Every Partnership Firm interested in converting to a more company-based model, such as a Limited Liability Partnership, must learn the partnership guidelines post Firm to LLP Conversion. This article will detail you regarding such regulations.
Also Read: Conversion of Partnership Firm into LLP
Partner’s Eligibility after Partnership Firm to LLP Conversion
Upon the conversion of a Partnership Firm to a Limited Liability Partnership, the persons who subscribed their names to the conversion document must be its partners. Also, any other person may become a partner of the LLP by and in accordance with the LLP agreement.
Relationship among Partners after Firm to LLP Conversion
LLP Agreement
As per the LLP Act of 2008, the Limited Liability Partnership Agreement will govern the mutual rights as well as the duties of the partners of a Limited Liability Partnership and the mutual rights and duties of a limited liability partnership and its partners between its partners or between the LLP and member partners.
Filing LLP Agreement post-conversion
The applicant, post-conversion, must file the limited liability partnership agreement and any changes, if any, with the Registrar in the specified form as well as manner. The updation request must be accompanied by the requisite fee as well.
An agreement in writing made before the conversion of a Limited Liability Partnership between the persons who subscribe their names to the conversion document may impose obligations on the limited liability partnership, provided all the partners ratify such agreement after the conversion of the Limited Liability Partnership.
Also Read: convert sole proprietorship into private limited company
What if there is no LLP Agreement to determine the partnership relations?
Finally, in the absence of agreement, the LLP guidelines determine the mutual rights and duties of the partners, the mutual rights and duties of the limited liability partnership, and the partners relating to matters as set in the Act.
Cessation of the Partnership Interest in a Converted LLP
A person can cease to be a partner of a Limited Liability Partnership. This is also in accordance with an agreement with the other partners. In the absence of the LLP agreement with the other partners, the cessation of being a partner begins. By giving notice in writing of not less than thirty days to the other partners of his resignation intention, the Partner can relieve from his duties at the Firm.
Conditions for Cessation
An individual can cease to be a partner in a Limited Liability Partnership from any of the following conditions:
- Partner’s death or dissolution of the Limited Liability Partnership
- If any competent Court declares the Partner to be of unsound mind
- If any competent Court sentences the Partner to be an insolvent
Former Partner Clause
Suppose a person ceases to be a partner in an LLP. In that case, the former Partner is regarded as still being a partner of the LLP unless of the following. This is in relation to the person dealing with the limited liability partnership:
- Person has noticed that the former Partner has ceased to be a partner of the LLP
- Or the former Partner has ceased to be a limited liability partnership’s member partner has been delivered to the Registrar
Also Read: How to test a submitted Model Approval for certification?
Partner’s Obligation after Cessation
The cessation of a partner from the LLP does not by itself discharge the Partner from any obligation towards the business, to the other partners, or to any other person he incurred while being a partner.
These are some of the points one shouid remember regarding Partnership Guidelines after the Firm to LLP Conversion
