LIMITED LIABILITY PARTNERSHIP ACT 2008  & RULES 2009 Priya Bhansali  KUMBHAT & Co., Chartered Accountants www.bhansali.in
Agenda <ul><li>Genesis </li></ul><ul><li>Salient Features </li></ul><ul><li>Comparison between Partnership/LLP/Private Lim...
GENESIS OF LLP <ul><li>LLP – 1991 in Texas – Loan and savings failures </li></ul><ul><li>Uniform Partnership Act 1996 - US...
Concept Paper <ul><li>Role of service sector </li></ul><ul><li>Limitation of Multi-disciplinary partnership </li></ul><ul>...
What is LLP  <ul><li>LLP – separate legal entity with unlimited capacity to do anything a natural person can do – UK </li>...
Salient Features <ul><li>LLP for all kinds of business </li></ul><ul><li>Limited Liability  </li></ul><ul><li>Simple when ...
Salient Features <ul><li>Cannot be listed </li></ul><ul><li>Incorporation Document </li></ul><ul><li>Flexibility on intern...
Formation of LLP <ul><li>Similar to that of formation of Company </li></ul><ul><li>Acquire – DSC and DPIN </li></ul><ul><l...
Advantages <ul><li>Limited Liability </li></ul><ul><li>Members cannot be responsible for the act of any other member – int...
Disadvantages <ul><li>Compliance – Annual Filings, Solvency, Duplication </li></ul><ul><li>One person LLP concept absent <...
Regulatory Frame Work <ul><li>Legal </li></ul><ul><li>Administration </li></ul><ul><li>Taxation </li></ul>KUMBHAT & CO.,
Regulatory Framework <ul><li>Legal – </li></ul><ul><li>  LLP Act 2008 </li></ul><ul><li>-  Companies Act 1956 </li></ul><u...
Comparison <ul><li>Applicable Law </li></ul><ul><li>Liability </li></ul><ul><li>Perpetual Existence </li></ul><ul><li>Sepa...
Comparison <ul><li>Document providing procedure </li></ul><ul><li>Management </li></ul><ul><li>Compliance/Accounts/Audit <...
Comparison <ul><li>Oppression & Mis-management </li></ul><ul><li>Annual Filing  </li></ul><ul><li>E –filing </li></ul>KUMB...
Chapters under the Act <ul><li>Preliminary </li></ul><ul><li>Nature of LLP </li></ul><ul><li>Incorporation of LLP and matt...
Chapters <ul><li>Assignment & Transfer of partnership rights </li></ul><ul><li>Investigation </li></ul><ul><li>Conversion ...
Schedules <ul><li>First Schedule  - matters relating to mutual rights and duties  -like Table A </li></ul><ul><li>Second S...
LLP Rules  <ul><li>LLP Rules 2009  is notified, additions as and when need arises </li></ul><ul><li>18 chapters, 41 Rules,...
Designated Partner <ul><li>To be specified in Agreement </li></ul><ul><li>One must be a Resident of India </li></ul><ul><l...
Audit and Accounts <ul><li>Proper Books of Accounts </li></ul><ul><li>Cash or accrual basis </li></ul><ul><li>Statement of...
Accounts & Annual Returns <ul><li>Statement of Account and Solvency Statement to be prepared  within 6 m of end of FY and ...
Auditors <ul><li>Section 34(4)  & Rule 24(8) to 24 (19) </li></ul><ul><li>Authority  - Designated Partners – other partner...
Auditors (contd.) <ul><li>Re-appointment </li></ul><ul><li>Remuneration </li></ul><ul><li>Removal of an Auditor  </li></ul...
Other Countries <ul><li>USA </li></ul><ul><li>UK </li></ul><ul><li>Japan </li></ul><ul><li>Canada </li></ul><ul><li>China ...
TAXATION <ul><li>Expect to be cleared in the Budget of 2009 – Probable date is 31.7.09  </li></ul><ul><li>LLP or members w...
Taxation (contd.) <ul><li>UK – Income taxed  in hands of partners </li></ul><ul><li>UK – Capital Gains on transfer of asse...
Issues <ul><li>Minors, HUF can they be partners? </li></ul><ul><li>Act is very small when compared to Co’s Act 1956 – but ...
Foreign LLP <ul><li>Section 59  </li></ul><ul><li>Establishment of place of Business in India </li></ul><ul><li>Business a...
<ul><li>Lots to examine and explore !! </li></ul><ul><li>www.llp.gov.in </li></ul><ul><li>THANK YOU </li></ul><ul><li>www....
Upcoming SlideShare
Loading in …5
×

