When it comes to forming a Limited Liability Partnership (LLP), there are certain legal formalities that need to be taken care of. One such requirement is drafting an LLP agreement. This document outlines the terms and conditions of the partnership, including the rights and obligations of the partners, profit sharing ratio, and dissolution process.
The Institute of Chartered Accountants of India (ICAI) offers a comprehensive guide on LLP formation and compliance. According to the guide, LLP agreement must be drafted in accordance with the LLP Act, 2008 and the LLP Rules, 2009. The agreement should be executed on a non-judicial stamp paper and registered with the Registrar of Companies (ROC) within 30 days of incorporation.
The LLP agreement typically includes the following clauses:
1. Name and registered office: The agreement must mention the name of the LLP along with its registered office address.
2. Nature and objects: This clause outlines the business activities that the LLP is engaged in and the objectives it seeks to achieve.
3. Duration: The agreement must specify the duration of the LLP, which can be perpetual or for a fixed period of time.
4. Capital contribution: This clause outlines the amount of capital contributed by each partner and the profit sharing ratio.
5. Management: The agreement must specify the roles and responsibilities of each partner in the management of the LLP.
6. Meetings: The frequency and procedure of conducting meetings must be mentioned in the agreement.
7. Dissolution: This clause outlines the process of winding up the LLP, including the distribution of assets and liabilities.
It is important to note that the LLP agreement can be altered or amended by mutual consent of the partners. However, any such changes must be registered with the ROC.
In conclusion, the LLP agreement is a crucial document that formalizes the terms and conditions of the partnership. It is essential to comply with the regulatory requirements outlined by the ICAI and other legal bodies to ensure a smooth and hassle-free LLP formation and compliance process.