Formation, Conversion & Changes in Limited Liability Partnership

CS Makarand Lele

Central Council Member of ICSIPartner – MRM Associates, Company Secretaries, Pune

Preamble of the ActLLP, in simple terms, is an alternative corporate business

form that gives the benefits of limited liability company and the flexibility of a partnership firm.

It does not restrict the benefit of LLP structure to certain classes of professionals only and is available for use by any enterprise which fulfils the requirement of the Act.

Statutory Recognition

LLP is a Body Corporate (section 2(1) (d))LLP is a Legal Entity separate from its partners & have

Perpetual SuccessionAny change in the partners of a limited liability partnership

shall not affect the existing right or liabilities of the LLPProvisions of Indian Partnership Act, 1932 shall not apply to

LLP(section 4)

Companies Act 2013 – made LLP as most convenient vehicle

Stringent compliances Difficulties in getting the approvals for vital business transactions Incapacity to do business transactions Private Company at Par with Public – No lucrative exemptions available

to do businessRestrictions on number of members for companies.

Salient Features of LLPLiability

Liability of the partner is limited to his agreed contribution. No partner is liable on account of the independent or un-authorized

acts of other partners, thus allowing individual partners to be shielded from joint liability created by another partner’s wrongful acts or misconduct.

Every Partner, for the purpose of business of LLP, is the agent of LLP but not of other partner.

Partners are liable personally to the extent of guarantees provided by them.

Salient Features of LLPPerpetual Succession & continuityBorrow/ Invest on its own nameInitiate legal proceedings on its own nameSimplified compliances & no mandatory requirement of statutory audit

for certain LLP’sNumber of partners

There is no upper limit for number of partners in LLP unlike a ordinary partnership firm where the maximum number of partners cannot exceed 100 nor like private limited company wherein can not exceed 200.

Salient Features of LLPRights and duties of partners governed by the agreement subject to

actRelated Party Transactions:

There is no restriction on entering into any contracts with related parties.

Loans to related LLP is also not falling within the provisions of section 185 of Companies Act,2013

No mandatory meetings & their compliances.No restrictions on salaries, compensations, distribution of profit to

Partners. (under LLP Act) No restrictions on withdrawal from capital account.

Allowable Business in LLPAll profit making activities LLP can be a member of Stock ExchangeLLP formed with other objectives may undertake group

Investment activity. Provided it limits to a 50% criteria of RBI. LLP can undertake profession - CA, CS, CWA, Architect etc. For CS both Attestation & Non Attestation Services are

permitted CP holder can be a DP & can have share in profit.

Tax AspectsLLP’s is treated as Partnership Firms for the purpose of Income TaxThere is no surcharge on income tax of LLP.Minimum Alternative Tax (MAT) (Sec. 115JB) : The provisions are not applicable to

LLP.Alternate Minimum Tax (AMT) (Sec.115JC to Sec.115JF):

With effect from A.Y. 2011-12, LLPs are required to pay Alternate Minimum Tax (AMT) @ 18.5% on their Book Profit

Dividend Distribution Tax Sec 115O : NO dual taxation on distribution of its profits as DDT is not applicable

Deemed Dividend [Section 2(22) (e)]: Any loan given by LLP to its partners out of its accumulated Profits/ Reserves is not liable to be taxed as Deemed Dividend unlike in the case of closely held companies.

As per Finance Bill , 2015 LLP’s will be taxed @ 30%.

Eligibility of LLP under Income Tax S 184The LLP is evidenced by an instrument i.e. there needs to be a written LLP

Agreement. The individual shares of the partners are required to be clearly specified in the

deed.A certified copy of LLP Agreement must accompany the first return of income of

the LLPChanges in the constitution of the LLP or in the profit sharing ratio are required

be informed to IT by filing a certified copy of the revised LLP Agreement along with the IT return. Agreement should specify the continuation of LLP Business.

There should not be any failure on the part of the LLP while attending to notices given by the Income Tax Officer for completion of the assessment of the LLP.

Income Tax - Available DeductionsInterest paid to partners, provided such interest is authorized by the LLP

Agreement.Any salary, bonus, commission, or remuneration (by whatever name called) to

a partner will be allowed as a deduction if it is paid to a working partner who is an individual.

The remuneration paid to such working partner must be authorized by the LLP Agreement and the amount of remuneration must not exceed the limits under IT act.

In case of non compliance of section 184 no deduction towards interest and remuneration is allowed.

