DEED OF PARTNERSHIP WITH LIMITED LIABILITY
THIS DEED OF INCORPORATION OF LIMITED LIABILITY PARTNERSHIP made at ...................................., on the .............. day of ...................................., Two Thousand and .................... BETWEEN (1) ............................ of ...................., Indian Inhabitant, having his permanent usual residential address at ........................................................................................................................ (which expression shall unless it be repugnant to the context or meaning thereof, include his heirs, executors and administrators) hereinafter called “the Party of the FIRST PART”; (2) ............................ of ........................................, Indian Inhabitant, having his permanent usual residential address at ........................................................................................................................ (which expression shall unless it be repugnant to the context or meaning thereof, include his heirs, executors and administrators) hereinafter called “the Party of the SECOND PART” (3) ...................... of ........................................, Indian Inhabitant, having his permanent usual residential address at ........................................................................................................................ (which expression shall unless it be repugnant to the context or meaning thereof, include his heirs, executors and administrators) hereinafter called “the Party of the THIRD PART”;
WHEREAS:
(a) The Parties of the first Part, second Part and third Part hereto (hereinafter collectively referred to as parties or Partners) are desirous of carrying on business of ............................................ in Limited Liability Partnership with a view to profit in the name of ..............................Pursuant to application of ............................, the said name of the proposed Limited Liability Partnership is reserved by the Registrar appointed under The Limited Liability Partnership Act, 2008 (hereinafter referred to as “The Registrar”) for a period of three months from ..................................;
(b) The Parties are desirous of recording the terms and conditions of the Limited Liability Partnership as also for determining the mutual and inters rights, obligations and duties of the Partners thereto as appearing hereinafter.
IT IS HEREBY AGREED, RECORDED AND CONFIRMED BY AND BETWEEN THE PARTIES HERETO AS UNDER:-
1. NAME
(i) The present Limited Liability Partnership shall be known and registered as “................................................
(ii) The LLP may change its name with the written consent of all the partners by filing a notice of such change in the requisite form along with the payment of the prescribed fees with the Registrar.
(iii) The LLP shall ensure that all the relevant documents like official correspondence, invoices, publications etc. shall bear the name, address of its registered office, registration number of LLP and a statement that it is registered with limited liability.
2. APPLICABLE LAW:-
(i) The Present LLP shall be governed by The Limited Liability Partnership Act, 2008 and Rules made there under (hereinafter referred to as “the said Act”).
(ii) The provisions of The Indian Partnership Act, 1932 (9 of 32) shall not apply to the present LLP, save and except as provided under the said Act.
3. BUSINESS:
(i) The business of the LLP shall be of .............................................................................. and/or such other business as the majority of the Partners may from time to time decide and as may be permissible under the provisions of the said Act.
(ii) No change can be made in the nature of business of the LLP without the written consent of the majority of the partners.
(iii) No other business can be carried on by the LLP unless majority of the Partners agree to the same in writing.
4. REGISTERED OFFICE
(i) The Registered Office of the LLP shall be at ...................................................................
(ii) The LLP shall receive all communications and notices addressed to the LLP at the above registered office as also at any other address specifically declared by the LLP.
(iii) All documents including notices and communications shall be deemed to have been properly and effectively delivered to the LLP at the above registered office when sent by post Under Certificate of Posting or by Registered Post or by any other prescribed mode.
(iv) The LLP may change the place of its Registered Office and file the notice of such change with the Registrar in the prescribed form and manner and subject to the prescribed conditions and such change shall take effect only upon such filing.
5. PARTNERS
The particulars of the persons who are to be the Partners of the LLP on its incorporation are as under:-
Sr. No.
Full Name
Usual Residential Address
Date of Birth
Signature in confirmation of acceptance
1.
2.
3.
The above Partners have hereby subscribed their names to the present incorporation document.
6. DESIGNATED PARTNERS
(i) The particulars of the partners who are to be the “Designated Partners” of the LLP on its incorporation are as under:-
Sr. No.
Full Name
Usual Residential Address
Resident of
Date of Birth
Signature in confirmation of acceptance
1.
2.
(ii) The above Partners have already given their prior written consent and once again hereby give their express Written Consent as endorsed above to be and to act as the “Designated Partners” of the LLP.
(iii) Any Partner may become a Designated Partner with the consent of the majority of the Partners and on his giving written consent thereto.
(iv) The Partners holding more than 80% share in the profits in the LLP may remove a Designated Partner from the said post/office.
