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Resignation of a Partner


Partners can simply be admitted or removed from a Limited Liability Partnership (LLP) without affecting the LLP's structure or substance. The removal or resignation of a Partner must be properly documented, and the necessary filings with the Ministry of Corporate Affairs must be submitted to effect the Partner's removal or resignation.
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Overview

In line with the LLP agreement between the Partners, a Partner in an LLP may cease to be a Partner in an LLP. If the LLP agreement has no limitations, a Partner in an LLP can withdraw from the LLP by giving notice of resignation in writing to the other Partners in the LLP for at least 30 days.

Unless other Partners have received written notice of the partner's intention to resign or a notice has been made to the Registrar, a Partner in an LLP shall be regarded a Partner.

Unless the LLP agreement specifically allows it, a Partner in an LLP cannot be dismissed by a majority of the other Partners. A Partner can be withdrawn from an LLP if the LLP Agreement allows for it, and Form 4 must be filed to do so.

A LLP Partner would automatically cease to be a Partner in the LLP under the following circumstances:
  • When the Partner passes away
  • When the LLP is dissolved,
  • If the Partner is found to be mentally ill,
  • If the Partner is declared bankrupt or is adjusted as an insolvent.



Benefits of Resignation of a Partner

Retirement

If any partner wants to go for retirement they can apply for resignation from the LLP.

New opportunities

If any old partners resign then only it is possible to welcome the younger generations in the LLP for a new thought process.

Conflicts/Disputes

Having different opinions are common in businesses, in that case if a partner wants to resign, this process helps with the same.

Checklist/Requirements

  1. Supplementary Limited Liability Partnership Agreement
  2. Resolution for taking note of resignation of Partner
  3. Resignation Letter
  4. Proof of acceptance of resignation letter by LLP

Process of Resignation of a Partner

Step 1: Taking note of resignation letter received by the remaining partner.

Step 2: Convening a meeting for the purpose of addressing and finalizing other essential issues of the departing partner's obligation, capital, debts, and so on.

Step 3: Additional Limited Liability Partnership Agreement drafting and execution.

Step 4: Within thirty (30) days after the occurrence, LLP Form 3 and LLP Form 4 must be filed.

Step 5: Changes to the LLP Agreement (Form LLP 3) and Changes in Partners/Designated Partners (Form LLP 4)

Resignation of a partner

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Frequently Asked Questions


Whether the LLP Agreement is to be updated to remove Partner in the LLP?
Yes, by executing the supplemental deed, the LLP agreement can be amended with conditions of addition or removal. The deed will contain all of the specifics, including the change in capital, conditions, and profit-sharing ratio.
Within 30 days after the effective date of the modification or the date of execution, the Supplementary Deed must be submitted (whichever falls earlier). If you wait too long to file, you will be charged an extra fee of Rs 100 each day till you file.
Within six months of the LLP's effective date, it must appoint a new designated partner. If the LLP already has another partner, however, that partner's position can be modified to Designated Partner.
The stamp duty is calculated based on the additional capital in the LLP and is paid at the rate set by the state. The Supplementary Agreement shall be completed by payment of as applicable, in accordance with the stamp duty act of the state.
In order to withdraw from the LLP, the Partner must inform the remaining partners of his or her decision to leave. For the specified reason, the departing Partner must provide at least 30 days' notice or such other time as may be agreed among the partners in the deed.