Audit under section 44AB of IT act

Tax Audit u/s 44AB would be applicable if Total Sales, Turnover or Gross Receipts exceed Rs.100 Lakhs with effect from A.Y. 2013-14.

Formation of LLP

It can be formed as new LLP

It can takeover proprietary concern after formation

Formation of New LLPUnderstanding of :

the specific requirements of the parties nature of business likely to be carried outprinciple terms & conditions between the partnersdecision making processcontribution ratioprofit sharing ratioadmission, cessation, expulsion of partnersdispute resolution mechanismveto powers

Formation of New LLPDecide about the partner and Designated Partner:

Minimum 2 Partners are required (Individual or body corporate) (Sec. 5)Minimum 2 Designated Partners who are individuals and at least one of

them should be resident in India. (section 7(1))Ensure that all the Designated Partners have DIN reflecting residential

status. Otherwise file DIR 6 first. Ensure that any one Designated partners has DSC

Decide the place Registered Office of LLPDecide partner contribution that may consist of any tangible, intangible,

movable or immovable property or other benefits to LLP (Section 32 (1))

Sr. no. LLP Form No.

Purpose of form Time Limit

1 LLP Form No. 1

Application for reservation of name

2 LLP Form No. 2

For Incorporation of a LLP File within 3 months from the date intimation of Name approval by ROC

3 ROC will issue Certificate of Incorporation in LLP Form No. 16.

Certificate shall be conclusive evidence.

4 LLP Form No. 3

For information regarding LLP agreement

Within 30 days from the date of incorporation

5 Execution of LLP Agreement May be :1. After name approval but before

formation OR2. After formation

LLP Form No. 1 Key PointsName of the applicant- whether nominee of body corporate or

individual. Nominee should also be individual. It can be anyone.Description of proposed business activity (Prefilled in LLP Form No. 2

subsequently)Proposed monetary value of partner's contributionName Justification, whether name based on regd. Trade Mark etcIn case of body corporate is a partner attach copy of signed

resolution:Making Investment in LLP( check compliance of 186 in case of Company)-

specify amount and %.Appointing nominee for it. NOC for the nameApproving Draft LLP Agreement

LLP Form No. 2 Key Points

Address of RODescription of proposed business activity (Prefilled from LLP Form No. 1)NIC 2004 list to be used.Details of Partners & Designated Partners-

Name , address, nationality gets prefilled, occupation, form of contributions- manually filled

In case of body corporate is a partner attach copy of signed resolution.

LLP Form No. 2 Key PointsMandatory Attachments- Proof of RO, Subscriber’s sheetWhere name includes specified sectors such as banking, insurance, VC,

MF, stock exchange, Advocate, CA, CS, CWA, etc, a copy of the in-principle approval of the regulatory authority or council is required to be attached.

Addendum required in case no. of partners exceeds 200. (LLP Form No. 4 - details of the partners as an addendum)

Certification by professional stating all requirements of Act & rules in respect of incorporation complied.

LLP Form No. 3 Key PointsDate of Agreement-To be filled manually from LLP agreement. Date of Ratification, if agreement is done prior to incorporation (also

attach relevant declaration/ confirmation about ratification)Business objectives & Obligation to contribute gets PREFILLED from LLP

Form No. 2.Mutual rights & duties of the partners , duration of LLP, admission

cessation of partners, dispute resolution etc.Mandatory Attachments: LLP Agreement

LLP AgreementLLP agreement is very CRUCIAL constitutional document – governing

relationship between LLP & its partners & interse among the partners.

Matters provided in Schedule I of LLP Act – if LLP agreement is silent on any matter, then standard provisions provided here will prevail.

Draft LLP agreement to suit LLP Form No. 3- It is highly advisable to draft LLP Agreement in same sequence as far as possible, so that filling LLP Form No. 3 and its checking by ROC would be easy.

LLP agreement & all supplements & amendments to be filed with ROC in LLP Form No. 3 within 30 days along with signed copy.

LLP AgreementIt can be executed after name availability before formation i.e.

filing of LLP Form No. 2 - LLP can’t be a party. OR

It can be done after registration within 30 days - so as to make LLP itself as one party to make provisions of LLP agreement binding on it.

Stamp duty on LLP agreement is to be paid as per relevant state stamp act for Partnership entry based on capital contribution slabs. (Entry 47 of schedule I of Bombay stamp act, 1958.)

Essentials of LLP AgreementName of LLP, Partners, Designated Partners, business activity, procedure

for alteration of above, duration of LLP, definitions, registered office.

