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LIMITED LIABILITYPARTNERSHIP
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2. Prominent Drivers Bhat Committee (1972), Naik Committee (1992)
Expert Committee on development of Small Sector
Enterprises headed by Shri Abid Hussain (1997)
Study Group on development of Small SectorEnterprises headed by Dr.S.P.Gupta (2001)
Contd..
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Contd..Committee on regulation of private
companies and partnerships headed by
Shri Naresh Chandra (2003)
Committee on new Company Law -
Dr.JJ Irani (2005)
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3. History
Based on the recommendations of ExpertCommittees, draft LLP Bill was formulated
Introduced in Rajya Sabha on 15-12-2006 asLLP Bill 2006
Referred to the Department RelatedParliamentary Standing Committee on Finance
for exmination and report
Contd..
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Contd..
Committee submitted its recommendations tothe House of Parliament on 27-11-2007
The Government redrafted and finalized LLP Bill2008 and introduced revised LLP Bill 2008 inRajya Sabha on 21-10-2008
Bill was passed by Rajya Sabha on 24-10-2008
Contd..
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Contd..
The Bill was passed by Lok Sabha on 12-12-2008
The President gave consent to the Bill on 7-1-2009
LLP Rules, 2009 was notified in the Gazette on
1-4-2009. All rules notified except, Rules 32,33and 38 to 40 relating to conversion of Firm/Private company/ Unlisted public company
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4. Pre-condition for registering
LLP Object to do lawful business for profit ( no non-profit
organization can be registered under LLP )
Permissible name
Minimum two partners
LLP Agreement if not available
Schedule I to apply
Contd..
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Contd..
Minimum two designated partners havingDPIN and given consent
Consent of all partners
Submission of prescribed incorporationdocuments
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5. Structure of LLP Act
Chapter 1 -- Definition
Entity includes firm set up under IndianPartnership Act, 1932
Financial Year stipulated from 1st
April to 31st
March except first Financial Year can be 18
months if incorporated after 30th September
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Chapter 2 -- Nature of LLP
Legal entity
Perpetual succession
Indian Partnership Act, 1932 shall notapply to LLP
Contd..
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Contd..
Body Corporate may be partner in LLP
Disqualification for partners
Minimum two partners, no maximum number
Minimum two designated partners who are liable forcompliance of the provisions of LLP and having DPIN
Contd..
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Contd..
> In the absence of minimum requireddesignated partner, every partner shall bedesignated partner
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3. Incorporation andIncidental matters Documents prescribed under LLP Rules to be filed
Declaration of compliance to be filed by Company
Secretary/ Chartered Accountant/ Cost Accountant/Advocate and by one of the subscribers
Incorporation document include all details like Objects,
names of partners etc.
Contd..
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Contd.. On compliance, ROC to register LLP within 14 days
LLP has privilege to give an address other than
registered office for communication
Acronym LLP to be added to the name
Name registration as applicable to company and
similar name to existing partnership firm also cannot beallowed
Contd..
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Contd..> LLP registered with undesirable name
can be directed to change its name
without any time limit, however, anyinterested party can apply to ROC forissue of direction within 24 months from
the date of registration for change ofname
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Chapter 4 -- Partners and their
relations The mutual rights and duties determined as per
Partnership Agreement failing which Schedule Iwill apply
Change to be intimated to ROC
Any partner can resign in terms of LLPAgreement
Contd..
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Contd..
Cessation of partner does not exonerate pastliability
Resigned or ceased partner entitled for share ofprofits, return of capital contribution afterdeduction of accumulated losses
Similar right available to the legal heir
Contd..
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Contd..
A ceased partner can directly intimateROC, his cessation if he believes that LLP
will not intimate ROC. In such cases, ROCshall obtain confirmation from LLP within15 days and register thereof.
Ch t 5 E t t d
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Chapter 5 -- Extent andLimitation of Liability of LLP and
Partners Every partner liable to the agreed contribution
LLP not bound by acts of any partner contrary to LLP
Agreement
Liability of LLP to be met out of property of LLP
A wrongful credit to LLP on account of misrepresentation
by partner is acccountable by LLP
Contd..
