Llp- Presentation 1

7/31/2019 Llp- Presentation 1

1/74

1

LIMITED LIABILITYPARTNERSHIP


2/74

2

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..


3/74

3

Contd..Committee on regulation of private

companies and partnerships headed by

Shri Naresh Chandra (2003)

Committee on new Company Law -

Dr.JJ Irani (2005)


4/74

4

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..


5/74

5

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..


6/74

6

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


7/74

7

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..


8/74

8

Contd..

Minimum two designated partners havingDPIN and given consent

Consent of all partners

Submission of prescribed incorporationdocuments


9/74

9

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


10/74

10

Chapter 2 -- Nature of LLP

Legal entity

Perpetual succession

Indian Partnership Act, 1932 shall notapply to LLP

Contd..


11/74

11

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..


12/74

12

Contd..

> In the absence of minimum requireddesignated partner, every partner shall bedesignated partner


13/74

13

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..


14/74

14

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..


15/74

15

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


16/74

16

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..


17/74

17

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..


18/74

18

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


19/74

19

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..


20/74

20

Contd..

Act of fraud on the part of partner willmake the liability unlimited


21/74

21

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


22/74

22

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..


23/74

23

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


24/74

24

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..


25/74

25

Contd..

ROC has power to call for information both

from existing partners/ employees and past

partners/ employees


26/74

26

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


27/74

27

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..


28/74

28

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


29/74

29

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..


30/74

30

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..


31/74

31

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..


32/74

32

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..


33/74

33

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


34/74

34

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..


35/74

35

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..


36/74

36

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.


37/74

37

Chapter 11 -- Foreign LLP

Same as in the Companies Act, 1956

Chapter 12 - Compromise


38/74

38

Chapter 12 - Compromise,Arrangement and Reconstruction

of LLP Similar to Companies Act, 1956


39/74

39

Chapter 13 -- Winding up and

Dissolution Similar to Companies Act, 1956

Separate Rules will be framed fordissolution of LLP


40/74

40

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..


41/74

41

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


42/74

42

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.


43/74

43

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..


44/74

44

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..


45/74

45

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..


46/74

46

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..


47/74


48/74

48

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..


49/74

49

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..


50/74

50

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..


51/74

51

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..


52/74

52

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..


53/74

53

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..


54/74

54

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..


55/74

55

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..


56/74

56

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..


57/74

57

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..


58/74

58

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


59/74

59

E-formsForm 1 Availability of name with declaration

attached digitally signed by applicant

Form 2 Form of Incorporation Document


60/74

60

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


61/74

61

Contd..

Form 5 Notice of Change of Name

Form 6 Intimation of change in partner/partners to LLP by partner --

accompanied by declaration


62/74

62

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


63/74

63

Contd..

Form 9 Consent to act as designated partneraccompanied by declaration

Form 10 Intimation of change in particulars ofdesignated partners accompanied by

declaration


64/74

64

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


65/74

65

Contd..

Form 13 Notice of resignation sent to otherpartners

Form 14 Intimation to the Registrar of Firms/ ROCof conversion into LLP


66/74

66

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


67/74

67

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


68/74

68

Contd..

Form 19 Certificate of registration on conversion

Form 20 Summons for directions to convenemeeting approving scheme of

arrangement/ amalgamation


69/74

69

Contd..

Form 21 Affidavit in support of summons

Form 22 Notice of intimation of order of Court/CLB


70/74

70

Contd..

Form 23 Application for direction for change ofname of LLP

Form 24 Application to ROC for striking offname


71/74

71

Contd..

Form 25 Application for reservation/ renewal ofname by Foreign LLP/ Foreigncompany

Form 26 Form of Proxy


72/74

72

Contd..

Form 27 Form for registration of particulars byForeign LLP

Form 28 Notice of Change in constitution/registered office, partners details by

Foreign LLP


73/74

73

Form 29 Alteration in theCertificate of

Incorporation ofForeign LLP

alteration in theplace of Foreign LLP


74/74

Llp- Presentation 1

Documents

Transcript of Llp- Presentation 1