5. Conversion from/to LLP
a. Accounts & Returns
b. Relationship of Partners
c. List of Forms & uses
d. Admission, Retirement & Death of Partner
7. Audit and Taxation
9. Foreign LLP/FDI in LLP
10. Dissolution/Winding up
Limited Liability Partnership
Hybrid between private ltd. company & partnership firm
Indian government passed LLP Act on 09/01/2009
LLP Act,2008 gets notified w.e.f March 31st, 2009
The first LLP was registered on April 2,2009
Need for LLP:- Major causes for the advent of LLP are-
To enable the professionals to deal in international activities on the
concept of Limited Liability which was earlier not possible due to
To remove the restriction posed by Indian partnership Act, 1932 that
professionals are not allowed to have more than 10 or 20 partners.
LLPAct removed the above obstacles.
Limited liability of partners.
Flexible form of organization.
Administration according to LLP agreement.
Required to register with ROC.
LLP agreement is the main incorporation document.
The economic rights of partners are freely transferrable.
Separate legal entity.
Every partner is an agent of the LLP but not liable for the wrongful acts
of other partners.
In the absence of any provision for distribution of profits/ losses, partners
are entitled to share profits and losses equally.
LLPs are not allowed to operate as Not for profit organization
By Limited Liabilities Partnership Act 2008
By Limited Liabilities Partnership Rules 2008
By Registrar of Companies
By LLP Agreement between Partners
Partners:- Minimum two designated partners are required and no
limit on maximum
Capital:- No limit on maximum and minimum capital contribution
Names:- At least two proposed names are required
Objects:- As per LLP Agreement
Documents:-1) ID, Address proof and photo of all Partner and DPs.
2) LLP Agreement duly stamped as per relevant Stamp Act
of the State.
3) Subscriber Statements
4) Consent Letter from all Partner and DPs as per form9
5) Proof of Address of Registered Office
on MCA site
Apply for new
DP will apply
DSC to be
File form 1
Conversion from/to LLP
CONVERSION OF A PRIVATE / UNLISTED PUBLIC
COMPANY INTO LLP
Application for conversion in Form 18 with the
following attachments :
Statement of shareholders (may be attached in a tabular form)
Incorporation Document & Statement in Form 2 filed electronically.
Statement of Assets and Liabilities of the company duly certified as true
and correct by the Chartered Accountant in practice.
List of all the creditors along with their consent to the conversion (may be
given in the form of a tabular statement).
Copy of acknowledgement of latest income tax return.
Particulars of pending proceedings from any court/Tribunal etc.
Once converted into LLP, it can not be converted
back to private/unlisted public company
Accounts must be prepared for a financial year.
Methods of Accounting – Cash or Accrual
Books of Accounts shall include-
1) Details of all receipts and payments.
2) Records of assets and liabilities.
3) Statements of stock.
4) Any other records which the partners decide.
Records to be preserved- For 3 years from the date they were first made.
Statement of account & solvency to be filed with ROC within 6 months of
close of financial year in form 8.
Must file an annual return with registrar within 60 days from the end of
financial year in form 11.
Must be accompanied by certificate issued by CS confirming veracity of
particulars / statements in return, if turnover exceeds Rs. 5 crores or
contribution by all the partners exceeds Rs. 50 Lacs, else certificate must
be issued by DP.
Relationship of Partners
Governed by LLP Agreement
In absence of any agreement, principles set out in First Schedule
Registration of changes in partners / details of partners to be
filed in ‘Form-6’
• Equal Share in capital & profits / losses
• Partners not entitled to any remuneration for acting in
business or management of LLP
• No admission of partner without consent of all other
• Any ordinary matter regarding LLP may be decided by
resolution passed by majority of partners
List of Forms & their uses
Form DIN 1 Application for allotment of Director Identification Number
Form DIN 4 Intimation of change in particulars of Director to be given to the
Form 1 Application for reservation or change of name
Form 2 Incorporation document and subscriber’s statement
Form 2A Details in respect of designated partners and partners of Limited
Form 3 Information with regard to limited liability partnership agreement
and changes, if any, made therein
Form 4 Notice of appointment, cessation, change in name/
address/designation of a designated partner or partner. and consent
to become a partner/designated partner
Form 4A Notice of appointment, cessation, change in particulars of a partners
Form 5 Notice for change of name
Form 8 Statement of Account & Solvency
Form 11 Annual Return of Limited Liability Partnership (LLP)
Form 12 Form for intimating other address for service of documents
Form 15 Notice for change of place of registered office
Form 17 Application and statement for conversion of a firm into Limited
Liability Partnership (LLP)
Form 18 Application and Statement for conversion of a private company/
unlisted public company into limited liability partnership (LLP)
Form 22 Notice of intimation of Order of Court/ Tribunal/CLB/ Central
Government to the Registrar
Form 23 Application for direction to Limited Liability Partnership (LLP) to
change its name to the Registrar
Form 24 Application to the Registrar for striking off name
Form 25 Application for reservation/ renewal of name by a Foreign Limited
Liability Partnership (FLLP) or Foreign Company
Form 27 Form for registration of particulars by Foreign Limited Liability
Form 28 Return of alteration in the incorporation document or other
instrument constituting or defining the constitution; or the
registered or principal office; or the partner or designated partner of
limited liability partnership incorporated or registered outside India.
