Transfer Profit Rights. The Right Way.
The partners of an LLP can easily change their profit sharing ratio either by transferring only the profits right with no change in contribution or a change in the profit sharing ratio along with liability to bear changes in the amount of contribution.
In both the events, the LLP needs to follow the protocol specified in the LLP agreement. Usually, the LLP can change their partner profit sharing ratio with the consent of partners by making an amendment in the LLP agreement. Since the profit sharing rights in an LLP is a transferable commodity, the LLP needs to execute the proper assignment or transfer deed to give effect to the transfer of the profit rights to another partner. Based on the transfer deed, the LLP needs to make the necessary changes in the agreement and file it with the Registrar of Companies.