Limited Liability Partnership Act 2008

10,218 views

Published on

Published in: Business, Economy & Finance

Limited Liability Partnership Act 2008

  1. 1. LIMITED LIABILITY PARTNERSHIP ACT 2008 & RULES 2009 Priya Bhansali KUMBHAT & Co., Chartered Accountants www.bhansali.in
  2. 2. Agenda <ul><li>Genesis </li></ul><ul><li>Salient Features </li></ul><ul><li>Comparison between Partnership/LLP/Private Limited Co. </li></ul><ul><li>Chapters under LLP Act </li></ul><ul><li>Rules </li></ul><ul><li>LLP in Other Countries </li></ul><ul><li>Certain Issues </li></ul>KUMBHAT & CO.,
  3. 3. GENESIS OF LLP <ul><li>LLP – 1991 in Texas – Loan and savings failures </li></ul><ul><li>Uniform Partnership Act 1996 - USA </li></ul><ul><li>LLP Act 2000 – UK </li></ul><ul><li>Abid Hussain Committee -1997 </li></ul><ul><li>Naresh Chandra Committee – 2003 </li></ul><ul><li>JJ Irani Expert Committee – 2005 </li></ul><ul><li>Naresh Chandra 2 nd Committee – July 2005 </li></ul>KUMBHAT & CO.,
  4. 4. Concept Paper <ul><li>Role of service sector </li></ul><ul><li>Limitation of Multi-disciplinary partnership </li></ul><ul><li>Limitation of no. of Partners </li></ul><ul><li>Litigation – joint liabilities in case of partnership </li></ul><ul><li>Hybrid between a Company and Partnership </li></ul><ul><li>Profession as well as SME </li></ul>KUMBHAT & CO.,
  5. 5. What is LLP <ul><li>LLP – separate legal entity with unlimited capacity to do anything a natural person can do – UK </li></ul><ul><li>Partnership formed under LLP Act 2008 </li></ul>KUMBHAT & CO.,
  6. 6. Salient Features <ul><li>LLP for all kinds of business </li></ul><ul><li>Limited Liability </li></ul><ul><li>Simple when compared to a Company </li></ul><ul><li>Minimum Partners 2 ; no limit for maximum </li></ul><ul><li>Legal Entity – Artificial Juridical Person </li></ul><ul><li>Members & Mutual Rights </li></ul><ul><li>Designated Partners </li></ul><ul><li>Unlimited Capacity – no main objects </li></ul><ul><li>Conversion </li></ul>KUMBHAT & CO.,
  7. 7. Salient Features <ul><li>Cannot be listed </li></ul><ul><li>Incorporation Document </li></ul><ul><li>Flexibility on internal structure – No BOD etc </li></ul><ul><li>Mergers </li></ul><ul><li>Winding up </li></ul>KUMBHAT & CO.,
  8. 8. Formation of LLP <ul><li>Similar to that of formation of Company </li></ul><ul><li>Acquire – DSC and DPIN </li></ul><ul><li>Register DSC and DPIN with LLP </li></ul><ul><li>Check name availability </li></ul><ul><li>Download Forms </li></ul><ul><li>File Electronically </li></ul><ul><li>Track Status </li></ul><ul><li>Receive Certificate </li></ul><ul><li>Start Business </li></ul>KUMBHAT & CO.,
  9. 9. Advantages <ul><li>Limited Liability </li></ul><ul><li>Members cannot be responsible for the act of any other member – inter se agreement between members </li></ul><ul><li>No Maximum No. of Partners </li></ul><ul><li>Easier Operations – Perpetual </li></ul><ul><li>Compliances – Succession </li></ul><ul><li>No BOD, meetings/minutes </li></ul><ul><li>Remuneration </li></ul>KUMBHAT & CO.,
  10. 10. Disadvantages <ul><li>Compliance – Annual Filings, Solvency, Duplication </li></ul><ul><li>One person LLP concept absent </li></ul><ul><li>Limitation of 2 member LLP – result in closure </li></ul><ul><li>Documents available for public scrutiny </li></ul><ul><li>Penalty for non compliance </li></ul><ul><li>Taxation – Proposal to tax like partnership – taxation on converison not yet clear - </li></ul>KUMBHAT & CO.,
