Compliances

Change of activity of LLP

Every LLP is formed to carry on a specific business activity with a motive to earn profit. At the time of incorporation of an LLP, partners have to provide the main object of an LLP. Such object must be mentioned in brief in the LLP agreement. An LLP cannot carry on any business activities which are not mentioned in the agreement.
If partners want to widen or change the business activity then it must be recorded in an agreement. Every change in LLP agreement must be approved by MCA.

Situation when Object of LLP require changes:

• If the partners want to change the business completely.
• In case of partners want to add a new product line in an LLP. Kindly note an LLP can carry on only similar business activities. Hence, if the new product line is not related to an existing business then a new LLP has to be incorporated.
• If an LLP take over a firm which is carrying on different business activities.
• In case the government authorities orders as a result of change in prevailing law.
• Whenever such business activity is prohibited under any law.

Procedure for change of name of LLP as follows:

1. Conduct a board meeting
   

   A board meeting of all the partners must be called in a specified manner at a specified date and venue. If no specific process is mentioned in LLP agreement then the consent of all the partners must be accorded. Hence, the board must pass a resolution to change the business activity of an LLP.

2. Drafting of Supplementary LLP Agreement
   

   After filing the notice of change, if found satisfactory, ROC will present a fresh certificate of incorporation in the new name. The new changed name will be effective from the date as indicated in the certificate.
   Subsequent to availing fresh certificate of incorporation, you are required to draft a supplementary LLP agreement to update the change of LLP name to the original LLP agreement.

3. Filing of supplementary LLP Agreement

   After drafting of Supplementary LLP agreement, it shall be filed in Form-3 with the ROC within 30 days from the execution of the agreement. The form must be certified by a practicing professional such as Chartered Accountant or Company Secretary or lawyer. It must be filed with the following attachments.

   • A certified copy of a Board resolution
   • Supplementary agreement
   • Any other documents as required

   After approval from MCA, an LLP can start new business activities. MCA has authority to reject the form if the business activity is not in accordance of the law. Hence, every clause of an agreement must be drafted professionally.