Limited LiabilityPartnership Act, 2008

What is Limited Liability Partnership?

LLP Act, 2008 passed by Lok Sabha on 12th of December 2008 and the President gave assent to the Bill on 7th January 2009.

Hybrid of Corporate & Partnership business Form.

Limits liability of partners to the extent of their contribution.

LLP

Partners & Designated

Partners

Formation

Compliances

Foreign LLP

Conversion

Compromise

&

Arrangement

Dissolution

&

Winding up

Partners & Designated Partners (Sec. 7)

Designated partner : -

- Every LLP shall have at least two designated partners who are individuals and at least one of them shall be resident in India. - Responsible for managing the day to day affairs and ensuring the compliances of all applicable laws.

Requirements for Designated Partners : -

- Designated Partner identification Number (DPIN) - Only Individual can be the Designated Partners. - At least One Designated partner should be resident of India. - In case of Body corporate their nominees can be the Designated Partners.

Individual or/and body

corporate

Individual or/and body

corporate

LLP

• Each partner shall bring contribution in LLP and nature & amount shall be disclosed in the Accounts of LLP.

• Contribution can be in tangible, movable, immovable or intangibleForm

Contribution

• Right to participate in Management• Ethical duty to comply with all provisions of

LLP Act and LLP Agreement

Role/ Rights of Partner

• Limited to the Extent of their Contribution• Not Liable for the wrongful Acts /Omissions of

other Partners• Not Liable for Obligation of LLP arising out of

a contract.• Unlimited Liability of Partners in case of Fraud

Liability of Partners

Incorporationof

LLP(Sec. 11 to 21)

Step 1 - Deciding the Partners & Designated

partners

• At least 2 Partners - Individuals or Body Corporate

• Minimum two Designated Partners out of total no. of Partners –Individuals or Nominee of Body Corporate.

• At least One Designated Partner to be Resident of India.

Step 2 - Obtaining DPIN (Form-7) & Digital Signature

• DPIN – Designated Partner Identification Number ( 8 Digit Number)

• Online application in Form 7 to Central Government with Identity and Address Proof of applicant

Step 3 - Reservation of name Availability for

LLP (Form-1)

• Last word -‘LLP’ or ‘Limited Liability partnership’

• Not to be identical or nearly resemble to any other partnership firm, LLP, Body Corporate and trade mark. (Sec-15)

• E-Form 1 to be filed with ROC.

E Form 2 – Incorporation Document along with Subscription Sheet and

proof of address of registered office of LLP.

Total Incorporation Fees

Step 4 -Filing of Incorporation Document (Form-2)

Contribution up to 1 lakh

Fee Contribution More than 10 lakh Fee

Form 1 (Name Availability) 200 Form 1 (Name Availability) 200

Form 2 (Incorporation Document) 500 Form 2 (Incorporation Document) 5000

Form 3 (LLP Agreement Reg.) 50 Form 3 (LLP Agreement Reg.) 200

Form 4 (Partners Consent) 50 Form 4 (Partners Consent) 200

Incorporation Fee 800 Incorporation Fee 5600

Form 2 Fees for contribution- above Rs. 1 lakh and upto Rs. 5 lakhs - Rs. 2000/-- above Rs. 5 lakhs and upto Rs. 10 lakhs - Rs. 4000/-

Step 5 - Registration of LLP Agreement

•Mandatory execution of LLP Agreement (Sec-23)•In absence of Agreement as to any matter, Schedule 1 will be applicable.•Filing of details of LLP Agreement through e Form 3 – within 30 days of Incorporation.•Stamp duty on LLP agreement to be paid as per State Stamp Act.

Step 6 - Certificate of Incorporation

•On Successful Compliances – Registrar Issues Certificate of Incorporation.•Conclusive Evidence of Registration of Limited Liability Partnership

Accounts of LLP Shall be prepared within 6 months from the end of the Financial Year.

Books of accounts - Cash or Accrual basis.

Statement of accounts and solvency - filed by every LLP in e-form 8 within 30 days from expiry of 6 months from end of each financial year (30th October).

Audit: The accounts of LLPs shall also be audited.Exception: Small size LLPs

Annual Return: Every LLP shall file Annual Return (Form 11) with the Registrar within 60 days of closure of financial year (30th May).

Default: Any LLP which fails to maintain books of accounts and get them audited and file with Registrar

Fine - Rs. 25,000 to Rs. 5,00,000

Disclosures, Audit & Filing Requirements(Sec. 34 and 35)

Event Based Compliances of LLP

Compliance Section e-form Time Limit

Filing of Consent of Designated Partners

7(3) Form 4 Within 30 days of incorporation or subsequent appointments

Filing of Change in Partners 25(2) Form 3 & Form 4

Within 30 days of Change

LLP Agreement & Changes therein

23(2) Form 3 With in 30 days of incorporation or Changes in LLP Agreement

Shifting of Registered Office 13(3) Form 15 Within 30 days of Compliance

Change of Name 19 Form 5 Within 30 days of Compliance

• Additional Fees for delay filing of Form - Rs. 100 per day up to 300 days.