  11. 11. Regulatory Frame Work <ul><li>Legal </li></ul><ul><li>Administration </li></ul><ul><li>Taxation </li></ul>KUMBHAT & CO.,
  12. 12. Regulatory Framework <ul><li>Legal – </li></ul><ul><li> LLP Act 2008 </li></ul><ul><li>- Companies Act 1956 </li></ul><ul><li>- IT Act 2000 </li></ul><ul><li>- Indian Partnership Act 1932 </li></ul><ul><li>- General Clauses Act 1897 </li></ul><ul><li>- SEBI Act 1972 </li></ul><ul><li>- CPC 1908 </li></ul><ul><li>- Other Acts - Professionals </li></ul><ul><li>- Advocate Act 1961 </li></ul><ul><li>- CA Act 1949 </li></ul><ul><li>- CS Act 1980 </li></ul><ul><li>- CWA Act 1959 </li></ul><ul><li>Administration </li></ul><ul><li>- MCA </li></ul><ul><li>- ROC </li></ul><ul><li>- Tribunal </li></ul><ul><li>- Official Liquidator </li></ul>KUMBHAT & CO.,
  13. 13. Comparison <ul><li>Applicable Law </li></ul><ul><li>Liability </li></ul><ul><li>Perpetual Existence </li></ul><ul><li>Separate Legal Entity </li></ul><ul><li>Minimum Number </li></ul><ul><li>Maximum Members </li></ul><ul><li>Documents defining activities </li></ul>KUMBHAT & CO.,
  14. 14. Comparison <ul><li>Document providing procedure </li></ul><ul><li>Management </li></ul><ul><li>Compliance/Accounts/Audit </li></ul><ul><li>Minimum No. of Directors </li></ul><ul><li>Transferability of shares </li></ul><ul><li>Conversion </li></ul><ul><li>Common Seal </li></ul><ul><li>Change of Regd Office </li></ul><ul><li>Change of Name </li></ul>KUMBHAT & CO.,
  15. 15. Comparison <ul><li>Oppression & Mis-management </li></ul><ul><li>Annual Filing </li></ul><ul><li>E –filing </li></ul>KUMBHAT & CO.,
  16. 16. Chapters under the Act <ul><li>Preliminary </li></ul><ul><li>Nature of LLP </li></ul><ul><li>Incorporation of LLP and matters incidental thereto </li></ul><ul><li>Partners and their relations </li></ul><ul><li>Extent & Limitation of LLP and partners </li></ul><ul><li>Contributions </li></ul><ul><li>Financial Disclosures </li></ul>KUMBHAT & CO.,
  17. 17. Chapters <ul><li>Assignment & Transfer of partnership rights </li></ul><ul><li>Investigation </li></ul><ul><li>Conversion to LLP </li></ul><ul><li>Foreign LLP </li></ul><ul><li>Compromise, arrangement or reconstruction </li></ul><ul><li>Winding up and dissolution </li></ul><ul><li>Miscellaneous </li></ul>KUMBHAT & CO.,
  18. 18. Schedules <ul><li>First Schedule - matters relating to mutual rights and duties -like Table A </li></ul><ul><li>Second Schedule – Conversion of firm into LLP </li></ul><ul><li>Third Schedule – Conversion of Private Ltd Co into LLP </li></ul><ul><li>Fourth Schedule – Conversion of Unlisted Public Co. into LLP </li></ul>KUMBHAT & CO.,
  19. 19. LLP Rules <ul><li>LLP Rules 2009 is notified, additions as and when need arises </li></ul><ul><li>18 chapters, 41 Rules, 4 Annexures, 30 forms </li></ul><ul><li>Covers all the sections – Definitions to Winding up, Compounding , Destruction of old records etc </li></ul><ul><li>Concept LLP (Winding up and Dissolutions) Rules 200… </li></ul>KUMBHAT & CO.,
  20. 20. Designated Partner <ul><li>To be specified in Agreement </li></ul><ul><li>One must be a Resident of India </li></ul><ul><li>Responsible for all compliance </li></ul><ul><li>Body corporate </li></ul>KUMBHAT & CO.,
