LLP Agreements mean a written agreement between the partners of the Limited Liability Partnership (LLP) or between the LLP and its partners which establish the rights and duties of the partners toward each other as well toward the LLP.

It is a body corporate created by law. As per the LLP law, any two persons can incorporate an LLP by subscribing to the incorporation documents. Once an LLP is formed, the rights and duties of partners are governed by Schedule One of the LLP Act, unless the LLP's partners or the LLP and partners create an LLP agreement. The self-agreed LLP agreement provides the flexibility and contractual freedom to partner so as to fulfill their needs and interest as compared to an incorporated business structure as the majority of its administrative procedures are framed as per prescribed provisions of the Companies Act. So a well defines LLP Agreement is a must for smooth long term functioning of an LLP.

Content of LLP Agreements

A well structured and clearly summarized LLP agreement is very much required for the successful functioning of an LLP. Since As provisions of the company law is not applicable to an LLP, henceforth all corporate structure related issues must be taken into consideration. LegalRaasta.com has developed customized LLP agreements after careful study of the LLP Act and Rules. Our standard LLP agreement contains the below-mentioned provisions:

a). Name of the LLP

The name of the LLP shall end with LLP or Limited Liability Partnership as per the provisions of the LLP Act.

b). Date of the agreement and parties of agreement

After incorporation, the LLP agreement is to be executed within 30 days as per the LLP Act. LLP agreement is between partners of LLP which can either be LLP or individual partner. Hence for our agreement, all the parties to the LLP agreement which can be LLP or individual or both are taken into consideration. Statement of background – This section illustrates incorporation details, the state of registration, activities of LLP, etc.

c). Introductory provisions

It includes the definition of terms used in the LLP agreement, the name of the LLP and provision of future name changes, initial partners, new partners admission, business activities and their scope, power of LLP, duration, management, accounting, auditing, etc.

d). Partners' contribution and method of contribution

It portrays the contribution ratio of partners in terms of capital, interest on contribution, profit sharing ratio as well as the time period after which the capital can be withdrawn by any of the partners. It is important for maintaining the good cordial relation between partners.

e). LLP record keeping and bank arrangement

It includes the recording, maintenance, and storage of LLP books and other related documents.

f). Allocation and distribution

It clarifies the method of profit sharing among partners and distribution including interim distribution or final distribution in the LLP.

g). Capital and current account

It includes particulars that will be credited and debited in each account.

h). Disassociation of partner

It includes the terms and conditions when partners can disassociate or withdraw from the LLP. It illustrates the procedure, the rights of existing partners, and rights on assets after disassociation, as well as notice to existing partner.

i). Redemption and cross purchase of rights

It includes rights of partners as well as how those rights can be redeemed from the LLP. It considers methods of readmission as well as cross purchase.

j). Issue of partnership rights

It provides information related to admission of new partners and its rights thereafter.

k). Sales, transfer of partnership rights

It provides procedural information about the selling, transferring of partnership right to existing partner and a new partner. Partners' meetings and voting – It covers the mode, time period of the meeting, the method of the decision-making process and the voting rights of the partners concerned.

l). Partners' rights to records

Each partner has the right to scrutinize the records and documents of LLP for avoiding misappropriation and embezzlement. Rights of each partner to inspect records of LLP and copies of the same.