• Withdrawal from LLP partnership

I went into an LLP Partnership 1 year back. I was responsible for RnD and another guy was for financing and marketing. To date no bank account of the LLP has been opened, no transactions have occurred and thus no profits have generated. 
I have been legally bounded by the agreement to not carry out any business outside the LLP. If any intellectual property is created during the tenure with LLP then it will be the property of the LLP. 

I have already submitted by withdrawal notice 2 months back and still, the partner is willingly not responding to it. I have requested him many times that it's a matter of my survival and kindly terminate my partnership. He knows clearly that I don't have any money and if I want to make some then I will have to create something and approach someone. With this, he threatens me with the binding clauses. It's like he's bullying me. 

What law can help me with this? If we would have been generating profits then it wouldn't be an issue but I am not earning a single rupee from this partnership and am legally bounded too. Is there any ethics law that can help? Also if he doesn't respond to the withdrawal notice then what does that mean I have to stay in this agreement forcefully? Because I am not even 24 yet and I feel trapped. Kindly help
Asked 5 years ago in Business Law

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15 Answers

  1. You have to take acknowledgement from partner that he has got resignation letter from you.
  2. Convening a meeting for same and discussing about other important aspects like liability, capital, debts and so on of resigning partner and finalizing the same.
  3. Drafting and execution of supplementary LLP Agreement.
  4. Filing of LLP Form 3 and LLP Form 4 within thirty (30) days from the date of event.
  5. Form LLP 3 is form change the LLP Agreement and Form LLP 4 is for Change in partners/ designated partner

You may be require below documents after submitting the Resignation in the writing:

  1. Supplementary LLP Agreement
  2. Resolution for taking note of resignation of Partner
  3. Resignation Letter
  4. Acknowledge of acceptance of resignation letter by firm

Once, the forms LLP 3 & 4 are filled the registrar shall take the note of same and would approve the Forms if everything filled is fine.

Ganesh Kadam
Advocate, Pune
13008 Answers
267 Consultations

No you can terminate the same and dissolve the said llp by procedure followed as per companies Act. 

The detailed procedure as per MCA website is as follows

Step 1 – Pass a Resolution –
Once you decide the Close an LLP in India then you have to pass a resolution by the at least 3/4th of the Partners.

Step 2 – Form 1 Filings –
After the passing of a resolution, you have to file form 1 with the resolution copy within the 30 days.

Step 3 – Declaration of the Debt
In the third step LLP have to make a declaration that LLP has no debt liability or if have any then it will have sufficient amount so they can be paid within the 1 year from the commencement of the winding up. Its has prepared by the majority of the partners (minimum 2).

Step 4 – Form 4 & Value of the Assets
In the fourth step, the above forms an affidavit has been submitted to the registrar within 15 days of the resolution along with the forms and a statement saying that such winding up is not being done to defraud anyone, form no .4 and a report of the value of the assets of the LLP. You can read here about the Annual Compliance for the LLP which also included these Forms.

Step 5 – Obtain consent from the Creditors
In the fifth step if you have the creditors in your LLP then you have to obtain the consent from the creditors and it’s given by at least ⅔ of the unpaid creditors.

Step 6 – Filings and Appointment of Liquidator
File the consent from the creditors with the appropriate timelines. You have to provide advertisement also in the local newspaper within 14 days from the receiving creditor’s consent.
In case the LLP has liability increasing and assets the appointment of a liquidator is required and a liquidator’s statement in form 6 needs to be filed.

Step 7:- Finalization of the Accounts of LLP.
In the sixth step, you have to prepare the finalization of the accounts and submit along with the form 9. So once form 9 has been filed, all the formalities have been completed.

 

Prashant Nayak
Advocate, Mumbai
34514 Answers
249 Consultations

section 24 of the Limited Liability Partnership Act, 2008 

 

 

Sub-section (1) says thata person may cease to be a partner of a limited liability partnership in accordance with an agreement with the other partners or, in the absence of agreement with the other partners as to cessation of being a partner, by giving a notice in writing of not less than thirty days to the other partners of his intention to resign as partner.

 

 

2) Sub-section (2) (a) of Section 25 says that a LLP shall file a notice with the Registrar when a person becomes or ceases to be a partner within thirty days from the date he becomes or ceases to be a partner. In pursuance with this provision,where a person becomes or ceases to be a partner or where there is any change in the name or address of a partner, the limited liability partnership shall file with the Registrar, a notice in Form 4.

 

 

Ajay Sethi
Advocate, Mumbai
99775 Answers
8145 Consultations

1. How a partner can cease to be a partner in a LLP is laid down in Section 24 of the Limited Liability Partnership Act, 2008, which is reproduced below:

" (1) A person may cease to be a partner of a limited liability partnership in accordance with an agreement with the other partners or, in the absence of agreement with the other partners as to cessation of being a partner, by giving a notice in writing of not less than thirty days to the other partners of his intention to resign as partner."

2. If the partner decides to vacate his position as a partner in accordance with the LLP agreement and the consent of other partners, the procedure mentioned or decided by the partners can be adopted. In the absence of an agreement, a partner can resign by intimating the other partners with a notice. Such a notice must be issued 30 days prior to the date of resignation in accordance with Section 24 of the Act.

3. Resignation from a LLP will not automatically discharge the liabilities of the Partner with respect to the LLP. The partner can be held responsible for his/her actions and liabilities prior to resignation – even after the date of resignation.

