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CHANGE OF CONTRIBUTION OR CHANGE IN PROFIT RATIO
In LLP economic rights and management rights are governed by LLP Agreement. LLP can change these rights by amending LLP Agreement either increase contribution of partner or change profit ratio.
The usual procedure for changes in LLP rights are:
1.Partners meet to decide the changes in partners’ rights either by increasing the contribution or by restructuring the profit sharing ratio or by amending the LLP agreement.
2.Amendment to LLP agreement to incorporate the changes.
3.Filing of required documents with the Registrar
The LLP Act, 2008 or the LLP Rules, 2009 do not contain any specific provisions regarding the procedure for increase in contribution of an LLP. Hence, the procedure for increase in contribution of an LLP shall be governed by the provisions of the LLP agreement.
For indicating an increase in the contribution of an LLP, Form 3 is required to be filed with the Registrar. The time limit for filing of Form 3 with the Registrar is a maximum of 30 days from the date of modification of LLP Agreement, for increase in contribution.