A partner can be removed at any time in a limited liability partnership (LLP), and he can give himself a resignation whenever he wants to resign. This article talks about Procedure of Removal and Resignation of Partner in a Limited Liability Partnership.
What is a Limited Liability Partnership?
Limited Liability Partnership is like a partnership firm, in which the liability of partners is limited. It is a type of corporate entity, and also it is a separate legal entity which can sue and can be sued by others.
Resignation by Partner
If a partner wants to resign from the Limited Liability Partnership, then he can leave anytime, but he has to follow the procedure of Resignation. If a process is written on their agreement, then they can adopt that procedure of Resignation. In the case where a method of Resignation is not mentioned in their Agreement then a partner can resign by informing the other partners with a notice. He has to issue a warning to the other partners, and such a notice must be published before 30 days of the resignation. If a partner resigns it does not mean that he will automatically discharge the liabilities of the partner from Limited Liability Partnership, he will be liable for his actions and obligations before resignation.
During the resignation of a partner, he will get his shares of profit. In case of death of a partner, he will receive an amount that is equivalent to his shares in the partnership.
Removal of A partner
A Partner can be removed by other partners from Limited Liability Partnership (LLP) anytime. If the majority of partners decides, then they can remove a partner. A partner can remove from LLP for various reasons, some of the reasons mentioned here
- If A partner become Unsound Mind
- If a partner becomes Insolvent
- If a partner carry illegal business activity in their LLP
- If a partner cannot take his duties
- Other reasons
Rights and Liabilities of a Partner on Removal or Resignation
If any Partner who ceases to be a Partner of the LLP due to above-given reason or by death then he can avail below-given rights and also liabilities of partner mention below
- A partner has right on his profit shares for activity done by him prior Resignation/Removal
- A partner will be liable for his action which is done by his before Resignation/Removal
- A partner can transfer his rights to the other partners
- A partner can transfer his assets to the other partners
Filing of Form 4
Filing of form 4 must be for an LLP because it is mandatory filing for those who want to change of partner or their respective designation, an application shall be filed with MCA to approve the changes of a partner or the designation. This form will be presented with the help of CA or CS. You have to file your application with type 4. In this form, you have mentioned below given information
- Notice of Removal of Partner or Resignation of Partner
- Consent of Partners
- A resolution passed by all partners
- Original documents of an LLP
- Evidence of Removal/Resignation
All above given information is required during filing of the form, and also you have to attach supporting documents of this information. Also, you have to mention other required details in form 4.
This form should be filed within 30 days of the effective date of change or execution of an agreement. In the case of failure of submitting this form, you may have to face legal consequences. This form will be checked by a registrar, and he will give his approval for changes if he satisfies with the form.
You can file this form online through official website of Ministry of Corporate Affairs.
Conclusion for Removal and Resignation of Partner in LLP
As you can see that a partner can be removed anytime by the majority of the partner for which they have to follow procedure mention in their LLP agreement, in the absence of the procedure, then they have to follow MCA procedure. You have to file form 4 because it is a mandatory form for those who want to change their LLP agreement or wish to remove partner name. A process is straightforward you can file this online through MCA portal. And if you are a partner and want to resign from LLP, then you have to give notice to the other partner before 30 days of the resignation.