The document provides an overview of limited liability partnerships (LLPs) in India, including: 1) It traces the genesis and development of LLP laws internationally and in India through various committees from 1997-2005. 2) The key features of LLPs in India are that they provide limited liability, require a minimum of 2 partners, have no limit on maximum partners, and offer flexibility in structure while maintaining compliance requirements. 3) LLPs are formed similar to companies and are regulated through the LLP Act 2008 as well as rules on administration, taxation, and other legal frameworks.

1. LIMITED LIABILITY
PARTNERSHIP ACT 2008
& RULES 2009
Priya Bhansali
KUMBHAT & Co.,
Chartered Accountants
www.bhansali.in

2. Agenda
 Genesis
 Salient Features
 Comparison between Partnership/LLP/Private
Limited Co.
 Chapters under LLP Act
 Rules
 LLP in Other Countries
 Certain Issues
KUMBHAT & CO.,

3. GENESIS OF LLP
 LLP – 1991 in Texas – Loan and savings failures
 Uniform Partnership Act 1996 - USA
 LLP Act 2000 – UK
 Abid Hussain Committee -1997
 Naresh Chandra Committee – 2003
 JJ Irani Expert Committee – 2005
 Naresh Chandra 2nd Committee – July 2005
KUMBHAT & CO.,

4. Concept Paper
 Role of service sector
 Limitation of Multi-disciplinary partnership
 Limitation of no. of Partners
 Litigation – joint liabilities in case of partnership
 Hybrid between a Company and Partnership
 Profession as well as SME
KUMBHAT & CO.,

5. What is LLP
 LLP – separate legal entity with unlimited capacity to
do anything a natural person can do – UK
 Partnership formed under LLP Act 2008
KUMBHAT & CO.,

6. Salient Features
 LLP for all kinds of business
 Limited Liability
 Simple when compared to a Company
 Minimum Partners 2 ; no limit for maximum
 Legal Entity – Artificial Juridical Person
 Members & Mutual Rights
 Designated Partners
 Unlimited Capacity – no main objects
 Conversion
KUMBHAT & CO.,

7. Salient Features
 Cannot be listed
 Incorporation Document
 Flexibility on internal structure – No BOD etc
 Mergers
 Winding up
KUMBHAT & CO.,

8. Formation of LLP
 Similar to that of formation of Company
 Acquire – DSC and DPIN
 Register DSC and DPIN with LLP
 Check name availability
 Download Forms
 File Electronically
 Track Status
 Receive Certificate
 Start Business
KUMBHAT & CO.,

9. Advantages
 Limited Liability
 Members cannot be responsible for the act of any other
member – inter se agreement between members
 No Maximum No. of Partners
 Easier Operations – Perpetual
 Compliances – Succession
 No BOD, meetings/minutes
 Remuneration
KUMBHAT & CO.,

10. Disadvantages
 Compliance – Annual Filings, Solvency, Duplication
 One person LLP concept absent
 Limitation of 2 member LLP – result in closure
 Documents available for public scrutiny
 Penalty for non compliance
 Silent about Taxation
KUMBHAT & CO.,

11. Regulatory Frame Work
 Legal
 Administration
 Taxation
KUMBHAT & CO.,

12. Regulatory Framework
 Legal –  Administration
LLP Act 2008 - MCA
- Companies Act 1956 - ROC
- IT Act 2000 - Tribunal
- Indian Partnership Act 1932 - Official Liquidator
- General Clauses Act 1897
- SEBI Act 1972
- CPC 1908
- Other Acts - Professionals
- Advocate Act 1961
- CA Act 1949
- CS Act 1980
- CWA Act 1959
KUMBHAT & CO.,

13. Comparison
 Applicable Law
 Liability
 Perpetual Existence
 Separate Legal Entity
 Minimum Number
 Maximum Members
 Documents defining activities
KUMBHAT & CO.,

14. Comparison
 Document providing procedure
 Management
 Compliance/Accounts/Audit
 Minimum No. of Directors
 Transferability of shares
 Conversion
 Common Seal
 Change of Regd Office
 Change of Name
KUMBHAT & CO.,