  21. 21. Audit and Accounts <ul><li>Proper Books of Accounts </li></ul><ul><li>Cash or accrual basis </li></ul><ul><li>Statement of Account and Solvency </li></ul><ul><li>Audit – Not compulsory unless Turnover is > Rs.40 lacs or Contribution > Rs.25.00 lacs, conditions of R 24 </li></ul><ul><li>Appointment by DP, 30 days before closure of FY </li></ul><ul><li>Financial year defined as April - March </li></ul><ul><li>Penalty – LLP – Rs.25K – Rs.5.00 lacs & DP – Rs.10K - Rs.1.00 lac </li></ul>KUMBHAT & CO.,
  22. 22. Accounts & Annual Returns <ul><li>Statement of Account and Solvency Statement to be prepared within 6 m of end of FY and file Form 8 within 30 days of end of 6 m period </li></ul><ul><li>Authenticated by DP </li></ul><ul><li>Penalty for non- compliance – Rs.10K to Rs 1.00 lac for each DP and LLP – Rs.25K to Rs.5.00 lacs. </li></ul><ul><li>Annual Return duly authenticated </li></ul>KUMBHAT & CO.,
  23. 23. Auditors <ul><li>Section 34(4) & Rule 24(8) to 24 (19) </li></ul><ul><li>Authority - Designated Partners – other partners ? </li></ul><ul><li>When the appointment to be made – 30 days before the end of each Financial year </li></ul><ul><li>Term of appointment – till the next period </li></ul><ul><li>Audit exempted – if turnover < Rs.40 lacs or contribution does < Rs. 25 lacs </li></ul>KUMBHAT & CO.,
  24. 24. Auditors (contd.) <ul><li>Re-appointment </li></ul><ul><li>Remuneration </li></ul><ul><li>Removal of an Auditor </li></ul>KUMBHAT & CO.,
  25. 25. Other Countries <ul><li>USA </li></ul><ul><li>UK </li></ul><ul><li>Japan </li></ul><ul><li>Canada </li></ul><ul><li>China </li></ul><ul><li>Singapore </li></ul>KUMBHAT & CO.,
  26. 26. TAXATION <ul><li>Expect to be cleared in the Budget of 2009 – Probable date is 31.7.09 </li></ul><ul><li>LLP or members will be taxed </li></ul><ul><li>Capital Gains on sale of LLP assets </li></ul><ul><li>Receiving Share of accumulated profits? </li></ul><ul><li>Transfer of Shares </li></ul>KUMBHAT & CO.,
  27. 27. Taxation (contd.) <ul><li>UK – Income taxed in hands of partners </li></ul><ul><li>UK – Capital Gains on transfer of assets of LLP is also taxed in the hands of partners as if they own the same </li></ul><ul><li>US - reported in individual returns of the partners </li></ul><ul><li>Japan – Each member is directly subject to tax </li></ul><ul><li>Singapore – Personally taxed, taxed as self employed </li></ul><ul><li>China – passed through and attributed to partners </li></ul>KUMBHAT & CO.,
  28. 28. Issues <ul><li>Minors, HUF can they be partners? </li></ul><ul><li>Act is very small when compared to Co’s Act 1956 – but looks as if the Rules/Notifications will rule the Act – </li></ul><ul><li>General Names? Small Names ? Disclosure of Business in Name/ Objection </li></ul>KUMBHAT & CO.,
  29. 29. Foreign LLP <ul><li>Section 59 </li></ul><ul><li>Establishment of place of Business in India </li></ul><ul><li>Business activity carried on in India </li></ul><ul><li>Permission from RBI may be required under FEMA </li></ul><ul><li>FLLP has to file certain documents, Accounts and Solvency Statement in English </li></ul><ul><li>Notice of cessation </li></ul><ul><li>Certification and Authentication from Notary Public/Commissioner of Oaths in the Company it is incorporated </li></ul>KUMBHAT & CO.,
  30. 30. <ul><li>Lots to examine and explore !! </li></ul><ul><li>www.llp.gov.in </li></ul><ul><li>THANK YOU </li></ul><ul><li>www.bhansali.in </li></ul>KUMBHAT & CO.,

×