Term and Conditions for functioning of LLP, Partners contribution, profit sharing ratio, voting pattern, drawings by partners, loans from/ to Partners, property of LLP.

Provisions for Partners and Designated Partners of LLP like admission, cessation, removal, vacations, expulsion, rights, duties, liabilities and responsibilities of Partners.

Essentials of LLP AgreementRestriction on powers of partners.Matters requiring consent of all partners/designated

partners.Forbidden actsTransfer or assignment of share in LLP Management of LLP including meetings etc.Miscellaneous ProvisionsDeed of Adherence as Schedule to admit new partner.

Special points for LLP AgreementUnderstand the specific requirement of proposed business

Provide simplified decision making processes

Non compete

Veto Power- the agreement may provide for veto power for one or more partners. Can be useful if some partners intend to control decision making process. List of items can be provided.

Executive/ Managing Committee- in the case of large number of partners, it would be advisable to form a committee of senior partners to handle management.

Decision Making MechanismDecision making mechanism can be framed through LLP Agreement. Routine matters can be left to Designated Partners. Important matters (as specified in LLP agreement) can be dealt with

the prior consent of all partners or majority of it.Provision for written consent or approval through meeting is to be

done.Admission or retirement of partners can be done with unanimous

consent.Provision for annual meeting would be useful.

Compliances after registrationExecute LLP Agreement, file LLP Form No. 3, if not done at time of

incorporationObtain PAN, registrations under other Acts Open Bank AccountPrint letterheads with LLPINPrepare rubber stampsPrepare Common Seal of the LLP, if it decides to have one (Section 14(c))Obtain all required registrations, licenses and permissionsMaintain necessary registers if specified by LLP agreementMaintain proper books of accounts (mandatory requirement)

Routine compliancesLLP shall maintain books of accounts on cash or accrual basis and

according to double entry system of accounting.(Rule 24(2))Audit of books of accounts of the LLP is not mandatory if the turnover

does not exceed Rs 40 lacs in any FY or contribution does not exceed Rs 25 Lakhs (Rule 24(8))

An LLP has to close its financial year on 31st March every year. All the Books of accounts, other documents and annual forms shall be

preserved at its registered office for 8 years from the date on which they are made

Routine compliances

Statement of Account and Solvency DeclarationEvery LLP shall prepare Statement of Account and Solvency declaration within 6

months from the end of the financial year and file the same with ROC in LLP Form No. 8 within 30 days of expiry of 6 months from the end of the financial year i.e. by 30th October every year.

Annual returnEvery LLP shall file an annual return to the Registrar in LLP Form No. 11 within 60

days of completion of its Financial Year i.e. by 30th May every yearFiling of Income Tax ReturnsEvery LLP is required to file their returns with the Income Tax Department as per

time schedule prescribedReturns to be filed under all other applicable laws

FEMA Regulations for LLPAs per press note 1(2011 Series) issued by Ministry of Commerce and

Industry, department of industrial policy and promotion dated 20 May 2011, FDI is allowed, through the Government approval route, in those sectors/ activities where 100% FDI is allowed, through the automatic route and there are no FDI - linked performance related conditions.

LLPs with FDI will not be allowed to operate in prohibited sectors (agricultural/ plantation activity, print media or real estate business.)

LLPs with FDI will not be eligible to make any downstream investments.

FEMA Regulations for LLPOverseas Direct Investments (ODI) by LLP is not permitted.External Commercial borrowings (ECBs) by LLP is not permitted.Foreign Institutional Investors (Flls) and Foreign Venture Capital

Investors (FVCIs) were not be permitted to invest in LLPs. Investment by cash Consideration

Foreign Capital participation in the LLPs is allowed only by way of cash consideration, received by inward remittance, through normal banking channels, or by debit to NRE/ FCNR account of the person concerned, maintained with an authorized dealer.

Conversion of a Partnership Firm into LLP

ProcessPartners of registered firm may with unanimous approval decide to convert their

firm into an LLP by following a process provided in Second Schedule of the LLP Act.Cut off date balance sheet is to be drawn.They have to apply for name & need to follow the process of formation of LLP.In addition to formation process, it has to submit LLP Form No. 17 providing all

details & copy of partnership deed, Consent letters by partners, Statement of Assets and Liabilities of the firm duly certified as true and correct by the Chartered Accountant in practice, Copy of acknowledgement of latest IT return, NOC from the secured creditors.

Registrar will then issue certificate of registration of conversion In LLP Form No. 19After registration of conversions it is expected to file LLP Form No. 14 , however

same is not available for filing online.

