Almost every LLP in India is registered by people who mean to write the agreement properly later. The certificate arrives, the firm starts trading, and the document stays on a list of things to get round to. The trouble is that the gap does not stay empty. Section 23(4) of the LLP Act says that where the agreement is silent on any matter, that matter is decided by the First Schedule to the Act instead. Not later. From the day you registered. So you do have an agreement. It was written by Parliament, for people who did not write their own — and it is worth knowing what it says before you find out the expensive way. All partners share equally in the capital, profits and losses, whatever each of them actually put in. Two founders who contributed ninety lakh and ten lakh, with nothing said about profit sharing, are fifty-fifty. No partner is entitled to remuneration for working in the business. No new partner can be admitted without the consent of all the existing ones. Every matter is decided by a majority in number, one vote each — so the largest contributor and the smallest have identical votes. Disputes go to arbitration, not to the courts you were imagining. And the one that ends firms: no majority of partners can expel a partner unless an express agreement gave them that power. Read that next to the admission rule and you can see how an LLP freezes — one partner who cannot be removed, and who can also block every new admission. One more correction, because the instinct behind it costs real money. An LLP is not a partnership with a shield. Section 3 makes it a body corporate, a separate legal entity with perpetual succession, and says plainly that the Indian Partnership Act, 1932 shall not apply. Where we stop: we print no Registrar fee, stamp duty figure, audit threshold or tax number — those are rule-made or State-made and they move. We will not tell you whether an LLP beats a company for your business, and we do not choose your partners or your profit ratio.
What this guide covers
Begin with the sentence that is said in almost every LLP registration in the country.
Get the registration done first; we will sort out the agreement afterwards. It is said by founders in a hurry, by consultants quoting for a package, and by two friends who do not want to spend their first week together arguing about what happens if one of them leaves.
It is said in good faith and it sounds entirely reasonable. The incorporation has a form and a fee and a certificate at the end of it; the agreement feels like a document about a disagreement nobody expects to have.
And here is the thing that makes it a mistake rather than a delay.
When two people postpone their agreement, they imagine the terms of their relationship are simply undecided until they sit down. Blank. Waiting for them.
They are not blank. The Act has already filled them in. From the day of registration there is a complete set of terms governing those two people, and neither of them has read it. That is the whole subject of this part of the guide.
The provision is short and it does two things in turn.
First it makes the agreement sovereign: the mutual rights and duties of the partners, and of the LLP and its partners, are governed by the LLP agreement. That is the part everybody quotes, and it is genuinely liberating — within very wide limits, partners may arrange their affairs as they like.
Then sub-section (4): in the absence of agreement as to any matter, the mutual rights and duties of the partners and of the LLP and its partners shall be determined by the provisions relating to that matter as are set out in the First Schedule.
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So there is a Schedule at the back of the Act, and almost nobody registering an LLP has ever looked at it.
Fourteen numbered items. They cover profit sharing, management, remuneration, admission of partners, voting, minutes, competing businesses, expulsion and dispute resolution — which is to say, they cover very nearly everything a partnership argument is ever actually about.
Read as a drafting exercise it is a reasonable, even-handed set of defaults for people of roughly equal stake and equal effort. Read as the constitution of a real firm where one partner put in most of the money or does most of the work, it is a disaster — and it is operating silently in thousands of LLPs right now.
Which reduces the whole of this page to a single blunt statement.
You are not deciding whether to have an LLP agreement. You have one. You are deciding only whose words are in it.
Either the terms are the ones your partners negotiated and wrote down, or they are the ones Parliament supplied for people who did not. There is no third state in which the question is open, and the second option takes effect without anybody signing anything.
And it produces a single test, which can be applied to any term of any LLP in about ten seconds.
Not: what does our agreement say. But: on this particular question, did we decide, or did the Schedule decide for us?
Because the Schedule operates matter by matter rather than all or nothing. A twelve-page agreement that happens to say nothing about removing a partner is your document on eleven questions and the Schedule’s document on the twelfth — and the twelfth is the one you will eventually need.
Run the test across the five things that actually matter and most LLPs fail on at least three.
How profits are shared. Whether working partners are paid. How a decision is taken when partners disagree. How a new partner is admitted. How a partner is removed.
Take your own agreement, if you have one, and look for each of those five. Where you find a clause, you decided. Where you find nothing, the Schedule decided, and it decided in a way described in the next part of this guide.
