The Chartered Accountant

If the partners do not execute the partnership
agreement, the relationship between the partners
will be governed by the First Schedule to the LLP
Bill. This Schedule provides that mutual rights
and duties of partners of LLP shall be determined
as under in the absence of a written
agreement. Even if there is a written agreement,
but there is no specific mention about any of the
following matters, such matters will be governed
by the following provisions:
(i) All the partners of LLP are entitled to
share equally in the capital, profits and losses
of the LLP.
(ii) The LLP shall indemnify each partner in
respect of payments made and liabilities
incurred by him in relation to the business
of LLP.
(iii) Every partner shall indemnify the LLP
for any loss caused to it by his fraud in the
conduct of the business of LLP.
(iv) Every partner may take part in the management
of the LLP.
(v) No partner shall be entitled to remuneration
for acting in the business or management
of the LLP.
(vi) No person may be introduced as a partner
without the consent of all the existing partners.
(vii) Any matter or issue relating to the LLP
shall be decided by resolution passed by a
majority in number of the partners, and for
this purpose, each partner shall have one
vote. However, no change may be made in
the nature of business of the LLP without
the consent of all the partners.
(viii) Every LLP shall record the decisions taken
by it in a minute book within 30 days and
keep the minute book at the registered office.
It appears that this refers to the decisions
as stated in (vii) above.
(ix) Each partner shall render true accounts and
full information of all things affecting the
LLP to other partner or his legal represen-
DECEMBER 2008 1018 THE CHARTERED ACCOUNTANT
CORPORATE AND ALLIED LAWS
LLP with more than 20 persons can be formed by Chartered Accountants
for carrying on profession as Management Consultants. Similarly, LLP with
unlimited number of partners can be formed for carrying on any business
or profession.
tatives.
(x) If a partner, without the consent of the
LLP, carries on any business of the same
nature as and competing with the LLP, he
must account for and pay over to the LLP
all profits made by him in that business.
(xi) Every partner shall account to the LLP for
any benefit derived by him without the consent
of the LLP from any transaction
concerning the LLP or from any use by
him of the property, name or any business
connection of the LLP.
(xii) No Partner can expel any partner unless a
power to do so has been conferred by express
agreement between the partners.
(xiii) All disputes between the partners which
cannot be resolved in terms of the LLP
agreement shall be referred to Arbitration
under the provisions of Arbitration and
Conciliation Act, 1996.
Any person may join the LLP as a partner if all
partners agree to admit him as a partner. Similarly,
a partner will cease to be a partner on his death,
retirement or on winding up of the company or
LLP which is a partner. It is also provided that
if a partner is declared to be of unsound mind
or is declared to be insolvent, he will cease to be
a partner of LLP. For this purpose, the partners
will have to execute a fresh partnership agreement
recording the terms and conditions of the partnership
with revised constitution. Intimation about
admission of new partners or retirement of a
partner will have to be given to the ROC in the
prescribed from within 30 days.
The partnership agreement may provide for payment
of interest on capital of partners or remuneration
payable to the partners. Further, the
agreement will have to provide the share of each
partner in profits or losses of LLP. The conditions
relating to payment of interest, remuneration
or share in profits or losses can be changed by
amendments in the partnership agreement.
The rights of a partner to share profits or losses