Key issues Condition of non existence of security interest in the

assets is not specifiedAfter conversions, necessary intimation to be given to

registrar of firms, so as to remove the name of the firms from its record.

New PAN is required to be applied

LLP Form No. 17 Key IssuesPrinciple address of the firmWhether the firm is registered or not, date of agreementChoose yes or no :Whether all the partners have consented for conversion? Whether all the partners of the LLP are partners of LLP ?Whether up to date Income-tax return is filed? DateWhether any proceeding is pending in any Court/ Tribunal/ any other Authority?Whether any earlier application for conversion into LLP was refused by the Registrar?Whether any conviction, ruling, order, judgment of any Court, Tribunal or other

authority in favour of or against the company is subsisting?Whether there are any secured creditors ?- Obtain NOC?Whether clearance from any other authority/ body required?

Tax AspectConversion of a Partnership Firm to an LLP will have no tax

implications if the rights & obligations of partners remain the same after

conversion and; there is no transfer of any Asset or Liability after conversion.

If the above conditions are violated, the provision of Capital gains specified in section 45 of IT act will apply.

Conversion of a Company into LLP

Only Private Limited & Unlisted Public Companies can be converted into LLP.

No security interest – Charge in the register / Secured Loan in the Books/ Position at bankers end for shift the charge on assets in favor of LLP

Decision of cut off date, preparation of cut off date audited Financial statements. – Not older than 30 days.

ALL the shareholders to become partners and no one else.

Key issues

Application for name & need to follow the process of formation of LLP

In addition to formation process:LLP Form No. 18 i. e. application to ROC for

conversion is required to be filed along with Form No.2.

Intimation to ROC in LLP Form No. 14.

Process

LLP Form No. 1 Key IssuesApplication for name to be made for just addition of

words “LLP” in the existing Name of the Company by deleting word “private limited”

Board resolution required to be attachedDescription of proposed business activity- same as

per Main Object of MOA.Details of Designated Partners - can be non director

LLP Form 2 Key IssuesDetails of Designated PartnersPoint No. 9(j) Form of contribution - Conversion of shares and share in

profits. i.e. sum total of paid up capital and free reserves to be filled upPoint No. 13 Total Monetary value of contribution: Total should match

with the amounts specified above.Form of contribution and Total Monetary value of contribution gets

prefilled in the LLP Form No. 3 i.e. the same is also required to be reflected in the LLP agreement and initial contribution from partners.

Attachments: Proof of RO, Subscriber's sheet, details of company(s)/ LLP(s) in which partner/ designated partner is a director/partner

LLP Form No. 2 For conversion - contribution

LLP Form No. 18 – Application for conversion Key PointsChoose yes or no :Whether all the shareholders have consented for conversion?Whether all the partners of the LLP are shareholders ?Whether any security interest in the assets is subsisting or in force?Whether up to date Income-tax return is filed? DateWhether any prosecution initiated against or show cause notice for alleged offences under the

Companies Act, 1956?Whether any proceeding is pending in any Court/ Tribunal/ any other Authority?Whether any earlier application for conversion into LLP was refused by the Registrar?Whether any conviction, ruling, order, judgment of any Court, Tribunal or other authority in favor

of or against the company is subsisting.Whether there are any secured creditors ?- Obtain NOC?Whether up to date documents including balance sheet and annual returns Companies Act, 1956

have been filed?Whether clearance from any other authority/body required?

LLP Form No. 18 – Application for conversion Key Points

No forms pending for payment or processing at MCANo open charges in Charge Index At least 1 balance sheet and annual return submitted since formation, Company with share capital can only be converted Section 25/ 8 company can NOT be converted.Attachments to form:

EGM resolution Copy of acknowledgement of IT returnNOC from secured creditorsNOC from the body/authorities( If applicable)Statement of assets & liabilities duly certified true & correct by the auditor.Statement of shareholders stating compliance of all provisions of LLP Act & rules, annual

filing completed etc.

LLP Form No. 3 Key IssuesOBLIGATION TO CONTRIBUTE- gets prefilled from LLP Form No.2 Deemed Dividend & DDT issue In order to finalize the required contribution pattern for LLP,

necessary amendments to be made in Company’s cut off balance sheet before conversion. Shareholding patternRevaluation of Assets Issue of Bonus Shares Buy back of shares Payment of Dividend

LLP Form No. 3 for conversion-obligation

LLP Form No. 14 Key IssuesIntimation to ROC in respect of conversionNo fees just acknowledgment is received Particulars of Company gets prefilled in Part B , CIN to be

enteredParticulars of LLP gets prefilled in Part C, LLPIN to be entered.Attachment is certificate of registration issued on conversion.

