180+ Lawyers are online 
Procedure for Sale of LLP business and avoid legal complications
12-May-2023 (In Civil Law)
Hi , We have a partnership business with 4 other partners of Plastic PVC pipes Manufacturing Unit. I am the 1st partner . The business could not start and we had decide to sell the business . The buyer demanded that all other 4 partners should relinquish partnership and then only he will buy the unit from 1st partner , citing he wanted to avoid legal complication. my questions : 1. Is this a common practice while acquiring LLP's 2. Can I get examples / case studies which show legal complication while buying LLP when other partner refuse to sell after commitment. regards
First of all LLPs' dont have the share capital.
It is possible only if the total contribution of LLP is divided into Units by means of Limited Liability Partnership Agreement and Conditions precedent to transfer of Units is prescribed in the LLP Agreement.
Thus transfer of Units is solely governed by the provisions of LLP Agreement.
Also, the said transfer should be done in accordance to the section 42 of Limited Liability Partnership Act, which states as under:
42. Partner's transferable interest.—(1) The rights of a partner to a share of the profits and losses of the limited liability partnership and to receive distributions in accordance with the limited liability partnership agreement are transferable either wholly or in part.
(2) The transfer of any right by any partner pursuant to sub-section (1) does not by itself cause the disassociation of the partner or a dissolution and winding up of the limited liability partnership.
(3) The transfer of right pursuant to this section does not, by itself, entitle the transferee or assignee to participate in the management or conduct of the activities of the limited liability partnership, or access information concerning the transactions of the limited liability partnership.
Also, major of the cases have been dealt by the competent courts for either dissolution/winding up of the LLP.
It is possible only if the total contribution of LLP is divided into Units by means of Limited Liability Partnership Agreement and Conditions precedent to transfer of Units is prescribed in the LLP Agreement.
Thus transfer of Units is solely governed by the provisions of LLP Agreement.
Also, the said transfer should be done in accordance to the section 42 of Limited Liability Partnership Act, which states as under:
42. Partner's transferable interest.—(1) The rights of a partner to a share of the profits and losses of the limited liability partnership and to receive distributions in accordance with the limited liability partnership agreement are transferable either wholly or in part.
(2) The transfer of any right by any partner pursuant to sub-section (1) does not by itself cause the disassociation of the partner or a dissolution and winding up of the limited liability partnership.
(3) The transfer of right pursuant to this section does not, by itself, entitle the transferee or assignee to participate in the management or conduct of the activities of the limited liability partnership, or access information concerning the transactions of the limited liability partnership.
Also, major of the cases have been dealt by the competent courts for either dissolution/winding up of the LLP.
Helpful?
48+
48+
Adv. Siddhant Sharma
Delhi | 500+ Answers
Chat
Sale of property by partnership firm
Can partnership firm gift property
section 45(3) of income tax act
Capital gain on transfer of share in partnership firm
Transfer of property from individual to partnership firm
Can partnership firm hold immovable property
Stamp duty on transfer of immovable property to partnership firm
Transfer of capital asset by firm to partner
Disclaimer: The above query and its response is NOT a legal opinion in any way whatsoever as this is based on the information shared by the person posting the query at lawrato.com and has been responded by one of the Divorce Lawyers at lawrato.com to address the specific facts and details.
Connect with top Civil lawyers for your specific legal issue
No Comments! Be the first one to comment.
"lawrato.com has handpicked some of the best Legal Experts in the country to help you get practical Legal Advice & help."
