First Schedule explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
The First Schedule contains fourteen default rules on the mutual rights and duties of the partners, and of the LLP and its partners. They apply where there is no LLP agreement or the agreement is silent on a matter; under section 23(4) the Schedule fills the gap. If your LLP agreement is thin, or you want to depart from these defaults, our changes in agreement and partners service can help.
The mutual rights and duties of partners, and of the LLP and its partners, are determined by the LLP agreement, and "in the absence of any such agreement on any matter" by the First Schedule (paragraph 1). The defaults include equal sharing of capital, profits and losses, no remuneration, consent of all partners to admit a new partner, decisions by majority in number with one vote each, no expulsion without express power, and arbitration of disputes. The 2021 Act made no change to the Schedule.
Where the Schedule comes from
Section 23(4) provides that, "in the absence of agreement as to any matter", the mutual rights and duties of the partners and of the LLP and the partners "shall be determined by the provisions relating to that matter as are set out in the First Schedule". Our article on section 23 covers it in full. The Schedule's heading reads: "Provisions regarding matters relating to mutual rights and duties of partners and limited liability partnership and its partners applicable in the absence of any agreement on such matters".
The OCR copy of this Schedule is partly garbled in paragraphs 3, 4 and 5. Where the print is unclear below, we give the sense and say so; check the official text for the exact words.
The fourteen paragraphs
| Para | Subject | Default rule |
|---|---|---|
| 1 | Source of rights and duties | By the LLP agreement; where it is silent on any matter, by the Schedule |
| 2 | Sharing | All partners share in capital, profits and losses |
| 3 | Indemnity by the LLP | LLP indemnifies each partner for payments made and personal liabilities incurred in the ordinary and proper conduct of the business and in preserving the business or property |
| 4 | Fraud | Every partner is liable for loss caused by his fraud in the conduct of the business (text partly garbled) |
| 5 | Management | Every partner may take part in the management of the LLP (text partly garbled) |
| 6 | Remuneration | No partner entitled to remuneration for acting in the business or management |
| 7 | New partner | No person introduced as a partner without the consent of all existing partners |
| 8 | Decisions | Majority in number of the partners, one vote each; no change in nature of business without all partners' consent |
| 9 | Minutes | Decisions recorded in minutes within thirty days, kept at the registered office |
| 10 | Accounts and information | Each partner renders true accounts and full information to any partner or his legal representatives |
| 11 | Competing business | Profits of competing business without consent are accounted for and paid over to the LLP |
| 12 | Secret benefits | Benefits from LLP transactions or use of its property, name or business connection are accounted for |
| 13 | Expulsion | No majority can expel a partner unless an express agreement confers the power |
| 14 | Disputes | Referred to arbitration under the Arbitration and Conciliation Act, 1996 |
Paragraph by paragraph
Paragraph 1: the gateway
The mutual rights and duties of the partners, and of the LLP and its partners, are determined "subject to the terms of any limited liability partnership agreement or in the absence of any such agreement on any matter, by the provisions in this Schedule." So the Schedule is a fallback matter by matter, not an all-or-nothing package: an agreement that deals with profit sharing but not with remuneration leaves paragraph 6 to apply.
Paragraph 2: sharing
"All the partners of a limited liability partnership are to share in capital, profits and losses of the limited liability partnership." The paragraph does not say "equally" in the printed text. It says partners share in capital, profits and losses; the common reading is equal sharing, but check the official text before relying on the point, and see our article on LLP agreement clauses on profit sharing and capital.
Paragraph 3: indemnity by the LLP
The LLP "shall indemnify each partner in respect of payments made and personal liabilities incurred by him" in the ordinary and proper conduct of the business of the LLP, and in or about anything done for the preservation of the business or property of the LLP. The second limb is partly unreadable in the OCR, and the wording above is our reading.
Paragraphs 4 and 5: fraud and management
Paragraph 4 makes a partner liable for loss caused to the LLP by his fraud in the conduct of the business. Paragraph 5 gives every partner the right to take part in the management of the LLP. Both are garbled in the OCR; the sense is as stated. Read together with section 30 on fraud; see our article on section 30.