A word about why so many LLP agreements are silent on exactly these points, because it is not carelessness.
The commonly circulated LLP agreement is a short document built to be filed. It recites the parties, the name, the business, the contribution and some general clauses, and it gets through the filing without difficulty — which is all it was designed to do.
Nobody drafting such a document is trying to mislead anybody. It is simply answering the Registrar’s question rather than the partners’ question, and those are different questions. A filing-grade agreement is not the same thing as a governing agreement.
If one silence has to be ranked above the others, it is not the profit clause, which at least gets argued about openly.
It is the absence of a power to remove a partner. Everything else can be renegotiated between people who still have a reason to deal with each other. That one cannot, because by the time it is needed the person it would be used against has every reason to refuse.
A clause of four lines, agreed in an hour when everybody is friendly, is the difference between a firm that can survive a partner going bad and a firm that simply stops. It is also the clause clients most often tell us to leave out because it feels distrustful to raise.
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Now the defaults themselves, one at a time, starting with the one that costs the most money.
Item 2 of the First Schedule: all the partners of a limited liability partnership are entitled to share equally in the capital, profits and losses of the limited liability partnership.
Read what is absent from it. There is no reference to contribution, to effort, to time spent, to who brought the clients or to who signed the lease. Equally means equally, among however many partners there are.
Which produces the single most consequential sentence on this page.
Two partners contribute ninety and ten. Their agreement says nothing about profit sharing. They share equally.
And the partner who contributed ninety has no argument available, because he is not being treated unfairly by anybody — he is being treated exactly as the statute provides for people who did not say otherwise. This is the commonest serious discovery in LLP practice, it always arrives in a profitable year, and it cannot be fixed retrospectively without the other partner’s consent.
The second default, and it is almost as damaging in practice because it is so counter-intuitive.
Item 6: no partner shall be entitled to remuneration for acting in the business or management of the limited liability partnership.
So the partner who is in the office every day, running the firm, has no entitlement to be paid for it unless the agreement creates one. He takes his share of profit, the same share as the partner who appears twice a year, and nothing for the work.
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The third is the mirror image of the second, and the two together explain a particular kind of resentment.
Item 5: every partner may take part in the management of the limited liability partnership.
Every partner may manage, and no partner is paid for managing. Which means the default LLP is a firm in which everybody has authority and nobody has a job — workable where partners genuinely contribute alike, and corrosive where one carries the firm.
The fourth default, and the one that most often produces paralysis rather than unfairness.
Item 8: any matter relating to the limited liability partnership shall be decided by a resolution passed by a majority in number of the partners, and for this purpose each partner shall have one vote; but no change may be made in the nature of the business without the consent of all the partners.
Majority in number. One vote each. Contribution is irrelevant to voting, so a partner holding most of the capital can be outvoted by two holding very little. And with two partners there is no majority at all, which is the position a great many LLPs are in without realising it.
The fifth, and it begins to interlock with the others.
Item 7: no person may be introduced as a partner without the consent of all the existing partners.
Taken alone this is sensible — nobody should have a business partner chosen for them. Taken together with the next one, it is the mechanism by which a single unhappy partner can stop a firm from growing, restructuring or replacing him.
The sixth default is the one this page would put in capital letters if it used them.
Item 13: no majority of the partners can expel any partner unless a power to do so has been conferred by express agreement between the partners.
Not a difficult procedure. Not a high threshold. No power at all, unless the partners expressly created one. A partner who has stopped working, stopped answering and started a competing venture cannot be removed by the others, however many of them there are and however obvious the case.
Combine items 7, 8 and 13 and you have the anatomy of a frozen LLP: he cannot be removed, he cannot be outvoted where there are only two of you, and he can veto anybody new. Every one of those three is a default that an agreement could have displaced in a sentence.
The last one is procedural and it surprises people at the worst moment.
Item 14: all disputes between the partners arising out of the limited liability partnership agreement which cannot be resolved in terms of such agreement shall be referred for arbitration as per the provisions of the Arbitration and Conciliation Act, 1996.
Partners who assumed that a dispute would go to the ordinary courts find instead that the Schedule has sent them to arbitration. That is not necessarily worse, and it is sometimes considerably better, but it is a different process with different costs — and it was chosen by a Schedule rather than by them.