4. On resignation the partner is entitled to his share of the LLP. The amount of monies to be paid to the resigning partner can be decided mutually by the partners. In case of death or insolvency of the partner he/she should receive the following:

a) An amount that is equivalent to the capital contribution of the former partner actually made.

b) His ‘right to share’ in the accumulated profits after deduction of accumulated losses, which is determined based on the date of resignation of the former partner.

 

Ashish Davessar
Advocate, Jaipur
30840 Answers
981 Consultations

Dear Sir,

You are suggested not to worry and serve a legal notice to the partner regarding resignation from the LLP and also write to ministry of corporate affairs regarding the misdeeds of the partner and request for your exit from the LLP. It is submitted that since no much formalities has been done, you may easily exit from the LLP. 

Ganesh Singh
Advocate, New Delhi
7169 Answers
16 Consultations

Hello,

  1. You must write to him about the resignation and demand appropriate action, clearly mentioning that you are being deliberately prevented by your partner from exercising your rights as a partner in resigning in the given context.
  2. If he does not respond deliberately, you can send him a legal notice demanding a decision on your resignation. It is important to keep in mind that the clauses regarding resignation of partner/withdrawal are adhered to while exercising your rights.
  3. If you have any clause in the Partnership Deed that makes you liable financially, you must take care of that aspect while exercising your right to withdraw.  

S J Mathew
Advocate, Mumbai
3619 Answers
175 Consultations

1.  Serve a Notice to the ROC (Registrar) regarding your resignation annexing the Partnership withdrawal notice and state the mentioned facts and seek his intervention via a due hearing.

2. IF there are only Two partners in the LLP, THEN on your resignation the LLP stands dissolved and the ROC must compulsorily dissolve the LLP.

3. Further irrespective of business or no business, it is compulsory to file NIL returns and other compliance's, failing which the partners become liable for legal prosecution.

 

Hemant Agarwal
Advocate, Mumbai
5612 Answers
25 Consultations

Simply file a declaration suit declaring that you are no longer a member of the said LLP.

This would be done after the lockdown is over. 

Till than you can send a legal notice to him

Rahul Jatain
Advocate, Rohtak
5365 Answers
4 Consultations

You have served notice on your partner two months back, in your case, 30 days notice is sufficient.  

You have complied with the provisions of the enactment.

You need to complete certain procedural formalities like filing forms with the Registrar i.e., Form No.4 etc., which has to be done within 30 days from date of serving notice on your partner.

Thus, take help of local lawyer, to complete the procedural formalities of filing relevant forms with the Registrar about your resignation, it is sufficient.

You need not worry.  You have complied with your contractual obligations.

S Srinivasa Prasad
Advocate, Hyderabad
2876 Answers
9 Consultations

You cannot be forced to stay in LLp. In the absence of an agreement, a partner can resign by intimating the other partners with a notice. No need to wait for its acceptance and since you have not paid for any intellectual property generated during the tenure. It cannot be held property of LLp.

 

Yogendra Singh Rajawat
Advocate, Jaipur
23079 Answers
31 Consultations

Any partner can resign from the Limited Liability partnership by giving notice to firm and partners.

The remaining partner will take suitable action on same keeping in mind the minimum number of partner would be left after resignation of one partner, capital contribution and so on.

Generally, resignation of partner lead to change in Limited Liability Partnership Agreement, as the going partner withdraws his/her capital from Limited Liability Partnership.

 

PROCEDURE:

  • Taking note of resignation letter received by the remaining partner.
  • Convening a meeting for same and discussing about other important aspects like liability, capital, debts and so on of resigning partner and finalising the same.
  • Drafting and execution of supplementary Limited Liability Partnership Agreement.
  • Filing of LLP Form 3 and LLP Form 4 within thirty (30) days from the date of event. Form LLP 3 is form change the LLP Agreement and Form LLP 4 is for Change in partners/ designated partner

 

The resigning partner shall be entitled to:-

  1. An amount equal to the capital contribution of the former partner actually made to the Limited Liability Partnership and
  2. His/her right to share in the accumulated profits of the Limited Liability Partnership.

 

Hence you may proceed as per law in case the other partners are not responding to your resignation letter properly. 

T Kalaiselvan
Advocate, Vellore
89977 Answers
2492 Consultations

1. Send him a legal notice for termination of LLp partnership from firm through your advocate.

2. If he refuse to accept your resignation then you can file suit for dissolution of partnership in court. 

3. if he doesn't respond to your withdrawal notice even then you are not bound to stay in agreement after the notice period is over.

Mohit Kapoor
Advocate, Rohtak
10686 Answers
7 Consultations

If the LLP agreement doesn't have any restrictions, then a Partner in a LLP can resign from a LLP by providing notice of resignation in writing not less than 30 days to the other Partners in the LLP

Mohammed Mujeeb
Advocate, Hyderabad
19325 Answers
32 Consultations

You must fight in civil court, you will succeed. 

Kishan Dutt Kalaskar
Advocate, Bangalore
6230 Answers
499 Consultations

You have repeatedly tried to contact him and have made clear your intentions.

Now that withdrawal notice is deemed to bw accepted.

He has opened a LLC but it is not functioning. He cannot keep you without paying you anything.

Leave the company. His is just empty threats. He cannot do anything.

Rahul Mishra
Advocate, Lucknow
14114 Answers
65 Consultations

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