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The particular presentation is about the much desired & long awaited LLP i.e, Limited Liability Partnership Act which is a result of efforts of various Expert Committees..!!

Transcript of Law

  • Indian history 2003: Naresh Chandra Committee Report which highlighted need for LLPs & suggested application of LLPs to Service industry, Chartered Accountants, Lawyers, Architects, etc. 2005: J J Irani Expert Committee on Company Law recommended introduction of LLPs-suggested small enterprises be included in scope of LLP & there should be a separate LLP Act 2006: LLP Bill introduced in Parliament 2007: Bill referred to Parliamentary Standing Committee (PSC) for examination 2008: Lok Sabha passes New LLP Bill as revised by PSC The arrival of much-desired & long-awaited LLP Act was result of efforts of several expert committees which includes:-
  • 2009: LLP Act, 2008 receives presidential assent & is published in Official Gazette 2009: LLP Act, 2008 gets notified w.e.f March 31st, 2009 3239 LLPs Registered till June 2011 Indian history
  • Different Chapters of the Act Chapter I-Preliminary (Ss. 1 & 2) Chapter II-Nature of LLP (Ss. 3-10) Chapter III-Incorporation & Incidental Matters (Ss. 11-21) Chapter IV-Partners & their Relations (Ss. 22- 25) Chapter V-Extent & Limitation of Liability of LLP & Partners (Ss. 26-31) Chapter VI-Contributions (Ss. 32 & 33) Chapter VII-Financial Disclosures (Ss. 34-41) Chapter VIII-Assignment & Transfer of Partnership Rights (S. 42) Chapter IX-Investigation (Ss. 43-54)
  • Different Chapters of the Act Chapter X-Conversion to LLP (Ss. 55-58) Chapter XI-Foreign Limited Liability Partnerships (S. 59) Chapter XII-Compromise, Arrangement or Reconstruction of LLPs (Ss. 60-62) Chapter XIII-Winding Up & Dissolution (Ss. 63-65) Chapter XIV-Miscellaneous Provisions (Ss. 66-81) First Schedule-Mutual Rights & Liabilities of Partners & LLP Second Schedule-Conversion of Partnership Firm to LLP Third Schedule-Conversion of Private Company to LLP Fourth Schedule-Conversion of Unlisted Public Company to LLP
  • Preliminary (Ch. I) Short title, extent & commencement This Act may be called the Limited Liability Partnership Act, 2008 It extends to the whole of India All sections which have been notified as on March 31st, 2009, vide notification no. S.O. 891(E)
  • Preliminary (Ch. I) Important Definitions: Body Corporate [S. 2 (1) (d)]: means a company defined in section 3 of the Companies Act, 1956 and includes- (i) a limited liability partnership registered under this Act; (ii) a limited liability partnership incorporated outside India; and (iii) a company incorporated outside India, but does not include- (i) a corporation sole; (ii) a co-operative society registered under any law for the time being in force; and (iii) any other body corporate (not being a company as defined in section 3 of the Companies Act, 1956 or a limited
  • Preliminary (Ch. I) Business [S. 2 (1) (e)]: includes every trade, profession, service and occupation Financial Year [S. 2 (1) (l)]: in relation to limited liability partnerships, means the period from the 1st day of April of a year to the 31st day of March of the following year: Provided that in case of a limited liability partnership incorporated after the 30th day of September of a year, the financial year may end on the 31st day of march of the year next following that year
  • Preliminary (Ch. I) Limited Liability Partnership Agreement [S. 2 (1) (o)]: means any written agreement between the partners of the limited liability partnership or between the limited liability partnership and its partners which determines the mutual rights and duties of the partners and their rights and duties in relation to that limited liability partnership Registrar [S. 2 (1) (s)]: means a Registrar, or an Additional, a Joint, a Deputy or an Assistant Registrar, having the duty of registering companies under the Companies Act, 1956
  • Comparison with Partnership Firms Basis Partnership Firms LLP Governing Law Partnership Act, 1932 Limited Liability Partnership Act, 2008 Registration Not Compulsory; but is preferred Compulsory Creation By partnership Agreement By Law Legal Status Partners collectively known as Firm; no separate legal status LLP has separate legal status apart from partners Succession Firm would cease to exist on change in partnership, unless otherwise provided in agreement LLP would not be affected on change in partnership (Perpetual Succession) Ownership of Assets Partnership cannot own assets in its name; assets must be in name of Partners LLP can own assets in its own name Liability of Partners Unlimited Limited Minors Position Minor can be admitted to benefits of Partnership Law silent on position of Minors