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Set out together below — and if any single screen of this guide is worth a screenshot, it is this one.
| The question | What a drafted agreement usually says | What the First Schedule decides if yours is silent |
|---|---|---|
| Profit sharing | A stated ratio, often tracking contribution | Equally among all partners, whatever each contributed |
| Pay for working | An express remuneration or drawings clause | No partner is entitled to any remuneration |
| Management | Defined roles and authority limits | Every partner may take part in management |
| Decisions | Weighted or unanimous on defined matters | Majority in number, one vote each |
| New partners | By a defined majority or by the founders | Only with the consent of all existing partners |
| Removing a partner | An express power with conditions | No power to expel exists at all |
| Disputes | Whatever the partners chose | Arbitration under the 1996 Act |
Read the third column as a whole and ask one question of it: would your partners sign that document today, knowing what it says? Because in the absence of an agreement, they already have.
Now a correction that has to be made before anything else in this guide can be used properly.
Most people arriving at an LLP arrive from a partnership or from the idea of one. The name invites it. The partners are called partners. The instinct is that this is a partnership firm with better protection bolted on.
Section 3 closes that door expressly, in words worth reading once: the 1932 Partnership Act simply does not apply to an LLP. Not partly, not by analogy. The statute your instincts come from has been switched off for this structure.
Because the instincts carried over are specific and each of them is wrong here.
That the firm is the partners. That a partner can bind the firm in the ordinary way a partner binds a firm. That the firm dissolves when a partner leaves or dies. That the partnership deed is a private document between the partners.
Every one of those is a proposition from a statute that has been disapplied. The LLP position on each is different, and the difference is not a detail — it changes what happens when somebody dies, leaves or signs something they should not have.
The nearest useful comparison is the company side rather than the partnership side, which is why the documents look familiar to anybody who has seen a shareholders agreement or a board resolution. Founders who also want a private arrangement between themselves, sitting alongside the filed document, are describing a co-founder agreement, and where a structure has no statutory defaults behind it at all the governing document carries even more weight — which is the subject of our trust registration guide.
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What it is instead is stated in the same section, and the words are worth having.
Section 3 names it a body corporate and treats it as a person distinct from the partners. The section’s full wording, and what the separateness means when it is compared with an ordinary firm, is set out on our partnership deed page; we have not copied it across.
A separate person: its property is its own, its debts are its own, litigation runs in its name, and it carries on regardless of what happens among the people who formed it. Closer in character to a company than to the partnership deed most founders are picturing.
And the phrase in that section which does the most work in practice.
The LLP has perpetual succession. It does not come to an end because its membership changes, and it is not tied to the lifespan or the continued involvement of any particular partner.
Which is an advantage people pay for and then fail to use. A firm that survives its founders is only an advantage if the agreement says how the founders are replaced — otherwise the entity continues while the arrangement that ran it has quietly stopped working.
Stated in the Act as a consequence, and it is the sentence to remember from section 3.
A change among the partners leaves the LLP’s existence, its rights and its liabilities untouched. Nothing about the entity turns on who happens to hold an interest in it this year.
So a partner leaving does not wind anything up. The firm carries on, its contracts carry on, its liabilities carry on — and the terms on which the leaver goes, and what is paid to him, are matters for the agreement. Where the agreement is silent about exit, the firm continues with a question mark where a departing partner used to be.
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Collecting the practical consequences, because this is where the abstraction earns its place.
Do not assume the firm ends when somebody leaves — it does not. Do not assume your agreement is private — it is filed. Do not assume contribution governs anything — it governs nothing by default. And do not assume partnership case law answers your question — the statute behind it has been disapplied.
None of this makes an LLP a worse structure. It makes it a different one, and most of the disappointment in this area comes from running a body corporate on partnership reflexes.
And a caution about the reason people are often sent here.
An LLP is frequently recommended as the light-touch option: cheaper than a company, fewer filings, less formality. The first and the third have something in them. The second deserves care, because an LLP that exists owes filings every year whether or not it trades.
That subject has its own page — our LLP annual return guide deals with the two annual filings and with the fact that the penalty for missing them falls on the designated partners personally. Anybody attracted to an LLP by the promise of low maintenance should read it before registering rather than afterwards.
Closing this part with a limit on what this guide will do.
Whether an LLP is right for you, rather than a private limited company, a one person company, a partnership or a section 8 company, is a question about where your money will come from, who will own the business in five years and how much annual compliance your people can sustain.