(v) The LLP may appoint a Designated Partner within thirty (30) days of a vacancy arising for any reason. It is agreed and clarified that if in case of vacancy no new designated partner is appointed or if at any time there is only one designated partner, each partner shall be deemed to be a designated partner.
(vi) The LLP shall file the particulars of every individual who has consented to act as a Designated Partner with the Registrar in the prescribed form and the manner within a period of thirty (30) days of such appointment and shall from time to time intimate changes in the Designated Partners in the prescribed Form to the Registrar.
7. MAJORITY OF PARTNERS:
The majority of the Partners shall mean the Partners holding 50% or more shares in the profit of the LLP.
8. SUBSCRIPTION, INCORPORATION & REGISTRATION
(i) The Partners have associated themselves for carrying on a lawful business.
(ii) The present Deed shall be treated as a Document for incorporating the LLP.
(iii) The Partners have subscribed their respective names to the present Deed being a Document for incorporating the LLP.
(iv) Upon execution of the present Deed of Incorporation of the LLP, the Partners shall at the earliest but not later than seven (7) days, file the present Deed along with a statement in the prescribed form made by either an Advocate or a Company Secretary or a Chartered Accountant or a Cost Accountant and by any one of the Partner who has subscribed his name to this incorporation document to the effect that all the requirements of the said Act and the rules made there under in respect of incorporation and matters precedent and incidental thereto are complied with.
(v) Upon the Registrar registering the Incorporation Document and issuing a certificate that the Limited Liability Partnership is incorporated by the name specified therein, the present LLP shall stand incorporated.
(vi) Upon incorporation
(a) all the Partners shall ratify the present Deed of Incorporation,
(b) The LLP shall become a legal separate entity that of its partners; and
(c) The terms, conditions and covenants of the present Deed shall bind the LLP as also its present and future Partners and all the Parties shall observe and abide by all the provisions recorded herein.
9. COMMENCEMENT OF LLP
The LLP shall commence from the date of issuance of Certificate of Incorporation by the Registrar.
10. FINANCIAL YEAR, BOOKS OF ACCOUNTS, OTHER RECORDS, AUDIT AND ANNUAL RETURN:-
(i) The Financial Year of the LLP shall commence from..................................................................................................
(ii) The LLP shall maintain such proper books of accounts as may be prescribed relating to its affairs for each year of its existence on cash basis or accrual basis and according to double entry system of accounting and shall maintain the same at its registered office for such period as may be prescribed by the relevant law.
(iii) The LLP shall, within a period of six months from the end of each financial year, prepare a Statement of Account and Solvency for the said Financial Year as at the last day of the said Financial Year in the prescribed form and such statement shall be signed by the designated partners of the LLP.
(iv) The LLP shall file, within the prescribed time, the Statement of Account and Solvency prepared, with the Registrar every year in the prescribed form accompanied by the prescribed fees.
(v) The Accounts of the LLP shall be audited in accordance with the prescribed Rules.
(vi) The LLP shall file its annual return duly authenticated with the Registrar within sixty (60) days of closure of its Financial Year in the prescribed form and accompanied by the prescribed fee.
11. DUTIES AND LIABILITIES OF DESIGNATED PARTNERS
Unless expressly provided otherwise in the said Act, every Designated Partner shall:-
(i) devote the whole of their time and attention to the LLP’s business.
(ii) be responsible for the doing of all acts, deeds, matters, and things as are required to be done by the LLP in respect of compliance of the provisions of the said Act including filing of any document, return, statement and the like report and documents pursuant to the provisions of the said Act.
(iii) be liable for and to all penalties imposed on the LLP for any contravention of the provisions of the said Act.
(iv) ensure that the minutes of all the meetings of Designated Partners as also of Partners and the decisions taken thereat are properly prepared within fifteen (15) days of the meeting and the same are signed by the Partners who attend the said meeting. The said minutes shall be kept and maintained at the registered office of the LLP.
(v) obtain Designated Partners Identification Number (DPIN) from the Central Government.
(vi) file the LLP Agreement, its ratification and all time to time changes (including change in the name or address of a partner) made thereto with the Registrar in the prescribed form along with the prescribed fee.
12. SHARE IN THE LLP
(i) The Capital, Profits and Losses of the LLP shall be shared amongst the Partners as under:-
NAMES
PERCENTAGE (%)
(a)
(b)
(c)
TOTAL ………
100%
(ii) The Liabilities of the LLP shall be met out of the property of the LLP. The Partners shall not be personally liable, directly or indirectly for any obligation of the LLP or for the liabilities of the LLP solely by reason of being a partner of the LLP.