Tax AspectFinance Act, 2010 has provided that any transfer of capital assets,

intangible assets by a private company or unlisted public company to LLP on its conversion into LLP would not be taxable on fulfillment of following conditions specified in Sec. 47(xiii a).Conversion is in accordance with provisions of Sec. 56/57 of LLP Act,

2008,The total sale, turnover or gross receipts in business of the company

does not exceeds Rs 60.00 lacs in any of the 3 preceding previous years.All the assets & liabilities are transferred to LLP,All the shareholders of the company become partner of the LLP in same

proportion as their shareholding in the company,

No consideration other than share in profit and capital contribution in the LLP arises to partners

The erstwhile shareholders of the company continue to be entitled to receive at least 50% of the profits of the LLP for a period of 5 years from the date of conversion,

No amount is paid, either directly or indirectly, to any partner out of the accumulated profits of the company for a period of 3 years from the date of conversion

Takeover of proprietary concern by LLPAfter formation LLP can takeover any business by entering into an

agreement of takeover.Object of the LLP as stated in the Agreement. If not covering the

proprietary business, the same needs to be amended by following the process stated in the LLP Act.

It would attract stamp duty.It would attract capital gain tax since it would be treated as transfer

under income tax act. All licenses, permission to be changed to the name of LLP.

Effect of conversion

All tangible , intangible assets , interests, rights, privileges, whole of undertaking gets vested in LLP without further assurance, act or deed.

Company shall be deemed to be dissolved & removed from records of eth ROC- status gets reflected in Master Data.

Pending proceedings may be continued, completed enforced by or against LLP.

Conviction ruling, order judgment may be enforced by or against LLPExisting contracts, agreements, employment continues.

Notice of conversion in correspondenceLLP not later than 14 days after the date of registration of

Conversion of Private Company/firm to LLP, shall;For a period of 12 months ensure that every official

correspondence bears:A statement that it was a Private company/ Firm and

converted into LLPThe name of the Company/ Firm and registration

number of the company

Structural Changes in LLP

Structural Changes in LLP- Change of Name

• Change name as per procedure in the LLP Agreement or if agreement is silent, with consent of all the Partners.• It would be advisable to pass resolution to submit to ROC.• File LLP Form No. 1 for application for name approval • The registrar will reserve name • Fix the effective date of change of Name • Sign and execute Supplement LLP agreement for change in name• File LLP Form No. 3 within 30 days of execution of supplement LLP

agreement

Structural Changes in LLP- Change of Name

• File LLP Form No. 5 (Notice for change of name)within 30 days of change of name. Attachment: Copy of minutes/decision, Extract of relevant provisions of LLP agreement. • Registrar will issue fresh certificate of incorporation• Changed name must appear on all official documents of LLP• Change name with all other authorities• Prepare new seal, rubber stamp etc. • All registrations are required to be changed• Stationary to be changed accordingly

Structural Changes in LLP- Change of Name• Check proposed business is allowable to be carried out by LLP• Take approvals if any required under other laws• Change activity as per procedure provided in the LLP Agreement or if

agreement is silent, with consent of all the Partners• Advisable to pass resolution• Sign and execute Supplement LLP agreement for change in activity• File LLP Form No. 3 within 30 days of execution of supplement LLP

agreement • ROC will record the same & will amend the NIC code accordingly. It will

appear in master data• LLP can then commence new Business activity.

Structural Changes – Admission partner • Decide name of partner to be admitted. • Check his DIN & eligibility. Nationality requirements- File DIR-6. Take

declarations for no disqualifications (section 5) & consent to act as partner.• Decide capital contribution, profit and loss sharing ratio and remuneration, if

any of new partner• Appoint new partner as per procedure in the LLP Agreement or if agreement

is silent, with consent of all the Partners• Execute new LLP Agreement/addendum/Deed of Adherence • Obtain approval by resolution• File LLP Form No. 4 within 30 days from date of appointment• File LLP Form No. 3 within 30 days of execution

Structural Changes in LLP- Cessation of Partner • A person cease to be partner• on his death or • dissolution of LLP or • if he is declared to be of unsound mind by a competent court or • if he has applied to be adjudged as an insolvent or declared as an

insolvent • Partner can retire by giving notice of his intention to resign to other

partners & LLP.