We will not answer it in a sentence on a page about registering one of them. What this page assumes is that the choice has been made in favour of an LLP, and what it insists on is that having made it, you write your own agreement rather than inheriting the Schedule’s.
Turn now to the two words in the name that people are actually buying, and to where they come from.
The protection is not a promise made by the Act in a clause headed limited liability. It follows from what the LLP is: a separate legal person under section 3, which owns its own obligations, together with the rule that being a partner is not by itself a reason for an LLP obligation to become yours.
So the shield is structural rather than granted. It holds because the debt belongs to somebody else — the entity — and not because a provision excuses the partners from a debt that was theirs. Which is why it fails only where the structure itself is set aside.
And the Act itself names two situations in which it does not hold. They are worth knowing precisely rather than vaguely.
One is about going on alone for too long. The other is about fraud. Neither of them is accidental and neither of them is obscure, which is a reassuring thing to be able to say about a structure most people are relying on without having read it.
Everything else people worry about — an unpaid supplier, a dispute with a customer, a bank that is unhappy, a year of losses — does not reach the partners personally through the Act at all. Those reach them only through something they signed, such as a personal guarantee.
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The first route is the one almost nobody has heard of, and it catches a very ordinary situation.
Section 6(1) requires every limited liability partnership to have at least two partners. Section 6(2) provides that where the number of partners is reduced below two and the limited liability partnership carries on business for more than six months while the number is so reduced, the person who is the only partner of the LLP during that time, and who knows that it is carrying on business with him alone, shall be liable personally for the obligations of the LLP incurred during that period.
One partner leaves or dies. The other carries on. Six months pass. From that point the obligations the firm incurs are his personally, and the structure he is relying on has quietly stopped protecting him.
The provision has a condition built into it, and the condition tells you what it is for.
It applies to the person who knows that the LLP is carrying on business with him as the only partner. It is not aimed at somebody who had no idea his co-partner had resigned, or who was dealing with a bereavement and had not turned to the paperwork.
Which makes the practical response straightforward rather than frightening: the six months is a window, not a trap. It exists to be used — to admit a second partner, or to stop trading, or to begin closing the LLP properly. What it is not is a period to be allowed to drift past while the firm keeps invoicing.
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A specific case worth isolating, because it comes up constantly and the answer is more comfortable than people fear.
Two partners registered an LLP, one has since gone, nothing is happening, no invoices, no bank activity. Is the remaining partner personally liable for everything?
The provision attaches to obligations incurred while the business is being carried on with one partner past the six months. An entity that is not trading is not incurring business obligations, so the exposure that worries people usually is not the live problem. The live problem is the annual filings, which continue regardless and carry their own consequences for the designated partners — and those are dealt with on the annual return page rather than here.
The other route is the one everybody expects to exist, and it does.
The Act provides for unlimited liability in the case of fraud — where the LLP or its partners carry on business with intent to defraud creditors or for any fraudulent purpose. The structure is not a device for defeating people who are owed money, and the Act says so rather than leaving it to be argued.
Which is worth saying positively rather than as a warning. A structure that could be used that way would be worth very little to anybody honest, because nobody would extend credit to it. The fraud provision is part of what makes the ordinary protection credible.
A note on why the previous section gave you a principle and not a punishment.
The penal provisions of this Act were reorganised by the amendment of 2021, which decriminalised a number of defaults and rewrote others. Figures for fines and terms of imprisonment under this statute are therefore among the most unreliable numbers circulating about it, because so much of what is published predates that amendment.
So we have stated the rule and withheld the number, deliberately. A reader who needs the consequence quantified needs it from the current text with advice attached, not from a web page that might be describing the position as it stood before 2022.
And the reassuring half, which is larger than the warning half and gets said much less often.
A bad year does not. An unpaid supplier does not. A customer dispute does not. A tax demand against the LLP does not, as a demand against the LLP. A partner behaving badly towards his co-partners does not expose the others.
What does expose a partner personally, outside the two statutory routes, is something he signed himself — most commonly a personal guarantee to a bank or a landlord. That is a contract he entered into, not a failure of the structure, and it is worth reading every such document with that distinction in mind.
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Compress this part and it comes to three sentences for somebody deciding whether to rely on the structure.
The protection is real and it is structural. It ends if you trade alone for more than six months knowing you are alone, and it ends for fraud. Everything else that reaches you personally, you signed.
