A started an online business (India) on his own. Now he wants B and C as partners to register an LLP. But A wants to retain 20% of share (he calls it founder's share) aside without any liability of loss. From remaining 80% A, B & C will hold 30%, 30% and 20% respectively for their partnership, but we have to share the entire 100% loss in the ratio of this partnership. Now the situation stands as: Share of Profit: A:B:C = 50 : 30 : 20 Share of loss : A:B:C = 37.5 : 37.5 : 25 Moreover, A claims, if we need to add a partner, our existing shares will go down in the ratio of this partnership, leaving that 20% founder's share untouched. Now the question is: Is all this legally valid and fair enough? Is it fine for us (B and C) to join this?
Yes, this is a valid deal as per the Indian law, though is not necessarily fair. We have removed the 'founder share' from the deal and moved to a simpler deal with a share ratio of 50:30:20. The founder, A, is already getting value for his contribution in the form of the largest portion of share, so there is no need to allow additional benefits.