Drafting Limited Liability Partnership Agreement (Pursuant to the provisions of Limited Liability Partnership Act, 2008)

[2021] 131 taxmann.com 197 (Article)

1. Limited Liability Partnership Act, 2008 – A brief

The Limited Liability Partnership Act, 2008 was enacted by the parliament of our country to introduce and legally sanction the concept of limited liability partnership in our country. By enactment of this act, the limited liability partnership in our country is recognized as a body corporate and obtains separate legal entity from the partners and it has a perpetual succession.

Any change in the partners of a limited liability partnership shall not get affect its existence, its rights, or liabilities of the limited liability partnership.

Further section 4 of the Limited Liability Partnership Act 2008 specifically spells out that the provisions of the India Partnership Act 1932 shall not apply to a limited liability partnership.

2. Salient features of the Limited Liability Partnership Act 2008

The Limited Liability Partnership Act 2008 comes into effect from the 1st day of April 2008. The Limited Liability Partnership Act 2008 contains in all eighty-one (81) sections and four (4) schedules. In addition to the above, the Ministry of Corporate Affairs has also framed Limited Liability Partnership Rules 2009 which prescribes many forms which are required to be filed with the MCA for a successful LLP agreement.

3. Limited Liability Partnership Agreement (LLP Agreement)

Limited liability partnership agreement is a contract of agreement reduced in writing between the limited liability partnership and its partners. This is known as the LLP agreement. The LLP agreement specified the rights and the duties of the designated partners toward each other and as well as toward the limited liability partnership.

The Limited Liability Partnership Act 2008 makes it mandatory to execute the LLP agreement and also get the agreement filed with the MCA within a period of thirty days of incorporation of limited liability partnership.

The limited liability partnership agreement is nothing but a charter of the LLP spelling out the procedural aspects for the smooth running of the limited liability partnership. In view of the above, it is very important to draft a well-structured and detailed LLP agreement setting out all the groundwork so that the agreement could act as a backbone to the smooth functioning of the limited liability partnership providing guidance and directions.

Click Here To Read The Full Article