ designated partner.
DOCUMENTS REQUIRED:
- Supplementary Limited Liability Partnership Agreement
- Resolution for taking note of resignation of Partner
- Resignation Letter
- Proof of acceptance of resignation letter by firm
Once, the forms LLP 3 & 4 are filled the registrar shall take the note of same and would approve the Forms if everything found in order.
