Amity Business SchoolMBA, Semester 1Legal Aspects of BusinessMs. Shinu Vig
Amity Business SchoolLimited Liability Partnership Act, 2008Section 2(n) says “Limited Liability Partnership means apartnership formed and registered under this Act.”Nature of LLP:•A LLP is a body corporate formed and incorporatedunder this Act and is a legal entity separate from that ofits partners.•A LLP shall have a perpetual succession.•Any change in the partners of LLP shall not affect theexistence, rights or liabilities of the LLP.
Amity Business SchoolLimited Liability Partnership•It is a corporate business vehicle•enables professional expertise and entrepreneurialinitiative to combine and operate in flexible,innovative and efficient manner• provides benefits of limited liability•allows its members the flexibility for organizing theirinternal structure as a partnership.
Amity Business SchoolUnique features of LLP:1. LLP Agreement:The mutual rights and duties of Partners will be decided by the LLPAgreement between Partners or between the LLP and its Partners, ifthere is one. Otherwise, the First Schedule of the LLP Act will apply.2. Designated Partners:LLP Act provides that every LLP should have a minimum of twoDesignated Partners who are individuals. One of the DesignatedPartners has to be resident in India.3. Limited Liability:Liability of the partners is restricted only to the amount of theircontribution. There is no exposure to the personal assets of thepartners except in the case of fraud.(Contd….)
Amity Business School4. Contribution by PartnersA contribution by a Partner can be in the form of any tangible,movable or immovable or intangible property or other benefits.6. Assignment and Transfer of Partnership Rights:As per the Act, partnership rights relating to share of profits andlosses, right to receive distributions as per LLP agreement inwhole or part can be assigned and transferred.7. Registered Office:Every LLP shall have a registered office to which all thecommunications and notices may be addressed.8. Statement of Account & Solvency / Annual ReturnEvery LLP has to file a Statement of Account & Solvency withthe Registrar within a period of 30 days from the end of 6months of each financial year.
Amity Business SchoolLiabilities of Designated PartnersA Designated Partner shall be :a) Responsible for doing all the acts as are required tobe done by LLP in respect of compliance of theprovisions of the LLP Act, including filing of anyreturn, document or statement.b) Liable to any penalties imposed on LLP for anycontravention of the above mentioned provisions.
Amity Business SchoolMerits of LLP:• Easy and less expensive formation• Flexibility in management• No requirement of any minimum capital contribution by partners.• No restriction as to maximum number of partners• LLP is a separate legal entity.• Partners are not liable for acts of other partners.• Low Compliance cost.• No exposure to personal assets of the partners except in caseof fraud.• Less requirement as to maintenance of statutory records• Less Government Intervention• Easy to dissolve or wind-up• Professionals can form Multi-disciplinary Professional LLP,which was not allowed earlier
Amity Business SchoolQualifications for becoming a partner:Any individual or body corporate may be a partner in aLLP.However an individual shall not be capable of becoming apartner of a LLP, if—(a) he has been found to be of unsound mind by a Courtof competent jurisdiction and the finding is in force;(b) he is an undischarged insolvent; or(c) he has applied to be adjudicated as an insolvent andhis application is pending.
Amity Business SchoolIncorporation of LLP:1. Acquire DPIN/ DIN and DSC.2. Check name availability.3. Download LLP forms.4. File electronically.5. Track status6. Receive Certificate of IncorporationName of LLP:Every LLP shall have either the words ‘Limitedliability partnership’ or the acronym ‘LLP’ as the lastwords of its name.
Amity Business SchoolConversion into LLP:Following entities may convert into LLP:1. A firm2. A private company3. An unlisted public company
Amity Business SchoolWinding up of LLP:The winding up of LLP can be either voluntary or by the Tribunal.LLP can be wound up by the Tribunal:a. If the number of partners is reduced below two, for a periodmore than six months.b. If LLP is unable to pay its debts.c. LLP has acted against the interest of the sovereignty of thecountryd. If LLP has made a default in filing Statement of Account andSolvency or Annual Return for a consecutive period of 5 years.e. Any other reason which is just and equitable.* Tribunal means National Company Law Tribunal