What is an LLP Agreement? Format and Key Clauses

An LLP Agreement is the foundational document of a Limited Liability Partnership in India. It defines the relationship between the partners, sets out how the LLP will be governed, and records the rights and duties of every partner. If you have registered an LLP or are about to, the LLP Agreement is the single most important document you will sign after the incorporation certificate. This guide explains what an LLP Agreement is, why it is mandatory, what clauses it must contain, and the format that meets the requirements of the Limited Liability Partnership Act 2008.

What is an LLP Agreement?

An LLP Agreement is a written contract among the partners of a Limited Liability Partnership and between the partners and the LLP itself. It is the equivalent of a partnership deed for a traditional firm, or the articles of association for a company. Under the LLP Act 2008, every LLP must have an LLP Agreement, and a copy of the agreement must be filed with the Ministry of Corporate Affairs within 30 days of incorporation using Form 3.

Without an LLP Agreement, the default rules in the First Schedule of the LLP Act apply. These defaults rarely suit a real business. They divide profits equally, give every partner equal management rights, and contain no framework for dispute resolution. Drafting your own LLP Agreement lets the partners control their own destiny.

Why is an LLP Agreement important?

An LLP Agreement matters for several reasons.

• Regulatory requirement. It must be filed with the MCA within 30 days of incorporation.
• Operational clarity. It sets out who does what, who signs what, and who decides what.
• Financial clarity. It records capital contribution, profit sharing, and loan arrangements.
• Dispute prevention. It provides a framework for resolving disagreements before they become lawsuits.
• Admission and exit. It controls how new partners join and how existing partners leave.

Key clauses in an LLP Agreement

A strong LLP Agreement covers the following areas.

1. Name and registered office

The full name of the LLP, its LLPIN, and its registered office address.

2. Business of the LLP

A clear description of the activities the LLP will carry on. Keep this specific to avoid confusion about scope creep.

3. Partners and designated partners

The names, addresses, and DINs of all partners. The agreement must name at least two designated partners who are responsible for compliance. Under the LLP Act 2008, at least one designated partner must be resident in India.

4. Capital contribution

How much each partner is contributing, in what form (cash, property, services), and when. The capital contribution also decides voting weights if the partners want to link voting to capital.

5. Profit and loss sharing

The ratio in which profits and losses will be shared. This can match capital contribution or follow a different formula agreed by the partners.

6. Management structure

Who runs the LLP day to day. Most LLPs either rotate management, delegate to designated partners, or appoint a managing partner. Some LLPs adopt a board style structure for larger teams.

7. Decision making

Which decisions require a simple majority, which require a supermajority, and which require unanimous consent. Typical unanimous decisions include admitting a new partner, borrowing above a certain threshold, amending the agreement, and dissolving the LLP.

8. Rights and duties of partners

What every partner is entitled to, such as information, access to records, and a fair share of profits, and what every partner must do, such as contributing time, maintaining confidentiality, and not competing with the LLP.

9. Meetings and records

How often the partners will meet, how notice will be given, and how minutes will be maintained.

10. Admission and retirement of partners

The process for adding a new partner and the process for an existing partner to exit, including notice period and settlement terms.

11. Expulsion of a partner

Grounds and process for removing a partner, for example in case of serious misconduct or long term incapacity.

12. Non compete and confidentiality

Restrictions on competing with the LLP during the partnership and for a reasonable period after exit.

13. Intellectual property

Ownership of IP brought into the LLP and IP created by the LLP.

14. Dispute resolution

A graded approach: discussion, mediation, and finally arbitration under the Arbitration and Conciliation Act 1996.

15. Dissolution and winding up

How the LLP can be wound up and how assets will be distributed on dissolution.

16. Governing law

Indian law, with jurisdiction in a specific city.

Sample LLP Agreement opening

"This Limited Liability Partnership Agreement is made on 9 April 2026 by and between the following partners of XYZ Consulting LLP, a limited liability partnership incorporated under the Limited Liability Partnership Act 2008 and having its registered office at Bengaluru, Karnataka."

The agreement then lists the partners with their PAN, DIN, address, and initial capital contribution, followed by the clauses described above.

Stamp duty on LLP Agreements

Stamp duty on an LLP Agreement is governed by state law and depends on the capital contribution. For example, in Maharashtra, the stamp duty is typically one percent of the capital contribution, subject to a minimum and maximum. In Delhi, the stamp duty follows a different scale. Your LLP Agreement must be executed on stamp paper of the correct value before it is filed with the MCA. Underpaying stamp duty can lead to penalties and admissibility issues in court.

Filing with the MCA

After the LLP Agreement is signed and stamped, you must file Form 3 with the Ministry of Corporate Affairs within 30 days of incorporation. Late filing attracts additional fees. If the LLP Agreement is amended later, a fresh Form 3 must be filed to record the changes.

Can an LLP Agreement be signed electronically?

Yes. Aadhaar based eSign under Section 3A of the Information Technology Act 2000 has the same legal status as a handwritten signature. Many LLPs now sign their LLP Agreement using Aadhaar eSign to save time, especially when the partners are in different cities.

Frequently asked questions

Is an LLP Agreement mandatory?

Yes. Every LLP must have an LLP Agreement and must file it with the MCA within 30 days of incorporation. Without a custom agreement, the default rules in the First Schedule of the LLP Act apply.

Can an LLP Agreement be changed?

Yes. Any change must be signed by all the partners and filed with the MCA using Form 3 within 30 days.

Can an LLP have only two partners?

Yes. An LLP must have a minimum of two partners. There is no maximum.

What if the LLP Agreement conflicts with the LLP Act?

The LLP Act takes precedence. Any clause in the LLP Agreement that contradicts a mandatory provision of the LLP Act is void to that extent.

Can the LLP Agreement be signed by Aadhaar eSign?

Yes. Aadhaar eSign is legally valid for LLP Agreements in India.

Sign your LLP Agreement on SignSetu

Getting every partner to sign in ink can take days. SignSetu lets all partners review and sign the LLP Agreement online using Aadhaar eSign, with full legal validity in India. Start at SignSetu LLP Agreement eSign.