A well structured and drafted LLP agreement is extremely necessary for the successful functioning of an LLP. An LLP is not a company and provisions of the company law is not applicable to an LLP, therefore it must address all corporate structure-related issues in the LLP agreement.
RPGS ASSOCIATES has developed customized LLP agreements after careful study of the LLP Act and Rules.
Our standard LLP Agreement Provisions:
- Name of the LLP
The name of the LLP must end with Limited Liability Partnership or LLP as per the provisions of the LLP Act.
- Date of the agreement and parties of the agreement
Since the LLP agreement is executed after incorporation and as per incorporation, the date of the LLP agreement is to be executed within 30 days of incorporation. As per the LLP Act, an LLP agreement is an agreement between partners of LLP or the LLP and it’s partners; hence, the parties of the LLP agreement can be all partners or LLP and all partners. The parties are the LLP and its partners, for our agreement.
- Statement of background
This section describes the details of incorporation, state of registration, the activities of LLP, etc.
- Introductory provisions
Name of the LLP, definition of the terms used in the LLP agreement and the future name changes, initial partners, new partners admission, business activities, power of LLP, duration, management, accounting, auditing, etc.
- Partners’ contribution and method of contribution
How each partner contributes, whether they can take back the contributed amount, interest on contribution, etc.
- LLP record keeping and bank arrangement
Method of keeping LLP books and records
- Allocation and distribution
It shows the profit of the LLP allocated among the partners and how distribution including interim distribution or final distribution in the LLP.
- Capital and current account
What is to be credited and debited in each account.
- Disassociation of partner
It shows the disassociation of a partner from the LLP, notice to existing partners, what are his rights, rights over assets of the LLP including termination of a partner from LLP
- Redemption and cross-purchase of rights
How partners’ rights can be redeemed from the LLP, method of readmission, cross-purchase, etc.
- Issue of partnership rights
A fresh issue of rights in the LLP including the admission of a new partner.
- Sales, transfer of partnership rights
Procedures for the sale of partner rights, transfer of rights, etc. to new and existing partners.
- Partners’ meetings and voting
How the meeting needs to be conducted, the decision-making process and voting rights are covered in this clause
- Partners’ rights to records
Each partner’s right to inspect records of LLP and copies of the same.
- Management and fiduciary duty
Who will manage the LLP, how day-to-day management function including the fiduciary duty of partners in the LLP
- Arbitration and general provisions
Method of appointing arbitrator, proceedings, etc.