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LIMITED LIABILITY PARTNERSHIP ACT, 2008 |
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ORIGIN OF LLP (extends to the whole of India) |
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- LLP basically is a new concept, which has the features of both a company as well as a partnership firm.
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Eventually spread out to other European Countries, particularly France, Germany and Great Britain and also to USA and Japan.
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In Italy as European Business Model
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NATURE OF LIMITED LIABILITY PARTNERSHIP ACT |
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- Its legal separate entity from its partners.
- It shall have perpetual succession.
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Any change in partnership shall not affect on the rights & powers of the LLP.
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Provision of Indian Partnership Act , 1932, shall not apply to the LLP.
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Any individual or body corporate may be the partner of LLP.
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Every LLP shall have at least 2 partners.
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DEFINITIONS |
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Means: Any partner as per Section 7 i.e.
1. every LLP shall have at least two designated partners.,
2. who are individuals or Nominee of Body Corporate , And
3. at least one of them shall be a resident in India . |
Financial Year :
Period from 1st of April to 31st of March of the following year.
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Foreign Limited Partnership :
Incorporated outside India which establishes a place of business within India .
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| Incorporation of Limited Liability Partnership Section 11 |
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Two or more person associated for carrying on a lawfully business with a view to profit shall subscribe their name to an incorporation document.
(b) The incorporation document shall be filed in such a manner and with such fees as may be prescribe by the Registrar within which the Registered Office of the LLP is to be situated; and
(c) The incorporation document shall be made either by the Advocate or
Company Secretary or Chartered Accountant or Cost Accountant, who is engaged in the formation of LLP and by any one who subscribed his name to the incorporation document.
The incorporation Document shall be :---------
a) be in a form as may be prescribed;
b) name of LLP;
c) state the purposed business of LLP
d) address of the registered office of LLP;
e) name and address of each of the persons who are to be partners of LLP on incorporation ;
f) Name and address of the Designated Partners of the LLP;
g) Contain such other information concerning to the proposed LLP as may be prescribed. |
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» Sub sec (12): |
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If a person makes a statement u/s 11(2) (c), which he-----
a) knows to be false; or
b) does not believe to be true,
shall be punishable with imprisonment, may be extended to 2 years and with fine which shall not be less than Rs. 10 Thousand and extended to Rs. 5 Lacs . |
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» Sub sec (12): |
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The Registrar shall retain the incorporation document, he shall within a period of 14 days -----
a) register the incorporation document; and
b) give the certificate of incorporation
(3) The Certificate of Incorporation of LLP shall be signed by the Registrar and authenticated by his official seal. |
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» Sub sec 14: |
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a) Every LLP shall have its registered office.
b) LLP may change its registered office and file the notice of such change with the Registrar in such a form and manner and subject to such conditions as may be prescribe.
On registration, a LLP shall , by its name, be capable of------------
- Suing and being sued;
- Acquiring, owning, holding and developing or disposing of property, whether movable or immovable, tangible or intangible;
- Having a common seal, it it decides to have one; and
- Doing and suffering such other act & things as may be lawfully do & suffer . |
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» Sub sec 15: |
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Every LLP shall have either the words " Limited Liability Partnership" or the acronym "LLP" as the last word of its name. |
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» Sub sec 19: |
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Any LLP may change its name registered with the Registrar by filing with him a notice of such change in such a form and manner and on the payment of such fee as may be prescribed . |
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» Sub sec
21(1): |
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Every LLP shall ensure that its invoices, official correspondence and publications bear the following, namely ;
a) Name, address of its registered office and the Registration number of the LLP; and Statement that it is registered with LLP.
(2) Contravenes the above provision shall be punishable with fine which shall not be less than Rs. 10 Thousand but which may be extended to Rs. 25 Thousand . |
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Partner |
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- Every LLP shall have at- least two partners |
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Disqualifications |
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Person of unsound Mind |
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Undercharged insolvent |
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Applied to be adjudicated as an insolvent and his application is pending. |
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Any time number of partners is reduced below two and LLP carries on business for more than six months , the person who is the only partner of the LLP shall be liable personally for the obligations of the LLP after those six months if he has the knowledge of the fact. |
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How to become a partner (Sec 22) |
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The subscriber of incorporation document Of LLP
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By and in accordance with the
LLP Agreement.