Paragraph 6: no remuneration
"No partner shall be entitled to remuneration for acting in the business or management of the limited liability partnership." Remuneration to partners needs an agreement. For the tax angle, see our income-tax guides.
Paragraph 7: new partners
"No person may be introduced as a partner without the consent of all the existing partners." Unanimity is needed. The filing of a change in partners is in section 25; see our article on section 25.
Paragraph 8: how decisions are made
"Any matter or issue relating to the limited liability partnership shall be decided by a resolution passed by a majority in number of the partners, and for this purpose, each partner shall have one vote. However, no change may be made in the nature of business of the limited liability partnership without the consent of all the partners." The test is majority in number, not capital. A partner holding a small share has the same vote as the largest. A change in the nature of business needs everyone's consent.
Paragraph 9: minutes
"Every limited liability partnership shall ensure that decisions taken by it are recorded in the minutes within thirty days of taking such decisions and are kept and maintained at the registered office of the limited liability partnership." The Schedule gives no penalty for not recording minutes; check section 74 as substituted in 2021 for the general position (see our article on section 74).
Paragraphs 10 to 12: accounts and loyalty
Paragraph 10: each partner must "render true accounts and full information of all things affecting the limited liability partnership to any partner or his legal representatives". Paragraph 11: if a partner, without the LLP's consent, carries on business of the same nature as and competing with the LLP, he must account for and pay over all profits made in that business. Paragraph 12: a partner must account for any benefit derived without the LLP's consent from any transaction concerning the LLP, or from use of its property, name or business connection.
Paragraph 13: expulsion
"No majority of the partners can expel any partner unless a power to do so has been conferred by express agreement between the partners." Expulsion needs an express clause. This is a point worth settling in the agreement; see our articles on cessation of partnership interest and the post on LLP agreement essential clauses.
Paragraph 14: arbitration
"All disputes between the partners arising out of the limited liability partnership agreement which cannot be resolved in terms of such agreement shall be referred for arbitration as the provisions of the Arbitration and Conciliation Act, 1996." Note the wording "arising out of the LLP agreement". The text does not say how the arbitrator is chosen; the 1996 Act governs.
Example. Kumar & Singh LLP has three partners and an agreement that says nothing about admitting new partners or remuneration. Two partners want to bring in a fourth and to pay themselves a monthly sum. Under paragraphs 7 and 6, the fourth partner needs the consent of all three, and none of them may draw remuneration unless the agreement says so.
Why you should still have an agreement
The defaults are blunt. They give equal votes by headcount, no remuneration, no expulsion and no capital-based control. If the partners' real deal differs, record it. Our post on default provisions when there is no LLP agreement (Schedule I) covers the same ground in a different order, and the Form 3 post covers how the agreement and changes are filed.
Need help with your LLP agreement?
If your agreement is silent on remuneration, voting, new partners or exit, the Schedule decides for you. Our changes in agreement and partners team can draft or amend the agreement so that your actual arrangement governs.
Key takeaways
- The First Schedule applies matter by matter where the LLP agreement is silent.
- Partners share in capital, profits and losses; no remuneration unless agreed.
- A new partner needs the consent of all existing partners.
- Decisions are by majority in number, one vote each; a change in the nature of business needs all partners.
- Decisions must be minuted within thirty days and kept at the registered office.
- No expulsion without an express power; disputes go to arbitration.
- The 2021 Act did not change the Schedule.
Read next
- Section 23: relationship of partners and the LLP agreement
- Second Schedule: conversion of a firm into an LLP
- Default Provisions When No LLP Agreement: Schedule I
- LLP Agreement: Essential Clauses to Be Included
Disclaimer: Based on the Limited Liability Partnership Act, 2008 as amended by the Limited Liability Partnership (Amendment) Act, 2021, as consulted on 1 October 2026. Forms, fees and procedure are set by the LLP Rules, 2009 as amended from time to time. This article is general information, not legal advice; check the official text before acting.