Change LLP Business Activity

change llp business activity

Limited Liability Partnership Registration is a new form of business that runs like a company and partnership firm and it can operate any business activity except any prohibited or illegal activities. Currently, the LLP is very popular in India between small or medium organization and professionals for starting their business. The LLP is a hybrid of partnership firm and company, it has the features of both entities. The LLP can opt for any business activity at the time of registration like construction, consultancy, real estate, marketing or e-commerce, etc. but it is not necessary that the LLP run with only one activity during its tenure, it can add or replace or alter any business activity after its registration but for that, the LLP has to follow certain procedure like a private limited or public limited company has to do for alteration of their MOA and AOA. At the time of LLP registration, the LLP has to choose a particular industry and after registration, the LLP can select any industry to start other activities as well for the promotion of the business.

Process To Change The Business Activity Of LLP

Step 1 - Consent Of Partners

Any alteration in LLP agreement shall not take place until the partners give their consent for the same. The partners must agree to change the business activity of the LLP and the same should be in the form of resolution which shall be passed in the meeting of the partners.

Step 2 - Authorization To Designate Partner

In the same meeting in which the consent for alteration of business activity is taken by the partners, a resolution shall be passed for the authorization of the designated partner for taking all the necessary steps for completing the procedure of this alteration and to file all the relevant documents and forms to the registrar for seeking their approval.

Step 3 - Execution Of LLP Supplementary Agreement

 Once the partners provide their consent for the changes in the business activity of the LLP the same shall be mentioned in the LLP agreement and a supplementary LLP agreement shall be executed. It shall be executed on stamp paper and the value of stamp paper shall be Rs. 100/- or such amount as may be specified under State Stamp Act.

Step 4 - Filing of Form-3

The supplementary agreement shall be filed to the registrar for their approval in form-3 within 30 days from the date of passing the resolution of the partners in LLP. If the registrar is satisfied with the application, then they will provide their approval for such changes.

Once the registrar provides their consent the changes will take effect immediately. The LLP can start a new business anytime, whenever the LLP makes any changes in the agreement the same shall have to be intimated to the registrar within the specified time limit. If any delay occurred while filing the forms to the registrar there will be a minimum penalty of Rs. 100/- per day will be chargeable by the registrar. The LLP not only need to file the changes to the ROC timely but also has to do LLP annual compliances every year within the provided time limit and it includes KYC of designated partners, ITR filing of LLP, ROC filing etc. if any LLP fails to do that there are many consequences which the LLP has to face and to avoid these it is always advisable to the LLP to complete their responsibilities on time.

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