What is an LLP Agreement?

An LLP Agreement is the written contract between the partners of an LLP that sets out each partner's contribution, profit share, rights, duties, and how partners join or leave. It must be filed with the Registrar in Form 3 within 30 days of incorporation. It is the LLP's equivalent of a company's MoA, AoA and shareholders' agreement rolled into one.

Section 23 of the LLP Act, 2008 says the mutual rights and duties of the partners, and of the LLP and its partners, are governed by the LLP Agreement. Because an LLP has no shares, almost everything about who owns what and who decides what lives in this one document.

LLP Agreement drafting: what should it cover?

• Each partner's capital contribution.
• Profit and loss sharing ratio.
• Rights and duties of partners and designated partners.
• Remuneration or interest to partners, if any.
• Admission of new partners and exit of existing partners.
• Decision-making: what needs unanimous consent.
• Dispute resolution.

Other points worth writing down: who operates the bank account, who can sign contracts, what happens if a partner dies or becomes incapable, and whether partners may run a competing business. Remuneration and interest paid to partners also matter for income tax, so it helps to state them clearly in the agreement.

Drafting checklist

Clause	Question it answers
Name, office and business	What is the LLP called, where is it, and what will it do?
Contribution	How much does each partner bring, in what form, and by when?
Profit and loss	In what ratio are profits and losses shared?
Remuneration and interest	Which working partners are paid, and is interest paid on contribution?
Management	Who are the designated partners, and who can sign, borrow and hire?
Decisions	Which matters need a majority, and which need everyone's consent?
Entry and exit	How is a new partner admitted, and how is a leaving partner paid out?
Death or incapacity	What do legal heirs receive, and does the LLP continue?
Non-compete and confidentiality	Can partners run a similar business on the side?
Disputes	Will disputes go to mediation or arbitration, and where?

When must the LLP Agreement be filed? (Form 3)

The LLP Agreement must be filed with the Registrar in Form 3 within 30 days of incorporation. Any later change to the agreement is also filed in Form 3 within 30 days. Since 1 April 2022, late filing attracts an additional fee that is a multiple of the normal filing fee and rises with the delay. Forms are filed online on the MCA LLP e-filing portal.

Event	Form	Time limit
First LLP Agreement after incorporation	Form 3	30 days from incorporation
Any change in the LLP Agreement	Form 3	30 days from the change
Partner joins, leaves or changes role	Form 4	30 days from the change

How much does late filing cost?

The normal Form 3 fee is small and depends on contribution (from ₹50 to ₹600). The additional fee for delay, under Annexure A of the LLP Rules as amended from 1 April 2022, works like this:

Delay	Small LLP	Other LLPs
Up to 15 days	1 times the normal fee	1 times the normal fee
15 to 30 days	2 times	4 times
30 to 60 days	4 times	8 times
60 to 90 days	6 times	12 times
90 to 180 days	10 times	20 times
180 to 360 days	15 times	30 times
Beyond 360 days	25 times	50 times

The additional fee is payable on top of the normal fee. Whether an LLP counts as a "small LLP" depends on its contribution and turnover limits under the LLP Act and Rules, so check the current definition before relying on the lower column.

Who signs the LLP Agreement?

All partners sign the LLP Agreement, including any body corporate partner through its authorised representative. It is usually executed on stamp paper (or e-stamped) of the correct value, and a copy is attached to Form 3, which a designated partner signs with a Digital Signature Certificate (DSC). Keep the signed original safely — banks, investors and new partners often ask to see it.

What happens if there is no LLP Agreement?

If no agreement is filed, the default rules in the First Schedule of the LLP Act, 2008 apply — for example, profits shared equally. These defaults rarely match what partners actually intend.

The First Schedule also provides, among other things, that partners are not entitled to remuneration for working in the business, that a new partner needs the consent of all existing partners, and that ordinary matters are decided by a majority of partners. A clear agreement replaces these defaults with terms the partners actually chose.

How much stamp duty applies to an LLP Agreement?

The LLP Agreement is stamped according to the stamp law of the state where the LLP is registered. Rates differ from state to state and often depend on the capital contribution, so check the current rate for your state before the partners sign. An amended agreement may also need fresh stamping.

Common mistakes

• Copying a template that does not reflect the partners' real deal on profit, salary and exit.
• Signing on stamp paper of the wrong value or from the wrong state.
• Admitting or removing a partner (Form 4) without also amending the agreement (Form 3).
• Leaving out what happens when a partner dies or wants to leave.
• Missing the 30-day deadline, which starts the additional fees above.

Key takeaways

• Write down contribution, profit share, entry and exit.
• File Form 3 within 30 days of incorporation, and again within 30 days of any change.
• Late filing fees are multiples of the normal fee and grow with the delay.
• Without an agreement, the default rules apply.