Which is a clear enough picture to run a business inside — and it is why the agreement, rather than the liability position, is the thing worth spending an afternoon on. The liability rules are fixed by statute and will not change because you drafted well. The terms between the partners are entirely in your hands, and they are what this guide keeps returning to.
The last part of this guide is the mechanics, described honestly and without a list of forms that will be renumbered next year.
The shape of it is settled: the partners obtain digital signatures, a name is applied for, an incorporation document naming the partners and the designated partners is filed with the registered office details and the identity and address material required, the Registrar examines it, and a certificate of incorporation follows.
We describe it that way rather than by form number for a reason that applies to every compliance page on this site: the Act’s structure is stable and the forms, fees and portal steps around it are not. The digital signature certificates come first in practice, because nothing can be filed without them.
One structural requirement deserves its own section, because it is a decision rather than a formality.
Section 7 requires every limited liability partnership to have at least two designated partners who are individuals.
Individuals. A body corporate can be a partner in an LLP, but a designated partner must be a person. And designated partner is not an honorific: it is the role the Act and the rules address when they want somebody answerable, which is why the penalties for later filing defaults attach to those names personally.
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The second limb of the same requirement, and it decides structures for families spread across countries.
At least one of the designated partners shall be a resident in India.
Which has to be settled before anything is filed where the founders are abroad, and it should be settled on who will actually be answerable rather than on who is convenient. A designated partner living abroad who cannot sign promptly is a problem the firm meets every year at filing time, not once at the start.
A short section with one honest message.
The name is applied for and the Registrar decides it, on his own criteria, which include resemblance to existing names and marks and the use of words requiring approval. A name can be refused for reasons the applicant finds unconvincing.
So nobody should promise you a name, and anybody who does is promising somebody else’s decision. Have a second and third choice ready before applying. And note that approval of a name is not protection of a brand — if the name matters commercially, that is trademark registration, a different exercise before a different authority.
Another small thing with a long tail.
The LLP must have a registered office, and it is the address at which communications are served. It is not merely a form field: notices go there, and a notice served at a registered office nobody checks is still a notice served.
So use an address somebody actually opens post at. Where the premises belong to somebody else, the usual supporting documents are a rent agreement and the owner’s no-objection letter. Using a relative’s address because it was available is how firms discover a proceeding months after it started.
And now a question that looks administrative and is in fact the one from the first part of this guide wearing different clothes.
The incorporation requires the contribution of each partner to be stated. People treat it as a number to be filled in, often a round figure chosen because it sounds appropriate.
But contribution and profit sharing are two separate questions, and the Schedule only makes them look like one by defaulting both to equality. State the contribution accurately, and then state the profit ratio deliberately and separately in the agreement. Partners who state one and assume the other have done the thing this whole guide is about.
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The step that gets left undone, and it is the one this page cares about most.
Section 23 requires the limited liability partnership agreement, and any changes made to it, to be filed with the Registrar in such form, manner and accompanied by such fees as may be prescribed.
So the agreement is not a private document kept in a drawer. It is filed, it forms part of the record, and a change to it has to be filed too — which means a supplementary agreement signed and then put away achieves only half of what the partners intended.
The same is true of the other changes an LLP makes as it goes along: partners joining or leaving, a change in who is answerable, an increase in the agreed contribution, and the registers and minutes the firm is expected to keep as it decides things. Where the plan is to raise money or claim a recognition on the strength of the structure, startup recognition is applied for separately and after the LLP exists, not as part of registering it.
And the reason this step is missed is worth naming, because it is psychological rather than technical.
The certificate of incorporation arrives first. It is the thing everybody was waiting for, it goes into a frame or a folder, and the job feels completed. The agreement filing comes afterwards, within a period the rules prescribe, by which time nobody is watching.
We do not print that period here, because it sits in the rules rather than in the Act and is exactly the kind of number that moves. What matters is the habit: treat incorporation as half the job, and put the agreement filing in a diary on the day the certificate arrives.
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Closing this part with what the next year looks like, because founders deserve to know before they register rather than after.
Two annual filings, every year, whether or not the LLP trades. Any change of partners, address or agreement to be filed as it happens. The designated partners’ own annual verification. Books of account, and an audit where the rules require one.
