Limited Liability Partnership (LLP) is a company where all partners are having Limited liability. Which means that one partner is not liable for the negligence of other partner.
Features of LLP
- Limited liability protection is one of the main advantages in small and medium sized businesses.
- The existence and running of a limited liability partnership is not dependent on other partners. The change of partners in Limited Liability partnership will not affect in the continuity of the Limited Liability Partnership.
- The liability of partners in LLP is limited to the amount of capital invested and there is no minimum limited to the amount of capital to be invested.
- However in a partnership firm minimum there should be two members and maximum there can be 10 members, whereas in LLP minimum two members are required and maximum there can be N numbers of members.
Removal or resignation of Partners
Removal or resignation of Partners can happen for many reasons and those reasons are as follows-
- Death of the partner
- Dissolution of the LLP
- If partner is declared to be of unstable mind
- If partner is declared as insolvent
A partner can be removed from LLP if there is such resignation or removal clause in an agreement, until then no majority of partners can remove the partner by voting.
Removal of partner by majority, for that form is to be filled within 30 days duly signed by designated partners and the same has to be validated by a Chartered Accountant.
If a partner himself wants to resign the he must file or requires a notice to be given to the designated partners about its resignation 30 days in advance.
The procedure of removal of Partners from LLP is simple and the procedure is as follows-
- Preparation of financial statements and division of assets among the partners from the date of resignation.
- Redrafting the LLP agreement
- Tax compliances applicable to retiring Partner