• Selling share of partnership

We have LLC with 3 members A,B,C.
A wants to sell her share. 
B is disagreed
C is didn't decide. What should I do? I'm the B.
Asked 3 years ago in Business Law

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7 Answers

Transfer of share is governed by provisions of LLP 

 

section 42 of Limited Liability Partnership Act, which states as under:
42. Partner's transferable interest.—(1) The rights of a partner to a share of the profits and losses of the limited liability partnership and to receive distributions in accordance with the limited liability partnership agreement are transferable either wholly or in part.
(2) The transfer of any right by any partner pursuant to sub-section (1) does not by itself cause the disassociation of the partner or a dissolution and winding up of the limited liability partnership.
(3) The transfer of right pursuant to this section does not, by itself, entitle the transferee or assignee to participate in the management or conduct of the activities of the limited liability partnership, or access information concerning the transactions of the limited liability partnership.

Ajay Sethi
Advocate, Mumbai
96979 Answers
7829 Consultations

All the three of you have to reach an agreement on the issue. You have to be guided by your partnership agreement on the situation. Otherwise, the issue has to be settled by court.

Swaminathan Neelakantan
Advocate, Coimbatore
2917 Answers
20 Consultations

Partition is only way if there is disagreement in all. All the shareholders can sell or retain there individual shares even without partition

Prashant Nayak
Advocate, Mumbai
32493 Answers
201 Consultations

Dear client, 

Shares in a partnership can’t be transferred to another individual or partner without the consent of all the partners. When there is such disagreement on things that must require acceptance by all the partners, nothing in specific can be done to resolve such an issue. In case the partners still don't find themselves in agreement, partner A can withdraw from the partnership and call for dissolution of the firm. 

Thank you.  

Anik Miu
Advocate, Bangalore
10182 Answers
120 Consultations

In India, LLCs are registered under the rules and regulations of the Limited Liability Partnership Act, 2008, taking necessary and enlightening support if required, from the Companies Act, 1956. 

 the Articles of Association of the Company must be reviewed prior to beginning the share transfer procedure.

 If a shareholder wishes to sell some or all of his shares, such shares must first be offered to other existing members of the private limited company at a price determined by the Directors or the Auditor of the Company. The value of the shares can be determined based on the formula / method prescribed in the Articles of Association. If no existing shareholder is interested, then shares of the Company can be freely transferred to an outsider.

Only restriction contained the Articles of Association are considered legally binding. Any private agreement between the shareholders are not binding either on the company or on the shareholders. Further, share transfer can only be restricted by the Articles of Association. The right to transfer shares of a private limited company cannot be an total prohibition or ban on share transferability.

You may peruse your articles of association and proceed as per the conditions mentioned therein  

T Kalaiselvan
Advocate, Vellore
87178 Answers
2341 Consultations

1. What has been mentioned in the Partnership Agreement as Retirement of Partnership Clause?

 

2. Ordinarily, if B disagrees in A's selling her share to a third party, she shall have to buy the said share of A.

 

3. B can not just disagree in A's selling her share without offering to buy the same.

 

4. So, you should offer to buy the share of A.

Krishna Kishore Ganguly
Advocate, Kolkata
27461 Answers
726 Consultations

offer B's share first to A and C

If both of them refuse then issue a notice for dissolution of the LLC and for rendering accounts 

Yusuf Rampurawala
Advocate, Mumbai
7690 Answers
79 Consultations

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