A Limited Liability Partnership (LLP) Agreement—also known as the LLP Deed—is a legally binding document that outlines the rights, duties, profit‑sharing, management structure, and governance mechanism among partners. It is required under Sec. 23(2) of the LLP Act 2008 and must be filed with the Registrar of Companies (ROC) via Form 3 within 30 days of incorporation
An effective LLP Agreement provides clarity, minimizes conflicts, and reduces risks by framing transparent systems for decision-making, contribution, exits, audits, dispute resolution, and compliance.
LLP name and its registered address.
Formation date and effective commencement.
Partner identities and addresses.
Stamp duty particulars (paid on stamp paper or e-stamp).
Clearly define the LLP’s objects—activities allowed under its deed and permissible changes.
State the amount each partner contributes (cash, property, services), and specify timelines for payment.
Define percentages or ratios for sharing profits, losses, and provisions for adjustments.
Identify designated partners, their management roles, limitations, and appointment/removal conditions.
Outline voting rights—per partner, per capital, or hybrid—and list actions requiring special consent (e.g., bank accounts, new partners, loans).
Create clear terms for:
Adding a partner (approval, subscription, capital).
Voluntary retirement, death, disability, or expulsion.
Valuation and buy‑out processes for outgoing partners.
Include indemnity provisions: LLP indemnifies partners against corporate liabilities; partners also indemnify LLP in case of misconduct .
Specify if partners can transfer interest—partially/permanently, conditions, or prohibition.
Dispute mechanisms—mediation, arbitration, senior partner decision, or external third party.
Set conditions for amending the deed (e.g., unanimous approval, stamping, ROC filing).
Accounting period (e.g., FY April–March).
Audit requirement – mandatory if turnover > ₹40 lakh or capital > ₹25 lakh .
Annual filings: Form 11 (Annual Return); Form 8 (Statement of Accounts & Solvency)
Detail rules for voluntary or compulsory dissolution, partner responsibilities, asset distribution, and ROC filings.
Define default scenarios (non-payment, criminal conviction, non-obedience) and corresponding actions (suspension, expulsion).
Include provisions for termination and exit handling after liquidation.
Entire agreement clause.
Severability and waiver.
Notices serving mechanism.
Governing law (India) and jurisdiction.
Counterparts and execution.
Change of registered office, auditor appointment, etc. .
Research Law & Partners’ Intent
Review LLP Act, rules, and relevant case laws. Discuss with partners to capture vision, governance style, investor expectations, withdrawal intentions, and decision control
Create Initial Draft
Using a template or lawyer’s draft, populate LLP name, partner details, capital, objectives, roles, clauses, and schedules.
Legal Review & Negotiation
Have legal counsel review and negotiate terms for fairness and clarity.
Stamp Duty & Execution
Purchase ideal-value stamp paper per state laws or e-stamp, print the document, and have all partners sign it in ink on every page, along with two witnesses .
File with ROC
Within 30 days of incorporation, file Form 3 in MCA portal with the deed attached .
Distribute Copies
Provide stamped, signed copies to each partner and maintain a master copy at the LLP’s registered office.
Future Amendments
For any modifications, execute supplementary deed and file a fresh Form 3 within prescribed time.
Timing: Drafted pre-incorporation (but executed after), submitted within 30 days .
Mandatory Nature: Not enforceable unless legally stamped and filed, but highly advisable—even when the Act doesn’t mandate it by default .
State-specific Stamp Duty: Varies (typically 0.1%–1%) based on contribution value and location.
Preamble
Definitions & Interpretations
Name & Office
Business Scope
Term & Continuation
Capital Contribution
Profit & Loss
Management Structure
Voting & Meetings
Partner Admission/Retirement/Exit
Transfer of Interest
Indemnity & Responsibility
Accounts, Audit & Compliance
Dispute Resolution
Amendment Procedure
Dissolution & Winding Up
Events of Default & Consequence
Miscellaneous
Execution & Witness
Schedules (Partner Details, Capital, DIN/DPIN, etc.)
Boosts Credibility: Demonstrates professionalism to partners, banks, investors.
Prevents Conflicts: Clear terms for roles aligned with intended value propositions.
Legal Compliance: Helps avoid fines, litigation, or forced dissolution.
Flexibility & Tax Efficiency: LLP combines partnership-like flexibility with limited liability & avoids dividend taxes .
Investor Readiness: Commercial clarity boosts attractiveness to VCs, though conversion to Pvt Ltd may still be needed.
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An LLP Agreement is the backbone of a successful LLP. It establishes governance, allocates risks and rewards, enables seamless exits, and ensures statutory compliance. By covering the 16 key clauses and following a structured drafting & filing process, you create a rubber-strong foundation for sustainable and dispute‑free operations.
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