LLP Object Change

Change in Object Clauses of LLP

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Introduction

For LLPs looking to realign their business focus or expand into new areas, changing the LLP’s objects is a critical step. This requires careful planning and adherence to legal procedures, especially when adapting to new market demands, exploring opportunities, or modifying the LLP’s objectives.

The process typically involves several stages, including:

  • Passing a board resolution to approve changes in the object clauses of the LLP

  • Amending the LLP agreement

  • Obtaining partners’ consent for the proposed changes

Understanding the steps and required documentation ensures a smooth transition and keeps the LLP aligned with its strategic goals. In this article, we provide a complete guide on changing the objects of an LLP.

Object Change in LLP

Every LLP is required to define its objectives before commencing operations. If there is a need to change or add supplementary objects, the LLP must do so by filing Form 3. However, LLPs cannot change their main object clause to a completely different field; they are only allowed to add or modify supplementary objects that fall within the same category as the main object, as per the NIC code.

Example:

  • If an LLP’s main object is the construction of waterways, it may expand by adding the construction of dams as a supplementary object.

  • However, if the LLP wishes to start a wholesale sugarcane business, this would not be allowed, as it falls outside the main object category.

This is because LLPs are permitted to add or modify supplementary objects within the same NIC code group, but the main object cannot be entirely changed.

Before making any changes or additions, the LLP must:

  1. Check the NIC code list to ensure the new object aligns with the existing category.

  2. Obtain approval from the Registrar of Companies (ROC).

LLPs are not permitted to carry out any business activities that are not specified in the LLP agreement. To conduct new activities outside the original scope, the LLP must follow the proper procedure and get the changes approved by the ROC.

Documents required to change the objective of llp

Documents Required to Change the Objective of an LLP

To obtain approval from the Registrar of Companies (ROC) for changing the objectives of an LLP, the following documents are required:

  • Object Change Resolution:
    A resolution signed by all partners, clearly stating the proposed change in the LLP’s object clauses.

  • Supplementary LLP Agreement for Object Change:
    An amended supplementary LLP agreement outlining the rights, duties, and obligations of partners and designated partners. This agreement must be signed by all partners and designated partners.

  • Form 3 Filing:
    Form 3 must be submitted to the ROC to record the change in LLP objects. It includes details of the LLP, partners, and the revised objectives. Ensure the form is completely filled out and signed before submission.

  • Payment Receipt:
    The MCA fee payment receipt serves as proof of payment and should be retained for future reference.

Procedure for change in object clause of llp

Procedure for Supplementary Change in LLP Object Clause

Changing or adding supplementary object clauses in an LLP involves the following steps:

Step 1: Board Resolution
The process begins with passing a board resolution to approve the supplementary object clauses. The designated partners are authorized to sign, certify, and file the required forms with the Registrar of Companies (ROC). They can also fix the date, time, and venue for any Ordinary General Meeting if required.

Step 2: Amendment of LLP Agreement
After the resolution is passed, the LLP agreement must be amended using Form 3. The amendment should clearly outline the revised or additional objects of the LLP. It is recommended to review the proposed changes against the National Industrial Classification (NIC) Code list before proceeding.

Step 3: Partners’ Consent
All partners must provide written consent for the change in supplementary objects. This ensures that every partner is aware of and agrees to the modifications in the LLP agreement.

Step 4: Filing with the ROC
The amended Supplementary LLP Agreement must be filed with the ROC within 30 days of execution through Form 3, along with the prescribed fees.

Step 5: ROC Approval
Once the ROC reviews and approves the submission, the LLP can officially undertake new business activities as per the revised object clause.

Reasons to change object implication

Reasons for Changing the Object Clause of an LLP

Even after ROC approval of changes in the LLP agreement, there are several reasons why an LLP may choose to modify its object clauses:

  • Market Evolution:
    Markets are dynamic, with changing consumer preferences, technological advancements, and economic shifts. Updating the LLP’s object clauses helps the business stay competitive and aligned with emerging trends.

  • Diversification:
    LLPs may modify object clauses to expand into new regions or markets. For example, an LLP operating domestically may update its objects to include international trade while keeping the main object intact.

  • Strategic Alignment:
    Changes in the LLP’s long-term strategic vision may require updating its objects. This ensures that business operations remain aligned with overall goals, maintaining a coherent and effective strategy.

  • Innovation and Growth:
    To remain competitive, LLPs must innovate. Updating object clauses allows the introduction of new products, services, or business lines that reflect current market demands. Additionally, banks or financial institutions may require object updates in the agreement for providing loans or credit facilities.