LLP Agreement-Profit Sharing Clause query
Vikas Mehta
Profit sharing ratio of a LLP business can be
different from capital contributed by its partners.
Profit sharing as specified in the LLP Agreement will prevail but in case you
did not specify any clause with regard to profit sharing then First Schedule to
the LLP Act, 2008 will be applicable to the LLP which says that all partners
are entitled to share equally in capital, profit or losses of LLP.
However, can there be a clause in LLp agreement wherein all the active partners shall bring equal contribution say suppose 2 crores each, but net profits/loss of the LLp business shall not be divided among partners in the proportion of their individual capital contribution instead each partner shall only use the capital brought by him in the business and will take away any profits/ loss earned thereof.
Business of partnership is dealing in share market.
(precisely each partner is only allowed to use capital brought in by him in the course of business of share market and any profit or loss earned on that particular capital after providing for necessary taxes and expenses will be his final share in LLP.)
Pls advise.
Regards,
Vikas