Limited liability partnership

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Limited liability partnership

  1. 1. Limited Liability Partnership Act, 2008
  2. 2. 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.
  3. 3. Foreign LLP Compliances Conversion Compromise & Arrangement Formation Partners & Designated Partners LLP Dissolution & Winding up
  4. 4. Partners & Designated Partners (Sec. 7) Individual or/and body corporate Individual or/and body corporate LLP  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.
  5. 5. Contribution • 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 Role/ Rights of Partner • Right to participate in Management • Ethical duty to comply with all provisions of LLP Act and LLP Agreement Liability of Partners • 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
  6. 6. Incorporation of LLP (Sec. 11 to 21)
  7. 7. 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.
  8. 8. Step 4 -Filing of Incorporation Document (Form-2)  E Form 2 – Incorporation Document along with Subscription Sheet and proof of address of registered office of LLP. Total Incorporation Fees 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) 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 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/- 5000 5600
  9. 9. Step 5 - Registration of LLP Agreement Step 6 - Certificate of Incorporation • Mandatory execution of LLP Agreement (Sec-23) • On Successful Compliances – Registrar Issues Certificate of Incorporation. • 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. • Conclusive Evidence of Registration of Limited Liability Partnership
  10. 10. Disclosures, Audit & Filing Requirements (Sec. 34 and 35) 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
  11. 11. Event Based Compliances of LLP Compliance Section e-form Filing of Consent of Designated Partners 7(3) Form 4 Filing of Change in Partners 25(2) LLP Agreement & Changes therein Shifting of Registered Office 23(2) Form 3 & Form 4 Form 3 13(3) Form 15 With in 30 days of incorporation or Changes in LLP Agreement Within 30 days of Compliance 19 Form 5 Within 30 days of Compliance Change of Name Time Limit Within 30 days of incorporation or subsequent appointments Within 30 days of Change • 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.
  12. 12. Regular Compliances of LLP 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.  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
  13. 13. 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 of business in India Permission/appro val 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
  14. 14. Reservation/Renewal of Name by Foreign LLP/Foreign Company Foreign LLP/Foreign Company can reserve its existing name by which it is registered in the Foreign Country. 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/-.
  15. 15. Conversion of LLP Partnership Firm Private Company Unlisted Public Company
  16. 16. 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)
  17. 17. 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 .
  18. 18. 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
  19. 19. 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
  20. 20. 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]
  21. 21. 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)
  22. 22. 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/
  23. 23. Thank You

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