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Contd..
Act of fraud on the part of partner willmake the liability unlimited
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Chapter 6 -- Contribution
Contribution can be either tangible orintangible
Intangible contributions to beaccountable in monetary value asper valuation of CharteredAccountant
Contribution as per LLP Agreement
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Chapter 7 -- Financial disclosures
Appropriate books of accounts to be maintained on cash oraccrual basis according to Double Entry System
Within 6 months from the end of financial year, statement of
account and solvency to be signed by designated partners onlyand filed with ROC
LLP Accounts to be audited as per Rules ( small companies
exempted from audit ) -- if turnover does not exceed Rs.40lakhs or turnover does not exceed Rs.25 lakhs
Contd..
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Contd..
Certification by Statutory Auditor
It is hereby certified that I have verified theparticulars contained in the statement of account andinsolvency including the statement of assets andliabilities as at _____ and the income and expenditurefor the period ended ______ from the accountingrecords and other books and papers of _______ (
Name of LLP) and found them to be true andfair
Name of the Auditor
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Contd..
LLP to file Annual Return within 60 days of closureof Financial Year
LLP documents are available for public inspection
Any false statement in financial statements or otherdocuments will attract two years imprisonment and
penalty
Contd..
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Contd..
ROC has power to call for information both
from existing partners/ employees and past
partners/ employees
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Chapter 8 -- Assignment andtransfer of partnership rights
Economic rights are transferable such asshare in profit, right to receive distribution
Transfer of economic right itself does notresult in cessation of partnership
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Chapter 9 - Investigation
Central Government can appointinspectors on directions of NCLT
On directions of Court havingjurisdiction on the company
Based upon report of ROC
Contd..
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Contd..
Application to be made by partners having1/5th of the total partners
Investigation of related entities
Inspector has powers similar to that ofCompanies Act
Provisions for recovery of damages frompartners in respect of fraud, misfeasance,misconduct under Recovery of property
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Chapter 10 -- Conversioninto LLP A Partnership firm under the Indian Partnership Act,
1932, may be converted into LLP as per IIndSchedule
(a) Properties, assets etc. vest in the LLP withoutfurther act, assurance or deed
A firm may be a registered one under the IndianPartnership Act, 1932 or may not be registered
Contd..
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Contd.. If registered under the Indian Partnership Act, 1932, give
intimation to Registrar of Firms/ ROC within 15 days after the dateof registration
Registrars refusal is appelable to CLB/NCLT
All pending proceedings against the firm shall continue againstLLP
All licenses, approvals granted to partnership firm will continue
with LLP
Contd..
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Contd.. If any partner of the erstwhile firm discharges any
liability, he is liable to be fully indemnified in terms ofLLP Agreement
LLP shall ensure for 12 months disclosing on letterhead and documents that it was converted
All existing partners of the firm should also be partnersof LLP
Contd..
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Contd..(b) Private company can convert into LLP as per IIIrd Schedule
No subsisting security interest in assets at the time ofapplication
All existing shareholders should also be partners of LLP
On incorporation as LLP, intimate to the concerned ROC within15 days. The company shall be deemed to be dissolved fromthe records of ROC on the date of registration of LLP
Contd..
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Contd..All tangible and intangible assets will vest in
LLP without any act, assurance or deed
All proceedings, contracts, agreements, deedsin relation to erstwhile private company tocontinue with LLP
LLP shall ensure for a period of 12 months todisclose in all correspondence that it was aprivate company
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Contd.. An unlisted public company may convert into LLP as per
Schedule IV
No subsisting security interest in any asset of public limited
company
All shareholders of Unlisted Public Limited company continue aspartners
The concerned ROC to be informed within 15 days about the
conversion
Contd..
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Contd.. The Unlisted Public Limited company shall stand
dissolved on the date of registration of LLP
All tangible and intangible assets will be vested in LLP
All proceedings, contracts etc. of the erstwhile UnlistedPublic Limited company shall continue with LLPincluding approvals, licenses etc.
Contd..
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Contd..> The LLP shall ensure for a period of 12
months from the date of registration to
disclose the intimation of erstwhileUnlisted Public Limited Company in allcorrespondence etc.
