Change of Object of LLP

Changing the Business Activity of an LLP

An LLP (Limited Liability Partnership) is formed with a clear set of business activities defined in the LLP Agreement. Any business activities outside this scope are not permitted. If the partners decide to change or expand their business activities, they must follow a formal procedure to amend the LLP Agreement and get approval from the Ministry of Corporate Affairs (MCA).

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When Changes to Business Activities Are Needed

Complete Business Change: Partners may decide to shift the entire focus of the business.
New Product Line: Introducing a new product line, as long as it is related to the existing business. If the new product is unrelated, a new LLP must be formed.
Business Takeover: When an LLP acquires another business with different activities.
Legal Compliance: Changes required due to new laws or regulations.
Prohibited Activities: If certain business activities become illegal or restricted.

Steps to Change the Main Object of an LLP

1. Conduct a Board Meeting (Partners' Meeting)

Convene a meeting with all partners to discuss and approve the change in business activity.
If the LLP Agreement does not specify a meeting procedure, all partners must agree to the change.
Pass a resolution during the meeting to amend the business activity.

2. Draft a Supplementary Agreement

Prepare a supplementary agreement that modifies the object clause in the original LLP Agreement.
All partners must sign the supplementary agreement, which should be executed on stamp paper and notarized.
This agreement will only alter the object clause; the rest of the LLP Agreement remains unchanged.

3. File the Agreement with the MCA

File the supplementary agreement with the MCA using Form 3 within 30 days of execution.
The form must be signed and certified by a professional (e.g., Chartered Accountant, Company Secretary, or lawyer).
Attachments required:
- Certified copy of the board resolution.
- Original LLP Agreement.
- Supplementary Agreement.
- Any other documents requested by the MCA.

4. Obtain MCA Approval

The MCA will review the submitted documents. If the changes comply with legal requirements, it will approve the new object clause.
Approval from the MCA is essential for the LLP to begin its new business activities. The MCA may reject the submission if the proposed activities are illegal or non-compliant with regulations.

Conclusion

An LLP can change its business activities, but the process must follow the prescribed legal steps. The MCA approval is crucial, and any changes made without it are invalid. Partners should ensure they amend their LLP Agreement properly and file the necessary documents with the MCA to legally update their business activities.