Each of those is its own piece of work and each is listed separately on this site: the annual return filings, designated partner KYC, bookkeeping and accounting, and strike off if the firm is ever to be closed. None of them is included in an incorporation fee, anybody’s, and an LLP registered without a plan for them becomes the problem described on the annual return page.
What follows is our side of it, written out so there is nothing left to ask about on the phone.
Three kinds of enquiry, and they need different conversations. Two or three professionals going into practice together who want the structure right once. A trading or service business that has outgrown a proprietorship and been told an LLP is cheaper to run than a company. And a pair who already registered an LLP a year ago, never signed a real agreement, and have now disagreed about something.
The third is the one we take most care over, because the question is not what they want but what the Schedule has already decided while they were not looking. That conversation is worth having before anybody is quoted for anything.
If that is where you are, send the papers over and book either an online consultation or a session on video, with the file open in front of us. Reading an existing LLP against the First Schedule takes about twenty minutes and it tells you which questions you have actually answered — which is worth knowing before anybody negotiates anything.
Four things, and the order is not negotiable because each one shapes the next.
Who the partners are and who among them will be designated partners. What each is contributing, in money or otherwise, and what each expects to take out. How decisions are to be made when two of them disagree. And what happens when one of them wants to leave.
The last two are the ones clients want to skip, and they are the two the First Schedule answers worst. An LLP that cannot describe its own deadlock and exit arrangements is an LLP whose deadlock and exit arrangements have been written by Parliament.
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The deliverable, stated as a single document because that is what it is.
An LLP agreement written around your answers to those four questions: contribution and profit sharing stated separately and deliberately, remuneration dealt with expressly, management and authority defined, a decision mechanism that works with two partners as well as five, admission and retirement of partners, and what happens on death, incapacity or deadlock.
Every one of those clauses exists to displace a Schedule default rather than to look thorough. That is the test we apply to each line: if this clause were deleted, what would the First Schedule put in its place, and would the partners accept that. Where the answer is yes, the clause is unnecessary and we leave it out.
Four, and we will argue for them even where a client finds them unnecessary at the start.
Profit sharing stated as a ratio in its own clause. An express remuneration provision, even if the answer is that nobody draws anything for the first year. A decision mechanism that does not depend on head-count alone. And an express power to remove a partner, with its conditions.
The last of those is the one clients resist most and need most. Without it, item 13 of the Schedule applies, and a majority has no power to expel anybody at all. Nobody imagines needing that clause while the relationship is good, which is exactly when it can be agreed calmly.
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A boundary worth drawing clearly, because clients do try to hand these decisions over.
The profit ratio is yours. The contribution figures are yours. Who is a designated partner is yours. Whether your cousin should be a partner at all is yours.
We will tell you what each choice means, what it will look like in three years, and which of them is hardest to reverse. We will not choose between people for you. A drafter who takes that decision is pretending to knowledge he cannot have about a relationship he has not been part of.
Stated as two stages rather than one, because they are two stages and the second gets forgotten.
First the incorporation: the name, the incorporation document with the partners and designated partners, the registered office and the identity and address material the Registrar requires, together with the digital signatures needed to sign it.
Then, separately, the LLP agreement itself is filed with the Registrar after incorporation, within the time the rules prescribe. That second filing is where most self-managed incorporations fall down, because the certificate has arrived and the job feels finished. The digital signature certificates are obtained before any of it.
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The refusals on this page are narrow and each of them has been asked for.
We do not promise that a particular name will be approved, because that is the Registrar’s decision on criteria he applies. We do not promise a date for the certificate. We do not advise that an LLP will reduce your tax, which is not our subject and not a safe thing for anybody to say in general terms. And we do not tell you an LLP is better than a company.
That last one is a genuine refusal rather than modesty. Which structure suits a business depends on where its money is coming from, who will own it in five years and how much filing its people can actually sustain — and a drafting office that answers it in one sentence is guessing about a decision the founders will live inside for years.
A word about the professional you probably already have, since this is the point at which people expect to be told to change advisers.
You are not being told that. The annual filings, the accounts, the audit where one is required and every tax question belong with a chartered accountant, and over the life of an LLP that is much the larger part of the work.
Our part is the structure and the documents that create it; his part is everything that happens every year afterwards. An LLP whose agreement is sound and whose books are kept from the first month is in good order, and the two halves of that sentence are done by different people.
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Some LLP matters arrive as paperwork and are already something else.
