LLP Supplementary Agreement (India)

A supplementary LLP agreement is required under the Limited Liability Partnership Act 2008 whenever the partners of an existing LLP wish to amend, modify, or supplement the terms of the original LLP Agreement. Under Section 23(4) of the LLP Act 2008, any change in the LLP Agreement must be intimated to the Registrar of Companies in Form 3 within 30 days of such change — the supplementary agreement serves as the formal document recording that change. Common situations requiring a supplementary agreement include: (1) Admission of a new partner — when a new individual or entity joins the LLP as a partner, their contribution, profit share, and rights must be formally recorded in a supplementary agreement, and the change must be notified to the ROC in Form 4 (partner change) and Form 3 (agreement change) within 30 days. (2) Change in profit-sharing ratio — if the existing partners agree to revise the ratio in which profits and losses are distributed, a supplementary agreement documents the revised ratio and its effective date. (3) Change in contribution — if a partner makes an additional contribution (cash or kind) or if a partner's contribution is withdrawn, the supplementary agreement records the revised contribution and any impact on profit-sharing or voting rights. (4) Change in management provisions — if the partners wish to modify the decision-making procedures, meeting requirements, or the designated partners' authorities. (5) Addition or modification of non-compete, confidentiality, or IP provisions.

The admission of a new partner into an existing LLP in India is governed by Sections 6 and 7 of the LLP Act 2008 read with Rules 21 and 22 of the Limited Liability Partnership Rules 2009. The procedure involves both internal (partner consent and documentation) and external (ROC filings) steps. Step 1 — All-partner consent: Under the LLP Act 2008, no person can be admitted as a partner without the consent of all existing partners, unless the LLP Agreement provides for a different procedure (e.g., consent of a specified majority). The consent must be documented — typically in the form of a resolution signed by all existing partners or a meeting of partners with minutes. Step 2 — Due diligence on the incoming partner: If the incoming partner is to be a designated partner, they must hold a valid DPIN (Designated Partner Identification Number). If they are to be a regular partner, PAN and identity/address proof are sufficient. For corporate partners (companies or LLPs), the board resolution or partner consent authorising the investment must be obtained. Step 3 — Supplementary LLP Agreement: A Supplementary LLP Agreement is executed recording: the name, address, PAN, Aadhaar (for individuals) or CIN/LLPIN (for entities) of the new partner; their agreed contribution (amount, form, and timeline); their profit-sharing ratio; their rights and obligations; and the revised profit-sharing ratios of all existing partners after the new partner's admission.

Stamp duty on an LLP Agreement (and supplementary agreement) in India is governed by the Indian Stamp Act 1899 and the relevant state stamp acts (as stamp duty is a state subject under Entry 63 of the Concurrent List of the Seventh Schedule to the Constitution of India). The applicable stamp duty varies by state and by the nature of the change being documented. For an original LLP Agreement: Most states levy stamp duty on partnership/LLP agreements based on the amount of capital contribution. For example, in Maharashtra, the stamp duty on a partnership deed (which applies to LLP agreements) is 0.1% of the aggregate partnership capital contribution or ₹15,000, whichever is lower, under Article 46 of Schedule I to the Maharashtra Stamp Act 1958. In Delhi, the stamp duty on a partnership deed is ₹5 per ₹1,000 of capital (Article 46 of Schedule I-A to the Indian Stamp Act 1899 as applicable to Delhi). The specific rate should be verified against the applicable state stamp schedule at the time of execution. For a supplementary LLP agreement: Where the supplementary agreement records an increase in contribution (additional capital being brought in), stamp duty is typically levied on the incremental contribution amount at the rate applicable to partnership deeds in the relevant state. Where the supplementary agreement records only a change in profit-sharing ratio, management provisions, or other non-monetary terms, a nominal fixed duty applies (e.g., ₹500 or ₹1,000 as a 'miscellaneous' instrument in most states).

The exit of a partner from an LLP and the treatment of their profit share and capital is governed by the LLP Agreement (and any supplementary agreement), Section 24 of the LLP Act 2008, and the applicable provisions of the Income Tax Act 1961 (which governs FY 2025-26 and earlier; from 1 April 2026 the corresponding provisions of the Income-tax Act 2025 apply). Under Section 24(1) of the LLP Act 2008, a partner may cease to be a partner of the LLP: (a) in accordance with the LLP Agreement; or (b) in the absence of any provision in the LLP Agreement, by giving 30 days' notice to the other partners; or (c) on death or dissolution of a corporate partner; or (d) by order of the NCLT (National Company Law Tribunal) on application by the LLP or any partner. Settlement of departing partner's account: The LLP Agreement (or supplementary agreement) typically specifies how the departing partner's capital account and undistributed profit share are to be settled. Common approaches include: (a) payment of the partner's capital contribution and their proportionate share of undistributed profits as at the date of exit; (b) deferred payment in instalments over an agreed period; (c) set-off against any outstanding obligations of the departing partner to the LLP. Goodwill: If the LLP has built up goodwill over time, the departing partner may be entitled to a share of the goodwill value, or the LLP Agreement may expressly exclude goodwill from the departing partner's entitlement. The treatment of goodwill must be specified in the agreement to avoid disputes.

A LLP Supplementary Agreement (India) does not legally require a lawyer in India, and individuals and businesses may draft and execute the document independently. The Limited Liability Partnership Act, 2008 does not mandate legal representation for the creation or signing of this type of document. However, seeking independent legal advice from a qualified Indian lawyer is recommended for transactions involving substantial financial value, complex regulatory requirements, or cross-border elements where multiple legal jurisdictions may apply. A lawyer can verify that the document complies with all applicable statutory requirements, identify potential risks specific to the transaction, and confirm that the terms adequately protect the interests of all parties involved. Disputes arising from this type of document are decided at first instance by the competent civil court, tribunal or authority, with appeals and, where available, writ remedies lying to the High Courts and the Supreme Court of India. Professional legal review is particularly advisable where the document will be submitted to government agencies or used as evidence in legal proceedings.