Analysis onLimited Liability Partnership

Adesh Nahar

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www. llp.gov.in

International Scenario• Limited Liability Partnership has

been prevalent in many countries including

• USA - Year - 1990• UK - Year - 2000• JAPAN - Year - 2006• SINGAPORE – Year – 2006

• Our LLP model is based on UK /Singapore• 4899 LLP got registered up to 23rd May

2011

Limited Liability PartnershipJourney of LLP Act, 2008Constitutional BackgroundAny two or more persons associating for

carrying on a lawful business with a view to earn profit may set up an LLP

Basic Features of LLPHybrid conceptBody CorporateLLP is a legal entity separate from its

partners.Number of partnersDisqualification of partnerAny Change in partners of a LLP shall not

affect the existence, rights or liabilities of the LLP.

Personal Liability of member

Basic Features of LLPPartnership Act 1932 – N.A.Applicability of Companies Act,1956Partners fall below minimum numberDesignated Partner-Minimum -2 Liability of Designated PartnerName should contain “LLP”

PREREQUISITE FOR FORMATION OF LLP

Minimum 2 Partners (Individual or body corporate)

Minimum 2 Designated Partners who are individuals and at least one of them should be resident in India.

Digital Signature Certificate

LLP Name

LLP Agreement

Registered office

Flowchart

Registration Procedure

Incorporation Document - Form 2Name of LLPProposed BusinessAddress of Regd.

OfficeNames and

addresses of PartnersDesignated Partners

Any other information prescribed

• Similar to MOA• Provision to Change

Name, Business & Registered Office

• Certificate of Incorporation by ROC is conclusive evidence

LLP Agreement - Form 3Limited Liability Partnership Agreement

means any written agreement between the partners of the LLP or between the LLP and its partners and its partners which determines the mutual rights and duties in relation to that LLP.

After incorporation, the LLP may have the LLP agreement.

The LLP agreement is similar to AOA of Company.

Contents of LLP AgreementContents in partnership DeedDesignated partnerDuties of Designated partner Executive partner Duties of Executive partner

Stamp Duty

• The LLP Agreement must be stamped in accordance with the stamp Act applicable in the relevant state where LLP is being incorporated.

Accounts and AuditStatement of Account & Solvency

Form 8To be filed with ROC

within 6 months from close of financial year

Annual Return Form 11

To be filed with ROC within 60 days.

Annual Return to be certified by Company Secretary Only

A LLP shall be exempt from the audit of its accounts if its turnover does not exceed, in any financial year, Rs.40 Lakhs; and its contribution does not exceed Rs.25 Lakhs.

Such audit shall be carried by a Chartered Accountant in practice.

Required to keep all recrods for 8 years.

ComparisonPARTNERSHIPS LLP PRIVATE

LIMITED COMPANIES

Number of Members

2 to 20. Minimum 2 partners.

2 to 50 shareholders.

Liability Unlimited. Limited Limited

Registration Registration with Registrar of

Firm Optional.

Registration with RoC required. Compulsory

Registration with RoC required. Compulsory

Dissolution By agreement, mutual consent,

insolvency, certain

contingencies, and by court

order.

By agreement or by order of National

Company Law Tribunal.

By court order once the affairs of

the company have been wound

up or court’s discretion.

PARTNERSHIPS

LLP PRIVATE LIMITED

COMPANIES

Documents to be Filed

None required, unless registered. If registered, annual accounts mandatory.

Designated partners have to file annual accounts, and submit an annual statement on solvency.

Annual statement of accounts, minutes of Board meetings, share register, register of charges.

Act Applicable Partnership Act 1932

Limited Liability Act 2008

Companies Act 1956

Transfer / Inheritance of share

Not transferable.

Transferable Transferable

Thank You

9 Musketeers

Where every individual is committed