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MCA / LLP

LLP Agreement: Important Clauses, Format and Filing Requirements

By CA Madhusmita Padal • Updated September 2026 • 6 min read

The LLP Agreement is to an LLP what the Articles of Association are to a company — it defines how the LLP is governed, how profits are shared, who can make decisions, and how partners exit. Many LLPs skip filing a proper LLP Agreement and end up with Schedule I defaults that may not reflect what the partners actually agreed. This guide covers every important clause and explains how to file the agreement correctly.

Key Takeaways

  • LLP Agreement must be filed as Form 3 within 30 days of LLP incorporation.
  • Without a filed agreement, Schedule I of the LLP Act applies as default — including equal profit sharing.
  • Late fee for not filing Form 3: ₹100 per day — no maximum cap.
  • The agreement can be amended later via a partner resolution and updated Form 3 filing.
  • A well-drafted exit clause prevents the most common and costly partnership disputes.

What is an LLP Agreement and why is it critical?

An LLP Agreement is a written contract among the partners (and designated partners) of an LLP that governs the internal affairs of the firm — who owns what, who decides what, how profits are split, and how someone can exit. Under Section 23 of the LLP Act 2008, the mutual rights and duties of the LLP and its partners are governed by the LLP Agreement.

Filing a customised LLP Agreement is the most important step after incorporation. A default or template agreement often misses critical clauses — particularly around what happens when one partner wants to leave, or when there is a disagreement on business direction.

What does Schedule I of the LLP Act say if there is no agreement?

Issue Schedule I Default
Profit sharing Equal among all partners (regardless of capital or effort)
Remuneration to partners No salary or remuneration unless agreed in the LLP Agreement
Decision-making Ordinary business: majority of partners; changes to LLP nature: unanimous consent
Access to books Every partner has right to inspect LLP accounts and documents
New partner admission Consent of all existing partners required

What are the essential clauses of an LLP Agreement?

  1. Name and LLPIN of the LLP
  2. Registered office address
  3. Business activity and nature of the LLP
  4. Names and contributions of all partners — cash and non-cash contributions
  5. Profit and loss sharing ratio — must be explicitly stated (not equal by default unless intended)
  6. Designation and roles of Designated Partners; specific responsibilities
  7. Remuneration: whether designated partners receive a salary; amount and conditions
  8. Interest on capital: whether partners earn interest on capital contributed
  9. Decision-making: what requires majority, what requires unanimous consent
  10. Bank account: who can operate; signatories required
  11. Admission of new partners: required consent and capital contribution terms
  12. Retirement: notice period; valuation method for the retiring partner’s share
  13. Death or incapacity: whether the estate inherits the partner’s share or the LLP continues with others
  14. Expulsion: grounds and process for removing a partner for cause
  15. Non-compete: whether partners can work in competing businesses
  16. Dissolution: grounds and process
  17. Dispute resolution: arbitration or NCLT; governing law and jurisdiction

What should an LLP exit and dissolution clause say?

Exit clauses are the most frequently litigated part of an LLP Agreement. A clear exit clause should specify:

  • Notice period: How many days’ notice a partner must give before retiring (typically 30–90 days)
  • Valuation: How the exiting partner’s share is valued — book value, fair market value, or agreed formula
  • Payment timeline: How many months after exit the firm pays the exiting partner their share value
  • Non-compete post-exit: Whether the retiring partner can start a competing business (note: may not be enforceable, but helps deter)
  • Dissolution triggers: Reduction to fewer than 2 partners for more than 6 months; mutual consent; NCLT order

How do you file an LLP Agreement as Form 3 on MCA21?

  1. Log in to MCA21 portal with a Designated Partner’s credentials
  2. Go to MCA Services → E-Filing → LLP → Form 3
  3. Enter the LLP’s LLPIN
  4. Upload the executed LLP Agreement as a PDF attachment
  5. Digitally sign with the Designated Partner’s DSC
  6. Pay the ₹50 filing fee and submit
  7. Note the SRN for tracking
Tip: The LLP Agreement PDF must be signed by all partners — not just the Designated Partners. The document’s size should be under 10MB to upload successfully.

How do you amend an LLP Agreement after filing?

When the LLP Agreement needs to be changed — due to a new partner joining, a partner retiring, profit ratio change, or any other amendment — the process is:

  1. Pass a written resolution of the partners approving the amendment (as specified in the existing agreement)
  2. Draft the amendment or a restated LLP Agreement
  3. Have all partners sign the amended agreement
  4. File Form 3 (amended) with MCA21 within 30 days of the resolution

Late filing of an amended Form 3 also attracts ₹100/day. MCA keeps the history of all Form 3 filings, so the full evolution of the agreement is on record.

How can Tradeviser draft and file your LLP Agreement?

Tradeviser drafts customised LLP Agreements covering all critical clauses — profit ratio, remuneration, exit rights, dissolution, and dispute resolution — and files Form 3 with MCA21 within the 30-day deadline.

Get a Properly Drafted LLP Agreement

Tradeviser drafts and files your LLP Agreement within the 30-day deadline — with customised profit sharing, exit clauses, and dispute resolution tailored to your business.

Draft LLP Agreement

Frequently Asked Questions

What is an LLP Agreement?

The foundational document governing partners’ rights, duties, profit sharing, and governance of the LLP — filed as Form 3 with MCA within 30 days of incorporation.

Is an LLP Agreement mandatory?

Not mandatory to incorporate, but strongly recommended. Without it, Schedule I defaults (equal profit sharing regardless of contribution) apply.

What is the penalty for late filing of LLP Agreement?

₹100 per day from the 31st day after incorporation. No maximum cap.

Can an LLP Agreement be amended?

Yes — by partner resolution and filing amended Form 3 within 30 days of the resolution.

What happens if two partners disagree in an LLP?

Disputes are resolved per the agreement’s dispute resolution clause — typically arbitration or NCLT. Without a clause, partners approach civil court.