Form 29 Notice of (A) alteration in the certificate of incorporation or
registration; (B) alteration in names and addresses of any of the
persons authorised to accept service on behalf of a foreign limited
liability partnership (FLLP) (C) alteration in the principal place of
business in India of FLLP (D) cessation to have a place of business in
Form 31 Application for compounding of an offence under the Act
Form 32 Form for filing addendum for rectification of defects or
Admission, Retirement & Death of Partner(s)
Unless the LLP agreement says otherwise, the
admission of a new member requires the unanimous
consent of the existing members
An LLP agreement can provide mandatory
retirement but it needs to be objectively justified
Existence of LLP is not affected by admission,
retirement or death of partner(s) provided minimum
no. of partners are maintained
Audit & Taxation
Requirement of Audit
Statutory audit is mandatory if annual turnover is more than
`40 lacs or contribution exceeds ` 25 lacs
Tax audit is mandatory if turnover exceeds ` 60 lacs
Taxation on LLP
LLP’s will be treated as Partnership Firms for the purpose of
Income Tax w.e.f assessment year 2010-11
No surcharge will be levied on income tax.
Profit will be taxed in the hands of the LLP and not in the
hands of the partners.
Minimum Alternate Tax and Dividend Distribution Tax will
not be applicable for LLP instead AMT has been introduced
alike to MAT.
Remuneration to partners will be taxed as “Income from
Business & Profession”
No capital gain on conversion of partnership firms/company
Designated Partners will be liable to sign and file the Income
LLP shall not be eligible for presumptive taxation.
Capital Gain on conversion of Company into LLP will be
exempt from tax, if prescribed conditions are complied with.
On conversion, the successor LLP , will be allowed to carry
forward and set off of accumulated loss and unabsorbed
On conversion, the successor LLP will be allowed to amortize
the expenditure incurred under voluntary retirement scheme
on conversion, the successor LLP will not be allowed to take
the credit of MAT paid by the predecessor company.
Comparison between firm and LLP
Basis Partnership Firms LLP
Governing Law Partnership Act, 1932 Limited Liability Partnership Act,
Registration Not Compulsory; but is
Creation By partnership Agreement By Law
Legal Status Partners collectively known as
‘Firm’; no separate legal status
LLP has separate legal status
apart from partners
Succession Firm would cease to exist on
change in partnership, unless
otherwise provided in
LLP would not be affected on
change in partnership (Perpetual
Partnership cannot own assets
in its name; assets must be in
name of Partners
LLP can own assets in its own
Minor can be admitted to
benefits of Partnership
Law silent on position of Minors
Basis Company LLP
Governing Law Companies Act, 1956 Limited Liability Partnership Act,
Name Must contain suffix ‘Ltd’ or
Must contain suffix ‘LLP’
Common Seal Common Seal is compulsory Common Seal is optional
Rigid & governed by
Flexible & governed by LLP
Specific Resolution required
for appointment of auditors
at every AGM
Auditors shall be deemed to be
re-appointed in case no specific
appointment is made (unless
Audit All companies are subject to
audit of accounts
Only LLPs having turnover of
more than Rs. 40 Lacs or
contribution of more than Rs.
25 Lacs are subject to audit of
Comparison between Pvt. Ltd. Co. and LLP
Foreign LLP/ FDI in LLP
Means a LLP which is formed, registered or incorporated outside India and which
establishes a place of business in India
FLLP is required to file form 25 for approval of name
If FLLP has been incorporated in language other than English then it has to be
certified by a notary public of their respective country in English language
If translation has been made in India then such translation is required to be
certified by CA/CS/CWA/Advocate
Foreign LLP shall, within 30 days of establishment in India required to file form 27
within 30 days from its establishment
LLPs with FDI will be allowed, through the Government approval route, in those
sectors/activities where 100% FDI is allowed, through the automatic route and
there are no FDI-linked performance related conditions.
LLPs with FDI will not be allowed to operate in agricultural/plantation activity,
print media or real estate business.
LLPs with FDI will not be eligible to make any downstream investments
Where the Partners of LLP
themselves mutually decides
If the LLP decides that it to be dissolved by Tribunal
If no. of partners falls below 2 for more than 6
If LLP is unable to pay its debts.
If LLP has acted against interest of the sovereignty
and integrity of India, security of state or Public
Tribunal is of opinion that it is just and equitable
On declaration of LLP as defunct(Suomoto by LLP or
if it is not carrying business for 1 year or more)