A partner refusing to sign anything. An allegation that one partner has taken money or business for himself. A deadlock that has stopped the firm trading. A dispute referred to arbitration because the agreement was silent and item 14 of the Schedule sent it there. An application about the LLP’s affairs.
Court work is for your advocate, whose fee is engaged and paid by you directly; we do not quote, collect or share it.
What helps at that point is a clean record rather than a fresh document: the agreement as filed, every supplementary agreement, the minutes, the contribution evidence and the annual filings. Drafting a new agreement in the middle of a live dispute almost never helps and frequently becomes an exhibit.
A habit worth starting on day one, for a reason peculiar to this structure: the entity is built to outlive the arrangement that set it up.
One folder, kept permanently: the incorporation certificate, the LLP agreement as filed with its filing receipt, every supplementary agreement in date order, the contribution record, the minutes, and each year’s filings with their acknowledgements.
The supplementary agreements are the part people lose. An LLP that has changed its partners twice and can produce only the original agreement has a gap exactly where somebody will one day look, and a legal file management arrangement exists for firms that would rather not be the keeper of it.
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Our number first, because a reader comparing three quotations should not have to ring anybody to get it.
We charge ₹6,999 for the incorporation work, and it normally takes 7 – 15 days once the partner details and the agreed commercial terms are with us. That covers the name application, the incorporation filing and the drafting of the LLP agreement around your own answers rather than a template.
It is a charge for work, not a bundle of government money passing through us. The statutory fees, the stamp duty on the agreement and the cost of the digital signatures are paid where they are incurred, and none of them is inside our figure.
Beside the figure rather than discovered afterwards, because a price quoted without its edges gets argued about later.
It excludes the Registrar’s fees and the stamp duty on the agreement. It excludes the digital signature certificates. It excludes every annual filing — those are the LLP annual return work and they recur for as long as the LLP exists. It excludes bookkeeping, accounts and audit. And it excludes representation anywhere.
It also excludes the registrations an LLP may need once it actually starts trading, each of which is its own job: GST registration where turnover or activity requires it, MSME registration, a shop and establishment registration for the premises, PF registration once there are employees, and trademark registration if the name is to be protected as a mark rather than merely approved as a name.
Not one government fee, stamp figure or threshold appears above, and that silence is a policy rather than an oversight.
The Registrar’s fees are prescribed by rules and are slabbed by contribution. Stamp duty on an LLP agreement is fixed by each State and differs widely between them. The audit threshold and every tax number live in their own rules and have moved.
A founder who budgets from a figure found on a page like this and arrives short has been handed a problem by the page. Section numbers are safe to set down because moving one takes an amending Act; a fee slab can be replaced by a notification between one month and the next. Ask the office that will charge it, or ask us for your own State when you write.
Written for the reader who registered one some time ago and has arrived here with a growing suspicion.
Find the agreement and read it, properly, with the First Schedule beside it. For each of the five things that matter — profit sharing, remuneration, decision-making, admission of partners, removal of a partner — establish whether your agreement says something or says nothing.
Wherever it says nothing, the Schedule is already governing that question and has been since the day you registered. That is not a disaster and it is usually fixable: partners who still agree can execute a supplementary agreement and file it. The window for doing that calmly is while everybody still agrees.
Place Order — no advance, pay after work
One exercise, taking an afternoon, worth more than most of what firms spend on compliance.
Sit the partners down with the agreement and ask four questions out loud. If one of us wants out next year, what happens. If we disagree two against two, what happens. If one of us stops working but keeps his share, what happens. If one of us dies, what happens.
Where the agreement answers the question, you are fine. Where the room goes quiet, you have found a clause worth adding. It is a better use of an afternoon than any filing, and it costs nothing but the willingness to raise four awkward subjects while they are still hypothetical.
One thing to take away, and it is not about forms, fees or the Registrar.
You are not choosing whether to have an LLP agreement. You already have one. You are choosing whether it is the one you wrote, or the one the First Schedule wrote for people who did not get round to it.
Which is why the hour spent arguing about exit and deadlock before signing is the most valuable hour in the whole exercise. The incorporation certificate is issued either way. What differs is whose answers are inside it.
If the answer turns out to be an ordinary firm rather than an LLP, there is one step that cannot wait. A partnership firm that is not entered in the Register of Firms cannot take anybody to court on its own contracts, and registering after the suit is filed does not repair it. Set out on partnership firm registration.