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Chapter 11 -- Foreign LLP
Same as in the Companies Act, 1956
Chapter 12 - Compromise
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Chapter 12 - Compromise,Arrangement and Reconstruction
of LLP Similar to Companies Act, 1956
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Chapter 13 -- Winding up and
Dissolution Similar to Companies Act, 1956
Separate Rules will be framed fordissolution of LLP
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Chapter 14 -- Miscellaneous
A partner can have transaction with LLP and norestriction regarding Related Party transactions
Central Government can give special exemptions to
LLP
Information Technology Act incorporated in LLP --digitally signed documents and electronic documents
admissible as evidence in the Court
Contd..
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Contd..
Any document can be filed up to a period of300 days delay with prescribed additional fee-- after 300 days liable for prosecution in
addition to additional fee
Until constitution of NCLT, CLB shall
exercise powers except relating to winding up,compromises and arrangement etc. which shallbe exercised by High Court
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Contd..
Partner other than designated partner also liable if
connivance is proved or negligence established
A Metropolitan Magistrate, Judicial/ Ist ClassMagistrate have jurisdiction regarding LLP Litigation
Separate regulation by way of rules exhaustivelygovern every area of operation of LLP.
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LLP Rules
DPIN to be obtained for each designated partner. --Provisional DIN valid for 60 days
The fee payable to ROC can be paid by cash or directly
into Public Account of India maintained by RBI or anyauthorized bank
Provided -- where the e-forms are filed electronically,
payment of fees shall be through credit card or internetbanking or remittance at the authorized bank counter
Contd..
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Contd..
Following persons are not eligible for terming asdesignated partners :
(i) Undischarged Insolvent
(ii) Adjudged insolvent at any time within preceding 5
years(iii) Suspended payment to creditors within preceding 5
years
(iv) Is or has been affected by the Court of Law in anybusiness involving moral turpitude and sentenced toimprisonment for not less than 6 months
Contd..
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Contd..
Document can be served on LLP or Partner eitherelectronically or through courier
LLP can give an address other than registered office for
communication/ service of documents
LLP can shift its registered office from one place toanother as per partnership agreement, in the absence ofany such agreement consent of all partners requiredfor shifting registered office
Contd..
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Contd..
If the shifting of registered office is from one State toanother, not less than one month before filing any noticewith ROC, LLP to publish general notice in English andVernacular language in the District in which theregistered office is situated
The guidelines similar to those stated u/s 20 of theCompanies Act, 1956 have been incorporated in LLPRules for availability of name with the addition that thereshould not be similar name, vis--vis existing partnership
firm under the Indian Partnership Act, 1932.
Contd..
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Contd.
In other circumstances, the availed name will bereserved for 3 months from the date ofavailability of name
Aggrieved entity can apply to ROC for issue ofdirection to the existing LLP to change its namewith the details of grounds
Contd..
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Contd..
LLP can change its name as per terms of partnershipagreement, failing which, consent of all partners isrequired
Contribution of a partner can be tangible, cash, movableor immovable or intangible property in which case,valuation shall be done by practicing CharteredAccountant or practicing Cost Accountant or approvedvaluer -- Intangible assets can be quantified in monitory
value
Contd..
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Contd..
LLP to maintain books of accounts to disclosetrue and correct state of affairs of LLP
Statement of Account and Solvency to be signedby designated partners
Books of accounts to be maintained for 8 years
Contd..
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Contd..
Statement of Account and Solvency to be filedwithin 30 days from the end of 6 months of theFinancial Year
Accounts to be audited by CharteredAccountant. Statutory Audit not required if theturnover does not exceed Rs.40 lakhs orContribution does not exceed Rs.25 lakhs
Contd..
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Contd..
Exempted LLPs accounts should be certified bythe designated partners
Auditors of LLP to be appointed by designated
partners within 30 days before the end ofFinancial Year
Auditor to be appointed by partners on failure of
appointment by designated partners
Contd..
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Contd..
