Franking of LLP Agreement: Understanding the Basics
Franking of LLP agreement is an essential process that every Limited Liability Partnership (LLP) must go through to make the agreement legally valid. The term ‘franking’ refers to the process of stamping a document that verifies its authenticity. Franking is done by a designated authority that affixes a stamp and initials on the document, indicating that the tax has been paid. In this article, we will cover the basic understanding of franking of LLP agreement.
What is an LLP Agreement?
An LLP agreement is a legal document that defines the relationship between the partners of an LLP. It outlines the roles, responsibilities, and obligations of each partner and sets the terms and conditions of their partnership. An LLP agreement is crucial in protecting the interests of the partners and the business. It helps to ensure that the partnership runs smoothly and effectively.
Why is Franking of LLP Agreement Important?
Franking of LLP agreement is important because it makes the document legally valid. The stamp and the initials of the designated authority on the agreement indicate that the tax for the document has been paid. If the LLP agreement is not franked, it can be considered invalid in court.
The stamp duty, which is the tax levied on legal documents, is payable by the LLP at the time of execution of the agreement. The amount of stamp duty varies from state to state and depends on the value of the agreement. The stamp duty can be paid either in cash or by non-judicial stamp paper.
Process of Franking LLP Agreement
Franking of LLP agreement is a simple process. It involves the following steps:
Step 1: Prepare the LLP agreement: The LLP agreement must be prepared in accordance with the provisions of the Limited Liability Partnership Act, 2008.
Step 2: Calculate the stamp duty: The stamp duty payable on the LLP agreement must be calculated based on the value of the agreement. The stamp duty rates vary from state to state.
Step 3: Pay the stamp duty: The stamp duty can be paid either in cash or by non-judicial stamp paper.
Step 4: Get the LLP agreement stamped: The LLP agreement must be presented to the designated authority for stamping. The designated authority will affix a stamp and initial the document, indicating that the tax has been paid.
Step 5: Obtain the certified copy: After franking, the LLP agreement must be submitted to the designated authority for certification. The designated authority will verify the document and provide a certified copy.
Franking of LLP agreement is an essential process that every LLP must go through to make the agreement legally valid. Failure to frank the LLP agreement can lead to legal issues in the future. Therefore, it is essential to understand the basics of franking and ensure that the LLP agreement is duly franked before execution. By following the above steps, an LLP can ensure that their partnership is protected and runs smoothly.