Where the purpose is not commercial at all, the comparison is a different one. A members association registered under an Act of 1860 gets several of the practical advantages and none of the separate personality. See society registration.
Tell us who the partners are, what each is putting in, how you want decisions taken when two of you disagree, and what should happen when one of you wants to leave. We will apply for the name, file the incorporation and draft the LLP agreement around those answers, displacing the First Schedule defaults you do not want. If you already have an LLP and are not sure what its agreement actually decides, send it and we will read it against the Schedule first.
The sources behind every provision above. Every provision below was checked against the Act rather than recalled, which matters here because this statute was substantially amended in 2021 and a good deal of what is repeated about it online describes the position before that. All of it is the Limited Liability Partnership Act, 2008. Section 3 settles what the thing is. It is a body corporate, separate in law from its partners, with perpetual succession, and a change among the partners leaves its existence, rights and liabilities alone. The limb practitioners most often have to point out is the last one: the Indian Partnership Act, 1932 does not apply to an LLP at all. The section’s full text, and the comparison with an ordinary firm, sit on our partnership deed page rather than being reproduced here. Section 6(1) requires every LLP to have at least two partners; section 6(2) provides that where the number is reduced below two and the LLP carries on business for more than six months while the number is so reduced, the person who is the only partner during that time, and who knows that he alone is carrying on the business, shall be liable personally for the obligations of the LLP incurred during that period. Section 7 requires at least two designated partners who are individuals, at least one of them resident in India.
On the agreement, which is the subject of this page, section 23 governs: the mutual rights and duties of the partners, and those of the LLP and its partners, are governed by the LLP agreement; the agreement and any changes to it are to be filed with the Registrar in the prescribed manner; an agreement made before incorporation may be ratified afterwards; and section 23(4) provides that in the absence of agreement as to any matter, the mutual rights and duties of the partners and of the LLP and its partners shall be determined by the provisions relating to that matter as are set out in the First Schedule. We have read that Schedule rather than summarising somebody’s summary of it, and the fourteen items it contains are set out in the body of this guide: equal sharing in capital, profits and losses; indemnity by the LLP for payments made and liabilities incurred in the ordinary and proper conduct of its business or in preserving its business or property; indemnity by a partner for losses caused by his fraud; the right of every partner to take part in management; no entitlement to remuneration; no introduction of a person as a partner without the consent of all existing partners; decision of any matter by a majority in number with one vote each, but a change in the nature of the business requiring the consent of all; minuting of decisions within thirty days and keeping the minutes at the registered office; the duty to render true accounts and full information; accounting for the profits of a competing business carried on without consent; accounting for any benefit derived without consent from LLP transactions, property, name or business connection; the rule that no majority of partners can expel a partner unless a power to do so has been conferred by express agreement between the partners; and reference of unresolved disputes to arbitration under the Arbitration and Conciliation Act, 1996.
On liability we have taken only the two propositions the Act states clearly: that the shield exists because the LLP is a separate person under section 3 and because a partner is not personally liable merely by reason of being a partner, and that the Act itself provides for unlimited liability in the case of fraud. We have deliberately not printed the punishment attached to the fraud provision, because the 2021 Amendment Act reorganised the penal provisions of this Act and that is precisely the kind of figure most likely to be quoted from a pre-amendment source.
The deliberate omissions. You will not find a Registrar fee, a stamp duty figure, an audit threshold or a tax number anywhere above. The fees are prescribed by rules and slabbed by contribution, stamp duty on an LLP agreement is fixed State by State, and the thresholds live in rules that have changed. We have also not advised whether an LLP is preferable to a company or a partnership for any reader, that depending on matters a drafting office cannot know; not promised that any name will be approved, which is the Registrar’s decision; not predicted a date for any certificate; and not offered any view on the tax treatment of an LLP, which belongs with a chartered accountant.
Related work on this site. The two annual filings an LLP owes once it exists, and the personal liability its designated partners carry for missing them, are dealt with on our LLP annual return page and are not repeated here. For the alternatives to this structure, see private limited company registration, one person company registration, section 8 company registration and partnership deed. For the arrangement founders often need alongside the LLP agreement rather than instead of it, see co-founder agreement. And for a structure whose governing document carries even more weight because no central Act supplies defaults at all, see trust registration.
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