13. CONTRIBUTIONS:-
(i) The Capital of the LLP shall be Rs......... (Rupees: .......................................... only) or as may be mutually decided by the Partners.
(ii) The Partners shall from time to time contribute the capital to the LLP in their respective profit and loss sharing ratio and as may be required by the LLP.
(iii) The monetary value of contribution of each of the Partners shall be accounted for and disclosed in the accounts of the LLP.
14. RIGHTS, DUTIES AND RELATIONSHIP OF PARTNERS:
(i) The rights and duties of LLP and its Partners shall be governed by the present Deed or any other subsequent agreement entered into between the LLP and its partners modifying the same.
(ii) In the absence of any agreement between the Partners as to any matter, the mutual rights and duties of the Partners and the mutual rights, liabilities, obligations and duties of the LLP and its partners shall be determined by the provisions as set out in the said Act.
(iii) Each Partner shall render true accounts and full information of all deeds, matters, things and acts affecting the LLP or any Partner or his legal representatives.
(iv) None of the partners shall without the consent of the LLP:-
(a) engage or be concerned or interested either directly or indirectly in any other similar business or occupation of the LLP;
(b) engage, make any contract with or dismiss any employee of the LLP;
(c) forgo the whole or any part of any debt or sum due to the LLP;
(d) except in the ordinary course of trade, dispose of by loan, pledge, sale or otherwise any part of the property of the LLP;
(e) become bailor, guarantor or surety for any person or do or knowingly suffer anything whereby the partnership property may be endangered; or
(f) draw, accept or endorse any bill of exchange or promissory note on account of the partnership.
(v) Each partner shall:
(a) punctually pay and discharge his separate individual debts and engagements and indemnify the other Partners and the LLP assets against the same and all proceedings, cost, claims or demands in respect thereof;
(b) be just and faithful to the LLP and other Partners in all transactions relating to the LLP business and at all times give to the others a true account of all such dealings.
(vi) If a Partner, without the consent of the LLP, carries on any business of the same nature as and competing with the LLP, he must account for and pay over to the LLP all profits made by him in that business.
(vii) Every Partner shall account to the LLP for any direct or indirect benefit derived by him without the consent of the LLP from any transaction concerning the LLP, or from any use by him of the property, name or any business connection of the LLP.
(viii) Every Partner shall inform the LLP in writing of any change in his/her/its name or address at the earliest but not later than a period of fifteen (15) days of such change.
15. MANAGEMENT OF THE LLP:
(i) The LLP shall be exclusively managed by the Designated Partners.
(ii) Any other Partner, with the written consent of majority of the Partners in profit/shares or by a resolution of majority of the Partners in profit/share can take part in the management of the LLP.
(iii) The Bankers of the LLP shall be such bank or banks as the LLP may from time to time decide and such bank account/s shall be operated by the Designated Partners with or without other Partners as the LLP may from time to time decide.
(iv) Any matter or issue relating to the LLP shall be decided by a resolution passed by a majority of the partners.
16. REMUNERATION
No Partner shall be entitled to receive any remuneration for acting in the business or management of the LLP.
OR
The remuneration shall be paid to the Designated Partners as may be decided by the LLP, which shall be in accordance with the provisions of Income Tax Act, 1961.
17. INCOME TAX LIABILITY
The liability for payment of Income Tax of the income/profit earned by the LLP shall be governed according to Income Tax Act, 1961 and time to time subsequent amendments thereof.
18. INTRODUCTION OF A NEW PARTNER
No person can be introduced as a Partner of the LLP without the written consent of all the Partners.
19. ASSIGNMENT AND TRANSFER OF PARTNERSHIP RIGHTS
(i) Any Partner may transfer or assign his right to a share in the profits and losses of the LLP and to receive the distribution in accordance with the LLP agreement either wholly or in part.
(ii) Such transfer by itself shall not directly or indirectly entitle the transferee or assignee to participate in the management or conduct of the activities of the LLP or seek or have access to any information about the LLP or its transactions, activities etc
(iii) Such transferee/assignee shall not directly or indirectly have any locus or privity qua the LLP or any of its Partners. The LLP or any of its Partners shall have no direct and/or indirect concern with such transferee or assignee
(iv) Such transferee/assignee can not be and shall not be admitted as a Partner without the specific written consent of all the Partners; and
(v) Such transfer or assignment shall not by itself cause the disassociation of the said Partner or cause a dissolution and winding up of the LLP and whose association shall continue as if there was no transfer/assignment of his share.