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Relationship of Partners {Sec 23(1)} |
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The mutual rights and duties of a LLP and its partners shall be governed by the LLP agreement between the partners, or between the limited liability partnership and its partner. |
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Sec 23(2) : The LLP agreement and any changes, if any, made therein shall be filed with the Registrar in such manner as may be prescribed. |
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Sec 23 (3) : An agreement in writing made before the incorporation of a LLP between the persons who subscribe their names to the incorporation document may impose obligations on the LLP, provided such agreement is RATIFIED by all the partners after the incorporation of LLP. |
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Sec 23(4) : In the absence of any agreement as to any matter, the mutual rights and duties of the partners or LLP and its partners shall be determined as per First Schedule. |
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FIRST SCHEDULE |
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- All the partners are entitled to share equally in capital, profits and losses of LLP.
- No person shall be introduced as a partner without consent of all existing partners of LLP.
- No majority of partners can expel any partner unless a power to do so has been conferred by express agreement between the partners.
- Every partner may take part in the management of LLP.
- All the disputes arising out of LLP agreement which cannot be resolved in terms of such agreement shall be referred to Arbitration.
- If the partner carries on the business of same nature as and competing with LLP, without the consent of LLP, he must account for and pay over the LLP all profits made by him.
- Each partner shall render true accounts and full information of all the things affecting the LLP to any partner or his legal representative.
- No partner shall be entitled to remuneration for acting in the business or management of LLP.
- LLP shall indemnify each partner in respect of payments and personal liabilities incurred by him:
(a) in ordinary and proper conduct of business of LLP
(b) anything necessarily done for preservation of the business or property of LLP.
- Every partner shall indemnify the LLP for any loss caused to it by his fraud in conduct of business of LLP.
- No change be made in the nature of business of LLP without the consent of all the partners. |
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| Cessation of Partnership (Sec 24) |
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Accordance with the agreement
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In the absence of agreement ,by giving a writing notice, not less than 30 days to the other partner
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. On his death / dissolution of LLP
. Declared to unsound mind
. Applied to be adjudged insolvent
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File a notice of cessation to ROC within 30days from the date of cessation .
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| Entitlement from LLP Sec 24 (5) |
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Where a partner of LLP ceases to be a partner, unless other wise provided in the LLP agreement, the former partner or a person entitled to his share in consequence of the death or insolvency of the former partner, shall be receive from the LLP ----------
(a) An amount equal to the capital contribution of the former partner actually made to the LLP ; and
(b) His right to share in the accumulated profits of the LLP.
After the deduction of accumulated losses of the LLP, determined as at the date the former partner ceased to be the partner. |
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| Registration of changes in partners Sec 25 |
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Every partner shall inform LLP in his name / address within a period of 15 days of such change.
LLP shall :
(a) file a notice with the ROC within 30 days from the date he becomes or ceases to be a partner.
(b) file a notice with the ROC within 30 days from the date of change in the name or address of a partner.
(c) a notice shall be in such a form accompanied by such fee as may be prescribe.
(d) a notice shall be signed by the designated partner of LLP and authenticated in a manner as may be prescribe.
(e) For new incoming partner, consent latter signed by him and authenticated in a manner as may be prescribe. |
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| EXTENT & LIMITATION OF LLP |
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LLP not Liable (Sec 26,27) :
- For the purpose of LLP, every partner is the agent of LLP, but not of other partner.
- LLP is not bound by any thing done by a partner in dealing with a person if--
- Partner in fact has no authority to act for LLP.
- Partner knows that he has no authority to act for LLP.
LLP Liable (Sec 28) :
- if a partner of LLP is liable to any person as a result of a wrongful act in the course of the business of LLP.
- the liability of LLP shall be met out of the property of LLP. |
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How to become a partner (Sec 22) |
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Form of Contributions( Sec 32 )
1.Contribution may consist of tangible,movable or Immovable or intangible property or other benefit of LLP, including money, promissory notes, other agreements to contribute Cash or Property and contractsfor services performed or to be performed .
