In this blog post, Aakansha Bansal, a student pursuing her Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata, details the procedure to be followed while changing the name clause of a LLP.

 

What is a LLP?

The Limited Liability Partnership Act, 2008 was published on January 9, 2009, in the official Gazette of India and was notified on March 31, 2009. In the first week of April 2009, the first Limited Liability Partnership was established in India. LLP is an organization which enumerates the elements of both a Partnership as well as a Company.

LLP comes with an advantage of the limited partnership which is similar to that of a company. It overcomes the drawbacks of the traditional partnership to a great extent. The relationship of the principal and the agent which is the main ingredient of a partnership firm is relaxed in the LLP. In a LLP, the principle of agency is not followed, and none of the partners are liable for each other’s acts. The partners are the agents of a LLP only and not of each other. It has the advantages of a partnership firm as it enjoys the benefits of informality and tax advantages.

 

Characteristics of a LLP

A LLP is a separate legal entity in the eyes of the law; it is distinct from its members. It can deal in its name and can sue and be sued in its name and not in the names of its partners. Unlike in the case of companies, there is no need of any minimum capital.

 

LLP Agreement

There should be a minimum of two persons to start a LLP. However, there is no limit to the maximum number of persons which could be admitted to the limited liability partnership. It must have at least two individuals as ‘designated partners’. The rights and duties of the partners of a LLP are governed by the LLP AGREEMENT. However, forming a LLP agreement is not compulsory. If there is no agreement between the partners, their conduct would be regulated by the provisions of the Limited Partnership Act, 2008.

 

Name of the LLP

The name of a LLP should either end with “Limited Liability Partnership” or “LLP”. The name of a LLP can be reserved by filling Form 1 to the registrar.

The proposed name of the LLP should not be –

1. Offensive or undesirable in the eyes of the Central Government.
2. Registered by another company or LLP.

If the above two clauses do not hinder the proposed name, then the registrar may approve the name of the LLP. The LLP needs to be incorporated within three months from the date of approval of the name. If the LLP fails to comply with this requirement, then the approved name shall lapse and would be available for another applicant.

In the case of a foreign entity, the application for reserving the name shall be filled in eForm 25. The name shall be reserved for 3 years and unlike in case of Indian entities, there is a provision for renewal of name as well, i.e., even if the name is not adopted within 3 years and the reserved name lapses then  there is no need of any fresh application and the proposed name can be renewed if the application of renewal of name is made within a reasonable time.

 

Change of Name

A partnership firm, a private company, and an unlisted public company can convert themselves into a LLP. However, in this case, LLP shall take the same name as that of the partnership firm or a company and on conversion, it cannot change its name.

There is, however, no such limitation on a LLP for changing its existing name. An existing LLP may change its name voluntarily or by the directions of the Central Government.

SECTION 19 of the Limited Liability Partnership Act, 2008 lays down the procedure for the change of the name of  a LLP.

The Limited Liability Partnership can change its existing name by following the procedures as laid down in the LLP Agreement. If however a LLP Agreement is silent on how the name would be changed, the consent of each and every partner is required for changing the name.

Draft Resolution:

“RESOLVED THAT pursuant to the provisions of section 19 and other applicable provisions, if any, of the Limited Liability Partnership Act, 2008 (as amended or re-enacted from time to time) and Clause ……… [Clause Number] of the LLP Agreement dated ……., the existing name of the LLP is changed from ……….. [Existing name] to ………… [New name] as agreed upon by the partners of the LLP and in furtherance to this the LLP Agreement shall be amended accordingly.

RESOLVED FURTHER THAT Mr/Ms …………[Name of Designated Partner] designated partner be and is at this moment authorized to sign necessary documents, forms, do necessary filings with the Registrar of LLP and to do any such acts and deeds that may be necessary in this regard.”

 

Procedure for the change of the name of an existing LLP

Following is the procedure for the change of the name of an existing LLP: 

• MEETING: A meeting shall be held to obtain the consent of the partners for the change of name. Prior notice shall be served upon the partners before convening the meeting stating the purpose of the proposed meeting. The meeting shall be concluded by passing a proper resolution.
• APPLICATION: After obtaining the consent of all the partners, an application needs to be filled in Form 1 for the availability of the proposed name with the Registrar. Approximately 5 to 6 names should be mentioned in the order of priority.
• ATTACHMENTS: Following attachments need to be filed along with Form 1 with the Registrar –
  • A copy of the minutes of the meeting in which the consent of the partners was obtained along with the resolution.
  • A copy of the direction of the Central Government if the change is due to the order of the said Government.
• FEES: The fees as prescribed by the LLP Act, 2008 have to be paid by way of credit card only.
• APPROVAL OF NAME: The ROC will then approve the name if in the opinion of the Central Government it is not undesirable or if it is not identical with the name of any existing LLP or a body corporate.
• Period: The approved name is available for 3 months. If the concerned LLP did not change its name within three months from the date of approval, then it would lapse. The Limited Liability Partnership Act, 2008 does not give the applicant a benefit of renewing the lapsed name. The applicant would then have to start with a fresh procedure and would be burdened with a payment of fresh fees.
• FORM 5: After receiving the notice of approval, the applicant will then have to intimate the Registrar regarding change of name in FORM 5.
• FRESH CERTIFICATE OF INCORPORATION: The Registrar after satisfying himself that the name is changed as per the prescribed procedure, and the new name is one which was reserved for the concerned LLP, shall issue a fresh certificate of incorporation in Form 16 in the new name.
• DATE OF CHANGE: The changed name shall be effective from the date of the certificate mentioned above.
• SUPPLEMENTAL AGREEMENT: After that, the LLP will have to execute a supplemental agreement for the change in the name of LLP Agreement.
• INTIMATION TO REGISTRAR: LLP is required to intimate the Registrar for changes made in the LLP Agreement through the supplemental agreement in Form 3.
• POST-CHANGE REQUIREMENTS: After the LLP has successfully changed its name, it has to deal in the new name, and the changed name must appear in all the official documents of the LLP. The LLP has to deal with the outsiders in the changed name. All the name plates, business cards, etc., of the LLP have to be substituted by the new name. However, the former name of the LLP by which it was known to the world before the change should appear under the changed name of the Limited Liability Partnership for a certain time.

 

 

Things to be Avoided while Naming the LLP

The following things must be avoided in the name:

1. Use of identical names with that of an existing LLP or body corporates.
2. Use of general names such as ‘silk manufacturing’ or ‘jute textiles’, etc.
3. Use of the word ‘sahakari’ or ‘co-operative’.
4. The Emblems and Names (Prevention of Improper Use) Act, 1950 prohibits certain kinds of names. Therefore, use of such names should also be avoided.
5. Use of the name of national heroes such as ‘Bhagat Singh enterprises’.
6. Use of meaningless or vague alphabets such as GFVCGCBDH Ltd.
7. Names containing numbers like 15^th.
8. Prefixing words like modern, new to the names of already established, successful firms whether in India or outside.
9. Use of surnames or names except that of partners or directors.
10. Use of the name of state or country.

 

Conclusion

It is not always necessary that the LLP will continue in the same name. It may change its name whenever it deems fit. The name of the LLP may be changed voluntarily or mandatorily.

Ideally, the manner in which the name of the LLP should be changed should be mentioned in the LLP Agreement itself. However, if nothing is mentioned about the same then the procedure as laid down in Section 19 of the Limited Liability Partnership Act, 2008 must be followed.