  • Comparison with Companies Basis Company LLP Governing Law Companies Act, 1956 Limited Liability Partnership Act, 2008 Name Must contain suffix Ltd or Pvt Ltd Must contain suffix LLP Common Seal Common Seal is compulsory Common Seal is optional Organizational Structure Rigid & governed by Companies Act Flexible & governed by LLP Agreement Appointment of Auditors Specific Resolution required for appointment of auditors at every AGM Auditors shall be deemed to be re-appointed in case no specific appointment is made (unless otherwise decided) Audit All companies are subject to audit of accounts Only LLPs having turnover of more than Rs. 40 Lacs or contribution of more than Rs. 25 Lacs are subject to audit of accounts
  • Nature of Limited Liability Partnership (Ch. II) LLP is body corporate formed & incorporated under LLP Act 2008 [S. 3 (1)] LLP is legal entity separate from its partners [S. 3 (1)] LLP has perpetual succession [S. 3 (2)] Existence, Rights & Liabilities of LLP not affected by change in partners [S. 3 (3)] Indian Partnership Act, 1932 does not apply to LLPs [S. 4] Partners Individuals / Body Corporate can be partners [S. 5] Minimum two partners [S. 6 (1)] Maximum unlimited partners
  • Nature of Limited Liability Partnership (Ch. II) If no. of partners fall below 2 for more than 6 months & Remaining partner has knowledge of such no. of partners falling below two for period more than 6 months Then remaining partner will be personally liable for liabilities incurred by LLP [S. 6 (2)]
  • Nature of Limited Liability Partnership (Ch. II) Designated Partners (DP) [S. 7 (1)] Every LLP shall have at least two DPs Only Individuals can be DPs Every LLP shall file particulars of Designated Partners with the Registrar At least one DP shall be a resident of India Every DP to obtain a Designated Partner Identification No. (DPIN) from central Government Responsibilities & Liabilities of DPs [S. 8] Responsible for doing all acts, matters & things required to be done by LLP w.r.t compliance of LLP Act including filing of any document, return, statement & like report under LLP Act & as specified in LLP Agreement Liable to all penalties imposed on LLP for any contravention of above
  • Nature of Limited Liability Partnership (Ch. II) Changes in DPs [S. 9] LLP to appoint DP within 30 days of vacancy If no DP is appointed or if, at any time, there is only 1 DP, each partner shall be deemed to be a DP Penalty for Contravention [S. 10] For S. 7 (1): LLP & its every partner shall be fined > Rs. 10,000 (Maximum Rs. 5 Lacs) For Ss. 7 (4) & (5), 8 & 9: LLP & its every partner shall be fined > Rs. 10,000 (Maximum Rs. 1 Lac)
  • Nature of Limited Liability Partnership (Ch. II) Disqualifications of DPs R. 9 (1): No person can be DP of LLP, if- He is declared as insolvent within preceding 5 years He has suspended payment to his creditors & not made any composition with them within preceding 5 years He is convicted by Court for any offence including moral turpitude1 & sentenced to imprisonment not less than 6 months He is convicted by Court for offence under Section 30 of LLP Act
  • Incorporation & Incidental Matters (Ch. III) Incorporation Document [S. 11] Is among Prime Documents of LLP Must be submitted to registrar in Form-2 [R. 11] S. 11 (2) requires particular information to be contained in Incorporation Document- Name of LLP Proposed Business of LLP Address of Registered Office (RO) Names & Addresses of Partners Names & Addresses of DPs Other Information as may be prescribed RO shall be place of all correspondence for LLP [S. 13 (1)] On Contravening provisions relating to RO, LLP & its every partner shall be punishable with fine upto Rs. 25,000 but not less than Rs. 2,000 [S. 13 (4)]
  • Effect of Registration [S. 14]: On Registration, a LLP will be able to, in its own name- Sue & be sued Acquire, hold & develop or dispose off any property Have a common seal Do & suffer such other acts & things as bodies corporate may lawfully do or suffer Name of LLP mu