Limited Liability Partnership Agreement means any written agreement between the partners of the Limited Liability Partnership or between the Limited Liability Partnership and its Partner which determines the mutual rights and duties of the partners and their rights and duties in relation to that Limited Liability Partnership.

Some of the Clauses that need to be included in an Llp Agreement are:

Clause regarding Non-Competition: A clause can be added to the agreement which restricts partners to start invest or mentor any entity which includes partnership firms, LLPs and Company. This is to avoid conflict of interest among the partners and for the best interest of the LLP.

Definition clause: Like any good agreement, the Definition clause seeks to provide common understanding of any terms that are used in the LLP agreement. Hence the clause for definition for various terms should be included in the LLP agreement.

Clauses regarding protection of business secret: Every Billion Dollar Company was started in a small scale. For a business to flourish, the business should have a Unique Selling point which can be a different product, a change in service or an innovation to an existing problem. The partners are bound to protect the business and its assets, and the clause can be used to protect the LLP from external threats.

Contribution by the partners: Although this is mentioned in Form 3, here are detailed points which can be added in the agreement –

• Total contribution of the LLP and the contribution by each partner.
• If any partner is contributing in non-monetary form, that is, he / she is going to render services instead of monetary contribution, add the same.
• The percentage of contribution by each partner.
• Additional capital contribution by partner during the course of agreement.
• Manner in which contribution can be withdrawn by the partners – whether it can be withdrawn partly, fully, with or without consent of partners, etc.

Clauses regarding stand on legal issues: This is an essential clause in an LLP Agreement. This will avoid unnecessary conflict in the day to day management of the film. This clause describes the manner in which the company should sue or face trial in any legal matters. It can also fix a partner who will deal with the legal issues faced by the firm.

Clause regarding ESOP to the employees once the LLP is converted into a listed company: The LLP can add a clause that decides stock options to its founding employees as a goodwill gesture for being a part of the company from the inception. This gives a clear path of the long-term goal of the LLP to the various stakeholders of the firm. It also ensures higher employee morale. It also avoids confusion for future investors of the company.

If you have questions about the information presented here or if you would like to receive personalized advice, contact BDS Legal Services and get a free consultation.   

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