Structural Changes in LLP- Cessation of Partner

• On cessation, unless otherwise provided in LLP agreement, ceased partner or a person entitled to his share in consequences of death or insolvency shall be entitled to receive from LLP - • An amount equal to capital contribution of ceased partner actually made

to the LLP and• His right to share in accumulated profit of LLP after deduction of

accumulated losses of LLP• File LLP Form No. 4 within 30 days from date of cessation or retirement

Structural Changes in LLP- Cessation of Partner Any person who ceases to be a partner of a LLP may himself file

with the Registrar the notice of his cessation if he has reasons to believe that the LLP may not file the notice with the Registrar (LLP Form No. 4)

On receiving such notice Registrar shall obtain a confirmation to that effect from the LLP. Where no confirmation is given by the LLP with a period of 15 days, the Registrar shall register the notice made by the person ceasing to be a partner. (section 25(6))

Structural Changes – Expulsion, Increase in capitalExpulsion of Partner • As per para 13 of 1st schedule of LLP act, no majority can expel any partner unless a

power to do so has been conferred by express agreement between the partners.• Thus, there should be express provision in LLP agreement to expel a partner.• On expulsion process of communication to Registrar & other authorities is to be

followedIncrease in capital contribution• Process prescribed in LLP agreement to be followed • LLP agreement to be amended • Pay difference in stamp duty• File LLP agreement in LLP Form No. 3 within 30 days

Structural Changes in LLP - Change in RO•Within Local Limits •Within State but outside local limits • Outside the State• Change of registered office can be made as per procedure in the

LLP agreement or if agreement is silent, as per the procedure laid down in section 13(3) and Rule 17.

Amalgamation or reconstruction – between two LLP’s separate process provided

Compromise or arrangements with creditors or partners – separate process provided

Structural Changes in LLP- Amalgamation, Compromise or arrangements

Registration of LLP under the New Companies Act

Section 366 (1) of the Companies Act 2013 allows registration of existing LLP as Company. Section notified with effect from 01.04.2014. Application has to be made vide Form no. URC-1.

This provides a required exit opportunity to promoters from LLP set up.

Income Tax applicability will be in line with conversion of partnership into Company

Some issues in LLP Structure – Needs SolutionsCeasing of Indian residential status by a partner attracts FIPB

approval process. Thereafter restrictions on activities to carry out prohibited businesses specified in FEMA regulations.

Existence of LLP will be in danger – if any partner ceases to be a member of specified institute, if such LLP is formed with inprinciple approval of regulatory authority.

No clarity on completing the process of audit and holding of AGM for a cut off period financial statement required to be submitted in case of conversion of private limited to LLP.

Some issues in LLP Structure – Needs SolutionsIt would be difficult to win bankers confidence since there is

no provision to register charges on LLPThere is little discomfort to partners since LLP agreement is

available in public domain as against partnership deed.LLP as a distinct form of business from Partnership/

Company & is not recognized under many central, state or local legislations

No specific stamp duty provisions and hence required to be dependent upon partnership provisions in state stamp acts.

Some issues in LLP Structure – Needs SolutionsHUF/ Karta cannot become a partner in LLPConversion of more than 2 partnership firm into single

LLP is not possible LLP cannot undertake non-profit making activityLLP cannot raise money from public LLP cannot undertake NBFC activities requiring registration

with RBINo provision of redressal in case of oppression and

mismanagement in the LLP Act.

Penalties & FinesFor defaults/ non-compliance on procedural matters such as filing through the levy of a

default fee for every day for which the default continues.

Such default fee would be payable at the rate of Rs.100 per day after the expiry of the date of filing upto a period of 300 days (section 69). This is to be paid at the time of filing only with out any discretion.

The offences under the act can be punished either through payment of fine or through payment of fine as well as imprisonment of the offender

The Judicial Magistrate of the first class or Metropolitan Magistrate shall have jurisdiction to try offences under the LLP Act.

Penalties & FinesIt also provides for imprisonment penalty for following violations• making by any person a false statement at the time of incorporation of LLP • carrying on business of LLP with intent to defraud or for any fraudulent

purposes and • making, knowingly, false statements or omitting any material fact, in any return,

documents etc. under the act.• The offences which are punishable with fine only can be compounded by the

Central Government, by collecting a sum not exceeding the amount of maximum fine prescribed for the offence.

makarand.lele@mrmcs.com+91 98223 94381

Thank You

blogs.makarandlele.inwww.mrmcs.com