• Delay Filing of the Form beyond 300 days will attract additional fees and action against LLP and Designated Partners under the Act.

Regular Compliances of LLP

Form-8 (Filing of Statements of Accounts & Solvency) – Within 30 days from the end of 6 months from the closure of Financial Year.

Form-11 (Filing of Annual Return) – within 60 Days of closure of Financial Year

Maintenance of proper Books of Accounts on cash basis or on accrual basis and according to the Double Entry System of Accounting.

Maintained at registered office and preserved for at least 8 years.

Audit of Accounts in accordance with the Rules prescribed.

Foreign LLP [LLP Incorporated Outside India (LIOI)]

(Sec. 59 and Rule 34)

Section 59 of LLP Act, 2008 contain provisions regarding establishment of the place of business by Foreign Limited Liability Partnership within the India for carrying on their business.

Filing of Form-27 within 30 days from

establishment of place ofbusiness in

India

Permission/approval of

Reserve Bank of India (RBI) required for

establishment of place of business in

India.

Filing fees for Form-27 -

Rs.5000/-

Compliance of special Act, If the business is

regulated by special Act

Reservation/Renewal of Name byForeign LLP/Foreign Company

Form-25 is to be filed with the fees of Rs.10,000/-

Reservation of name valid for 3 years.

Renewal of name is possible by filing fresh From-25 on payment of fees Rs.5,000/-.

Conversion of LLP

Partnership Firm

Private Company

Unlisted Public Company

Procedure of Conversion of Company/Firm to LLP

I - Deciding the Partners & Designated Partners

II - Obtaining DPIN & Digital Signature

III – Reservation of Name for LLP (Form-1)

IV- Filing of Incorporation Document (Form-2)

V - Filing of Conversion Application ( Form 17/18)

VI - Certificate of Conversion into LLP (Form 19)

VII - Intimation of Conversion to ROC (Form 14)

Important Considerations for conversion LLP

• Filing of Form with registrar of LLP:-• Form-7 & Form1 and • Form-17/18 & Form-2 (with mandatory attachments)

•All the Members of the Company/partners of the firm shall be the Partners in LLP (and no one else) with the same capital/contribution ratio.

•Consent of all Members of the Company/partners of the firm shall be obtained.•No security interest on the assets shall be subsisting or in force on the date of application.

•NOC from Unsecured creditors.

•Statement of Assets and Liabilities certified by Auditor of not more than 30 days prior to the date of the conversion application.

•All due returns of ROC, Income Tax and other Tax authorities shall be filed. •NOC from other authority for conversion, if required.

•After receiving Conversion Certificate the same to be filed within 15 days with the Registrar of Companies in Form 14 .

Compromise, Arrangement and Reconstruction of LLP (Sec. 60)

Between LLP and it’s creditors or between LLP and it’s partners

3/4th of the creditors / partners must agree

NCLT order should be filed within 30 days

If a default is found, a fine of maximum Rs. 1 Lakh will be levied on the LLP

Winding up of LLP (Sec. 63 & 64)

May be wound up by NCLT or voluntarily

LLP can decide to be wound up by NCLT

No. of partners reduced below 2 for a period of 6< months

Unable to pay it’s debts

Acted against security of State or public order or against sovereignty and integrity of India

Defaulted in filing Statement of Account or Solvency or annual return for 5 years in a row

NCLT judges that it is equitable that the LLP be wound up

Provisions of the Company Act 1956 can be applied to LLP with suitable changes

Miscellaneous Provisions in LLP

Striking off the name of LLP by ROC. [Section 75]

Forms required to filed under LLP should be in electronic form online on the LLP Portal. [Section 68]

Till the constitution of NCLT and NCLAT under the Companies Act, 1956, the powers of NCLT and NCLAT will be exercised by the Company Law Board or High Court. [Section 81]

Unless specifically provided, the provisions of the Indian Partnership Act, 1932 are not applicable to LLPs. [Section 4]

Merits of LLP

Limited Liability of the partners

No Double Taxation

No Dividend distribution Tax

No limit on Max. no. of partners

No requirement of min. capital contribution

No requirement to maintain statuary records except book of accounts

Personal accounts of partners are not exposed

Allowance of FDI in LLP

Globally accepted structure ( e.g. – YouTube)

References

http://www.llp.gov.in/pdf/LLP_Act_2008_15jan2009.pdf

http://wirc-icai.org/wirc_referencer/Other%20Law/LLP.htm

http://www.llponline.in/

Thank You