Remuneration of auditor will be determined by personsappointing auditor
Auditor can resign by submitting his resignation along
with reasons if no reasons, the same should be stated
The auditor can be removed in terms of partnershipagreement -- If silent, with the consent of all the partners
Contd..
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Contd..
LLP to file Annual Return duly certified bypracticing Company Secretary
Every e-form filed by LLP with prescribed fees
through the website maintained by MCA
ROC to issue certificate electronically unlessROC is unable to issue, physical certificate can
be issued under his signature and seal
Contd..
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Contd..
ROC to process e-forms within 120 days of filing
Defects pointed out to be rectified within 30 days by LLP
If defects not rectified within the stipulated time, e-formwill be treated as Invalid and Not taken on Record
STP forms will be scrutinized and if found defective, will
be marked as Invalid by ROC and LLP to file fresh form
Contd..
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Contd..
The process of examining and registering of e-forms to be done within 120 days
Striking off of name of defunct company -- If acompany is not carrying on business or inoperation for more than one year, the name canbe struck off -- however, an opportunity will begiven to LLP before strike off
Contd..
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Contd..
LLPs covered by special legislation, NOCrequired from RBI/ such authority
Notice of strike off will be placed in the MCAwebsite
On expiry of period, LLP will be struck off by a
notification in the Official Gazette
Contd..
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Contd..
Liability of every designated partner shallcontinue as if LLP was not dissolved
Any person aggrieved by the decision ofROC can appeal to CLB before the expiryof 5 years from the date of publication in
the Official Gazette
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E-formsForm 1 Availability of name with declaration
attached digitally signed by applicant
Form 2 Form of Incorporation Document
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Contd..
Form 3 Intimation with regard to LLPAgreement and Changes if any
Form 4 Notice of appointment of partner,designated partner and changes among
them to be filed by LLP with ROC
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Contd..
Form 5 Notice of Change of Name
Form 6 Intimation of change in partner/partners to LLP by partner --
accompanied by declaration
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Contd..
Form 7 Application for allotment of DPINaccompanied by declaration
Form 8 Filing of statement of accounts andsolvency -- accompanied by
declaration of solvency -- statementof assets and liabilities duly signed bydesignated partners -- Addendum intimating charge particulars
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Contd..
Form 9 Consent to act as designated partneraccompanied by declaration
Form 10 Intimation of change in particulars ofdesignated partners accompanied by
declaration
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Contd..
Form 11 Annual Return of LLP signed bydesignated partner with verificationand certified by practicing Company
Secretary --If total turnover exceedsRs.5 crore or contribution exceedsRs.50 lakhs
Form 12 Intimating address other than
registered office for service ofdocuments -- certified by designatedpartners
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Contd..
Form 13 Notice of resignation sent to otherpartners
Form 14 Intimation to the Registrar of Firms/ ROCof conversion into LLP
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Contd..
Form 15 Notice of change of place of registeredoffice accompanied by certificate ofdesignated partner and certified by
practicing company secretary
Form 16 Certificate of Incorporation
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Contd..
Form 17 Application by Firm for conversion intoLLP -- attachment containing consent ofpartners -- NOC from Tax Authorities --
Consent of all creditors -- approval fromany authority accompanied bydeclaration of designated partner andcertificate of practicing Company
SecretaryForm 18 Application by private company/ unlisted
public company for conversion to LLPaccompanied by attachments like NOC
from Tax Authorities -- consent of all
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Contd..
Form 19 Certificate of registration on conversion
Form 20 Summons for directions to convenemeeting approving scheme of
arrangement/ amalgamation
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Contd..
Form 21 Affidavit in support of summons
Form 22 Notice of intimation of order of Court/CLB
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Contd..
Form 23 Application for direction for change ofname of LLP
Form 24 Application to ROC for striking offname
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Contd..
Form 25 Application for reservation/ renewal ofname by Foreign LLP/ Foreigncompany
Form 26 Form of Proxy
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Contd..
Form 27 Form for registration of particulars byForeign LLP
Form 28 Notice of Change in constitution/registered office, partners details by
Foreign LLP
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Form 29 Alteration in theCertificate of
Incorporation ofForeign LLP
alteration in theplace of Foreign LLP
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