20. EXPULSION OF A PARTNER
No majority of the Partners can expel any other Partner.
21. CESSATION OF PARTNERSHIP INTEREST
(i) A Partner shall cease to be a Partner of the LLP:-
(a) on his death or dissolution of the LLP; or
(b) if he is declared to be of unsound mind by a competent Court; or
(c) if he has applied to be adjudicated as an insolvent or declared as an insolvent; or
(d) in case of a “body corporate” within the meaning of the said Act, such body corporate is dissolved or goes into liquidation or the liquidator of assets of such body corporate has been appointed or the said body corporate applies for dissolution or voluntary winding up of itself; or
(e) any Partner gives notice in writing to the other Partners of LLP of his intention to resign as Partner.
(ii) Where any Partner ceases to be a Partner of the LLP (for short “Former Partner”) as provided above, the former Partner or a person entitled to his share in consequences of the death or insolvency or dissolution or winding up of the former Partner, shall be entitled to receive an amount equivalent to actual capital contribution by such Partner in the LLP as also to his share in the accumulated profits of the LLP but after the deduction of accumulated losses of the LLP determined as at the date such Partner has ceased to be a Partner.
(iii) The representative of a former Partner entitled to his share shall not have any direct and/or indirect right to interfere in the management of the LLP.
(iv) The cessation of a Partner from the LLP shall not by itself discharge the Partner who has ceased to be such Partner from any obligation to the LLP or to the other Partners or to any other person to whom he has incurred any obligation while being a partner of the LLP.
22. INDEMNITY:
(i) The LLP shall indemnify each and every Partner including Designated Partners in respect of payments made and personal liabilities incurred by such a Partner in the ordinary and proper conduct of the business of the LLP and/or in or about anything necessarily done for the preservation of the business or property of the LLP.
(ii) Every Partner including the Designated Partners shall indemnify the LLP for any loss caused to it or such Partners by the willful default, gross negligence or fraud of such a Partner in the conduct of the business of the LLP.
23. COMMON SEAL:
The LLP shall have a common seal and the Designated Partners shall provide for the Safe Custody of the same.
OR
The LLP has opted for not having any common seal.
24. WINDING UP AND DISSOLUTION
The LLP can be wound up and dissolved under the provisions of the said Act and rules framed there under.
25. GOVERNING LAW, ARBITRATION AND JURISDICTION OF THE COURTS:
(i) This Agreement as also its incorporation, execution, validity, interpretation and implementation shall be governed by and construed in accordance with the Laws of India and the provisions of the said Act.
(ii) Any disputes or differences arising out of the present agreement or from the interpretation of the terms and conditions, or non-compliance or non-payment, the same shall be resolved mutually and amicably by the parties (including LLP). If it cannot be resolved mutually and amicably, the same shall be referred to the Arbitration under the provisions of the Arbitration and Conciliation Act 1996 or any other relevant arbitral law for the time being in force. The Arbitration shall be held in English language and in the City of .........................
(iii) The Courts at ............................ alone shall have jurisdiction to entertain and try any dispute between the parties (including LLP).
We, the above named parties, whose names and addresses are hereunder subscribed, are desirous of being formed into a Limited Liability Partnership in pursuance of the present Deed of Incorporation and on the terms and conditions provided hereinabove:-
Name, Address description and occupations of the subscribers
Designation in the LLP (Partner/Designated Partner
Percentage of Share in the LLP taken by each subscriber
Signature of the Subscribers
Signature of witnesses for subscribers with addresses and occupation
Place:
Date:
NOTE:
(i) This Incorporation Document is prepared on the basis of the provisions of the said Act.
(ii) The format of the document is not given under the said Act or rules framed there under. However, the same is adopted to include the provisions/requirement of the Act.
(iii) The Act has still to come in operation. The Registrar may prescribe the Style/Format of the Incorporation Deed. It is also possible that Deed of Incorporation and the Partnership Agreement may be required to be prepared separately.
(iv) The present precedent is in the form of guidelines only.
(v) The tax (including Income Tax) structure of the LLP is not likely to be decided before the budget. The effective implementation of LLP shall be post budget of the Government of India. Therefore, presently general provision regarding taxation liability of the LLP is made in the precedent.
