Profit and Loss to Partners

Clause of LLP Deed for distribution of only profits to a sleeping partner

Distribution of Profit and Loss to active and sleeping Partners of LLP 

This article aware us of the situation wherein we can add a sleeping partner in an LLP for only Profits, not for loss.

An agreement is executed between partners of LLP for rights and duties of partners, or between the LLP and its partners. In case the LLP Agreement is silent or not specific about the rights and duties of partners like distribution of profits and loss to its partner, then provisions in the First Schedule to the LLP Act relating to that matter will apply.

All the partners of LLP are entitled to share equally in the capital, profits, and losses of the LLP. However, they are free to decide the ratio in which they will share profits. Accordingly, they can decide to share profit but not the losses as per the conditions of the agreement.

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