Limited Liability Partnership is a partnership in which the liability of the partners is limited. This means the personal property of the LLP for any loss or debt will not be affected. In case of LLP there might be a lot of changes that needs to be done. The firm of growing might want to add a new partner to work with them for which some process needs to be done. For doing any change, LLP has to make changes in the agreement of partnership deed. The change can’t be only related to the addition of a partner it can be related to anything and for that the LLP has to make changes in the agreement. Sometimes changing the things in the company don’t work and the firm gets closed. Closing a firm is an easy task if you know all the steps which are involved.
Add Designated Partner
In an LLP it’s required to have at least 2 partners in a firm. If the firm wants to add more partners in the firm it can be easily done. All the partners currently in the LLP must approve the admission of a new partner then only he will be admitted in the firm. The procedure for adding a new designated partner is:
- The new partner should get his own Digital Signature Certificate and Digital Identification Number.
- The meeting will be conducted where the decision of adding a new partner will be discussed.
- If the partner is accepted, then the name of the person will be added in Partnership Deed.
- After the meeting the person must fill form-4 and submit it within 30 days.
- Then Form-3 must be submitted.
- When all the procedure will be done the name of the person will be added in the Partnership Deed and can be seen on MCA’s official website.
Eligibility criteria partner:
- The age of the new partner must be 18 or above.
- Anyone is eligible for being a partner whether a individual or a corporate body.
- The person’s mental condition should be good.
- There should not be any criminal charges or fraud cases registered on the person’s name.
- The person should not have been declared bankrupt in last 5 years.
If any partner has changed his/her address, it’s necessary for them to inform this in the firm within 15 days. Form-4 must be filed and submitted to the Registrar of the company.
Duties of added Partner:
There are some duties that need to be followed by the new added partner. These duties are the same which are necessary for the existing Partners to follow, the duties are:
1) It’s necessary for the partner to submit the declaration form i.e. form-8 which contains information regarding statement of account and solvency.
2) The partners’ responsibility is to file the tax return to the registrar within 60 days after the closure of financial year.
3) In case of any need partner may need to submit their return of documents.
4) During the time of inspection partner must he co-operate with the inspector.
Changes in LLP agreement
If someone wants to change the agreement of LLP it’s not a big deal and can be done easily. You should just have to follow these steps:
All the partners in the firm should gather in meeting and pass a resolution regarding the changes.
The firm must fill and submit form-3 within the 30 days of passing the resolution to the Registrar. Form-3 contains the following details which need to be filled:
- Date on which the changes are being done in LLP agreement.
- Reason why the changes are being done in the LLP agreement.
- Change in a partner.
- Business activities.
- Change in investment and profit-sharing ratio.
- Any other changes due to these reasons:
- All the duties and rights of partners.
- Any types of any restriction on any or on all the partners.
- Changes due to any one of these situations.
- The partners.
- Administration and Management of LLP.
- Any disputes related to partner or LLP
- Duration of LLP.
- Type of business that will take place after the change.
- Details regarding the investment and profit-sharing percentage of all the partners after the change.
- How the industrial activities will be divided after the change.
After filling the form 3, form-4 is also required to be filled and then submitted to the registrar.
Documents required while filling form-3 and form-4:
- Original LLP agreement.
- Modified LLP agreement.
- Supplementary deed.
- Resolution passed by all the members in the meeting.
- Consents of all the partners in LLP.
- Any proof of change in the name.
- Evidence for changing the agreement.
Closing the LLP
While opening an LLP firm there is no guarantee for success of it. The time might come when all the partners decide to close the firm. To close it you have to follow some simple steps. Closing of LLP has 2 criteria:
- Declaring the firm as defunct: The partners have to write an application to registrar stating that the company is not functioning or simply it’s defunct. E-Form 24 must be filled to MCA and the documents which needs to provided are:
- Cease of operation which should be more than of 1 year.
- Closing the bank account.
- Get permission from MCA, RoC and others.
- The application must be authorized by any of the designated partners.
- An auditor must prepare a report of all the assets and liabilities.
- Acknowledgement of the recent tax return filed.
- Providing the statement of indemnity bond.
- Winding up the LLP: Winding up the LLP is divided into 2 parts that are:
- Winding up: Liquidation of companyof an LLP is regulated by the LLP Act 2008, Sections 63, 64 and 65. It’s further divided into 4 parts that are:
- Voluntary Winding up: It means when the partners decide among themselves to close the LLP. Form 1 should be filled for closing voluntarily within 30 days of passing the resolution.
- Winding up with creditors: Form 2 needs to be filled by the partners stating that there is no debt or sum unpaid to any creditors.
- Publication of Winding up: when the resolution has been passed and consent of creditors have been taken then company needs to publish the consent in the newspaper of the state.
- Appointing liquidator: After this whole process company has to hire a liquidator at some fees. He will liquidate the LLP only when consent is given by at least 2/3rd of the creditors.
- Dissolution: When all the liabilities will be dismissed and all the assets will be liquidated, liquidator will pass a report which needs to be submitted to MCA with form-9.
When all these steps mentioned are completed, the LLP will be wound up.
The process for payroll means keeping the financial records of all the employees. It includes their salary, all the tax deduction, all types of incentives and other schemes like Provident Fund and Employee State Insurance. There are so many records of the employee that needs to be stored and that’s why companies mostly get an E-payroll system like a software developed for themselves.
Benefits of Payroll maintenance and software:
- If a company has a payroll software then it can easily file the tax automatically on behalf of the employees.
- This software saves money and time as it doesn’t take much time and records edits all the data instantly.
- The employee’s whole salary is registered in it along with all the maintenance.
- The employee’s morale is always high since they receive their salary and incentives on time.
- The owner has better control over the finances.
- It helps in make accurate as well as fast invoices.
- It should have the necessary tools for payments to different vendor and contractor.
In a company it’s very much important to have a good payroll software. If the company has a good payroll software it makes work easy for the HR department of the company. It almost do’s all the work and it only requires one-time payment at the time of its purchase.
Documents required for E-Payroll system:
- It requires the registration certificate of the company.
- The company also needs to provide Electronic Challan cum Return document.
- Tax certificate.
- Taxpayer Identification number
FAQs On Changes in LLP
There are total 4 types of partner, which are:
- Equal right partners.
- Differential rights partner.
- Husband and Wife
- Different rights and powers partner.
Yes, a foreigner can also be admitted as a partner
The new partner requires to fill form 3 and 4.
Both form costs 100 rupees each.
It’s necessary for any kind of change.
In an LLP there is no maximum limit of partners that can be added.
It’s not necessary the remaining partners can carry on the firm with little change in LLP agreement.
It totally depends upon your Registrar; it can even take 1 month or 6 months.
It depends on liquidator and size of the firm.