2. Monetary value of contribution shall be Disclosed In the accounts of the LLP |
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Obligation to contribute ( Sec 33 )
1.Obligation to contribute in LLP shall be as
per the LLP Agreement..
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Sub- Sec (1): The LLP shall maintain proper books of account as may be prescribed
1. to its affairs for each year on cash basis or accrual basis,
2. According to double entry system and
3. Shall maintain the same on the registered office of the company. |
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Sub- Sec (2) : 1.repare a " Statement of Account and Solvency " within a Period of six month from the end of each financial year
2. And this statement is signed by the designated partners of LLP.
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Sub- Sec (3 & 4) : Statement of Account and Solvency shall file with ROC every year in prescribed form and fee.
Provided CG may exempt any class of LLP for the of requirement this sec
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Sub Sec (5): Fails to comply with provision of this sec
(a) LLP shall be punishable with fine, which shall not be less than Rs.25,000/- but not be extend to Rs. 5 Lacs .
(b) Every Designated Partner shall be punishable with fine, which shall not be less than Rs. 10 Thousand but not extended to Rs 1 Lacs .
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Sub Sec (1): Every LLP shall file an Annual Return with ROC within 30 days of the closure of F.Y .
Sub Sec (2): If LLP fails to comply, shall be punishable with fine, which shall not be less than Rs.25,000/- but not be extend to Rs. 5 Lacs .
Sub Sec (3): Every Designated Partner shall be punishable with fine,which shall not be less than Rs. 10 Thousand but notextended to Rs 1 Lacs .
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Assignment And Transfer of Partnership Right |
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Sub sec (1): The right of a Partner to share a profits and losses of LLP and receive distributions in accordance with LLP Agreement are transferable either wholly or in part.
Sub sec (2): The transfer of any right by any partner, does not by itself cause the disassociations of the partner or Dissolution and Winding up of LLP. Sub sec(3): The transfer of right pursuant to this section does not, by itself, entitle
The transferee or assignee to participate in the management of LLP. |
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Conversion Into LLP Sec 55
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Eligibility of conversion |
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A firm may convert into LLP in accordance with the Provisions of Second Schedule of this chapter. |
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- A firm may convert into LLP, only if the partners of LLP in which the form is to be converted, compromise, all the partners of the firm and not one else.
- Filing document for the purpose of conversion:
(a) Statement by all of its partner in such a form and manner an accompanied by such fee as may be prescribe by the CG and containing the following document :
i ) Name and Registration number of the Firm,
ii) Date of incorporation.
(b) Incorporation Document as per Sec 11 of LLP Act, 2008 |
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Registration
Of Conversion |
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Sub sec 6(1) On the receipt of above incorporation document, the Registrar shall register the document and issue a Certificate of Registration.
Provide that the LLP, shall within a period of 15 days from the registration, inform, the concerned Registrar of the Firm with which it was registered about the conversion and the particulars of the LLP.
Sub sec 6(2) If the Registrar is not satisfied with the filing incorporation Document, shall refuse to register the LLP Provided that an appeal may be made before the Tribunal in the case of refusal of registration of LLP
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1. (a) All tangible (movable & immovable) property, intangible property vested in the firm, all assets, interest, rights, liabilities, obligation relating to the firm and whole of the undertaking of the firm shall be transferred to and shall vest in the LLP without further assurance, act, or deed; and
(b) The firm shall be deemed to be dissolved.
2. If any of the above mentioned property is required to registered with any Authority, the LLP as soon as notify that property with relevant Authority.
3. If any proceeding by or against the firm which are pending in any Court, Tribunal or before any Authority on the date of registration may be continued by or against the LLP.
4. All the existing contracts, deeds, bound, agreement , employment shall be enforceable by or against the LLP.
5.(a)Every partner of the firm that has converted into LLP shall continue to be personally liable (jointly and severally with the LLP) for the liabilities and obligations of the firm which were incurred prior to the conversion.
(b) If any such partner discharge any liability or obligation referred to above, he shall be (subject to the agreement with the LLP to the contrary) to be fully indemnified by the LLP in respect of such liability or obligation. |
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