15. Comparison
 Oppression & Mis-management
 Annual Filing
 E –filing
KUMBHAT & CO.,

16. Chapters under the Act
 Preliminary
 Nature of LLP
 Incorporation of LLP and matters incidental thereto
 Partners and their relations
 Extent & Limitation of LLP and partners
 Contributions
 Financial Disclosures
KUMBHAT & CO.,

17. Chapters
 Assignment & Transfer of partnership rights
 Investigation
 Conversion to LLP
 Foreign LLP
 Compromise, arrangement or reconstruction
 Winding up and dissolution
 Miscellaneous
KUMBHAT & CO.,

18. Schedules
 First Schedule - matters relating to mutual rights and
duties -like Table A
 Second Schedule – Conversion of firm into LLP
 Third Schedule – Conversion of Private Ltd Co into
LLP
 Fourth Schedule – Conversion of Unlisted Public
Co. into LLP
KUMBHAT & CO.,

19. LLP Rules
 LLP Rules 2009 is notified, additions as and when
need arises
 18 chapters, 41 Rules, 4 Annexures, 30 forms
 Covers all the sections – Definitions to Winding up,
Compounding , Destruction of old records etc
 Concept LLP (Winding up and Dissolutions) Rules
200…
KUMBHAT & CO.,

20. Designated Partner
 To be specified in Agreement
 One must be a Resident of India
 Responsible for all compliance
 Body corporate
KUMBHAT & CO.,

21. Audit and Accounts
 Proper Books of Accounts
 Cash or accrual basis
 Statement of Account and Solvency
 Audit – Not compulsory unless Turnover is > Rs.40 lacs or
Contribution > Rs.25.00 lacs, conditions of R 24
 Appointment by DP, 30 days before closure of FY
 Financial year defined as April - March
 Penalty – LLP – Rs.25K – Rs.5.00 lacs & DP – Rs.10K -
Rs.1.00 lac
KUMBHAT & CO.,

22. Accounts & Annual Returns
 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
 Authenticated by DP
 Penalty for non- compliance – Rs.10K to Rs 1.00 lac
for each DP and LLP – Rs.25K to Rs.5.00 lacs.
 Annual Return duly authenticated
KUMBHAT & CO.,

23. Auditors
 Section 34(4) & Rule 24(8) to 24 (19)
 Authority - Designated Partners – other partners ?
 When the appointment to be made – 30 days before
the end of each Financial year
 Term of appointment – till the next period
 Audit exempted – if turnover < Rs.40 lacs or
contribution does < Rs. 25 lacs
KUMBHAT & CO.,

24. Auditors (contd.)
 Re-appointment
 Remuneration
 Removal of an Auditor
KUMBHAT & CO.,

25. Other Countries
 USA
 UK
 Japan
 Canada
 China
 Singapore
KUMBHAT & CO.,

26. TAXATION
 Expect to be cleared in the Budget of 2009 –
Probable date is 31.7.09
 LLP or members will be taxed
 Capital Gains on sale of LLP assets
 Receiving Share of accumulated profits?
 Transfer of Shares
KUMBHAT & CO.,

27. Taxation (contd.)
 UK – Income taxed in hands of partners
 UK – Capital Gains on transfer of assets of LLP is
also taxed in the hands of partners as if they own the
same
 US - reported in individual returns of the partners
 Japan – Each member is directly subject to tax
 Singapore – Personally taxed, taxed as self employed
 China – passed through and attributed to partners
KUMBHAT & CO.,

28. Issues
 Minors, HUF can they be partners?
 Act is very small when compared to Co’s Act 1956 –
but looks as if the Rules/Notifications will rule the
Act –
 General Names? Small Names ? Disclosure of
Business in Name/ Objection
KUMBHAT & CO.,

29. Foreign LLP
 Section 59
 Establishment of place of Business in India
 Business activity carried on in India
 Permission from RBI may be required under FEMA
 FLLP has to file certain documents, Accounts and Solvency
Statement in English
 Notice of cessation
 Certification and Authentication from Notary
Public/Commissioner of Oaths in the Company it is
incorporated
KUMBHAT & CO.,

30. Lots to examine and explore !!
www.llp.gov.in
THANK YOU
www.bhansali.in
KUMBHAT & CO.,