Llp Agreement Format Icai

LLP Agreement Format ICAI: Everything You Need to Know

When forming a limited liability partnership (LLP) in India, it is essential to have a written agreement in place. This agreement outlines the rights, responsibilities, and obligations of each partner in the LLP. The Institute of Chartered Accountants of India (ICAI) provides a format for LLP agreements.

In this article, we will discuss the LLP agreement format prescribed by the ICAI and its key components.

What is an LLP Agreement?

An LLP agreement is a legal document that outlines the relationship between partners in an LLP. This agreement is crucial as it specifies the rights and duties of partners, the profit-sharing ratio, the process for the admission and retirement of partners, and more.

LLP Agreement Format Prescribed by ICAI

The ICAI has provided a format for LLP agreements, which can be downloaded from its official website. This format contains various clauses that must be included in an LLP agreement. The clauses are as follows:

1. The Name of the LLP

The agreement must state the name of the LLP. The name must end with the letters `LLP` and must be registered with the Registrar of Companies (ROC).

2. Nature of Business

The agreement must specify the nature of business that the LLP will undertake. It must also mention the location of the registered office of the LLP.

3. Capital Contribution

The agreement must state the capital contribution made by each partner. It must also mention the process for making any additional contributions.

4. Profit Sharing Ratio

The agreement must specify the profit-sharing ratio between partners. The ratio may be equal or unequal, depending on the agreement between partners.

5. Management of the LLP

The agreement must outline the management structure of the LLP. It must specify the roles and responsibilities of each partner, including the designated partner responsible for filing tax returns and maintaining compliance with regulations.

6. Admission and Retirement of Partners

The agreement must outline the process for admitting new partners and retiring existing partners. It must specify the conditions under which partners can retire, the procedure for transferring their share, and any restrictions on transferability.

7. Conflict Resolution

The agreement must specify the process for resolving disputes between partners. It must outline the steps to be taken to resolve conflicts and the forum for dispute resolution, such as arbitration.

8. Dissolution of the LLP

The agreement must outline the process for dissolving the LLP, including the steps to be taken in case of insolvency.

Conclusion

An LLP agreement is an essential document that outlines the rights and obligations of partners in an LLP. The agreement must comply with the format prescribed by the ICAI and contain clauses that specify the nature of business, capital contribution, profit-sharing ratio, management of the LLP, admission, and retirement of partners, conflict resolution, and dissolution of the LLP.

Having a well-drafted LLP agreement can help avoid disputes and ensure the smooth functioning of the LLP. Therefore, it is essential to seek professional assistance from a lawyer or a chartered accountant while drafting an LLP agreement.