LIMITED LIABILITY PARTNERSHIP

ACT, 2008

-By Sarita Devi

 INTRODUCTION
First LLP in INDIA- 2nd April, 2009
www.llp.gov.in – For registration and governance
LLP Rules, 2009 contains administrative
provisions for formation, management,
reconstruction and winding up of LLPs.
Users/Beneficiaries ???
 MEANING AND NATURE (SEC. 3 & 4)
SEC. 2(1) (n) – “ An incorporated partnership
formed and registered under the Act”.
FEATURES OF LLP
1) Body corporate (Sec. 3(1))
2) Separate legal entity (Sec. 3(2)) (assets and
liabilities)
3) Artificial Legal Person
4) Perpetual succession (Sec. 3(2))
5) Common seal ( name, date, place)
6) Limited Liability
7) Management of Business
8) No Mutual Agency
9) Minimum and Maximum no. of parties
10) Business for profit only
 FEATURES (CONTD.)
11) LLP Agreement
12) Annual accounts and Audit
13) Investigation
14) Compromise or Agreement ( Merger and
Acquisition)
15) Conversion into LLP
16) Winding up of LLP
17) The Companies Act, 2013
18) Taxation of LLP (Income tax act,1961)
19) E-filing of documents (www.mca.gov.in)
20) Foreign LLPs
21) Non-applicability of the Indian partnership act
BASIS PARTNERSHIP LLP
FIRM
1. REGULATING The Indian Partnership The Limited Liability
ACT Act, 1932 Partnership Act, 2008

2. BODY NO YES
CORPORATE

3. SEPARATE NO YES
LEGAL ENTITY

4. CREATION Agreement between the Registration under the LLP

partners Act, 2008

5. Voluntary Mandatory
REGISTRATION

6. PERPETUAL No Yes
SUCCESSION

7. NAME No guidelines Contain the word LLP as

suffix
BASIS PARTNERSHIP LLP
FIRM
8. MAXIMUM 10- Banking business silence
NO. OF 20- others
PARTNERS
9. LIABILITY Unlimited Limited to the extent of its
agreed contribution
10. MUTUAL Bind firm as well as other Can only bind firm
AGENCY partners

11. No provision 2 designated partners

DESIGNATED Atleast one should be
PARTNERS resident in India
12. COMMON No As official signatures
SEAL
13. LEGAL All partners responsible Only designated partners
COMPLIANCES
14. AUDIT OF Annual turnover exceeds Annual turnover exceeds 60
ACCOUNTS 1 crore lakhs or contribution exceeds
25 lakhs
BASIS PARTNERSHIP LLP
FIRM
15. ANNUAL No requirement 1) Annual statement of
FILING OF accounts
DOCUMENTS 2) Statement of solvency
3) Annual return with the
registrar of LLP every yr.
16. FOREIGN Cannot become partner Can become
NATIONALS
17. MINOR AS Yes No
PARTNER
18. 1) By mutual agreement 1) Voluntary
DISSOLUTION/ 2) Death, insolvency etc. 2) By national company law
WINDING UP 3) By Court order tribunal

19. By partners By partners or designated

MANAGEMENT partners
20. MODE OF No provision On cash or accrual basis
MAINTENANCE
O0F ACCOUNTS
 ASSIGNMENT??

State the differences between limited liability

partnership and limited liability company.
INCORPORATION OF NEW LLP
• Deciding the partners and
STEP-1 designated partners

• Obtaining the DPIN and digital

STEP-2 signature certificate

• Checking the availability of name

STEP-3
INCORPORATION OF NEW LLP
(CONTD.)

• Drafting of LLP Agreement

STEP-4

• Electronic filing of some

STEP-5 documents with ROC

• Issuing certificate of Incorporation

by ROC
STEP-6
INCORPORATION DOCUMENT
(SEC-11)
e-Form 2
Incorporation document provides for the details
of LLP
Name
Address of partners and designated partners
Amount of Contribution
Consent for forming a LLP to carry on a lawful
business with profit motive.
Declaration regarding all legal compliances .
 REGISTERED OFFICE OF LLP AND
CHANGE THEREIN (SEC.13)
Place where all correspondence related to LLP would be
sent.
CHANGE-
1) File the notice with registrar in Form 15
2) Where LLP Agreement silent about conditions- Consent
of all partners required.
3) Where change from one state to another- if having
creditors, consent of creditors also required.
4) In this case, notice in daily newspaper not less than 21
days before filing any notice with registrar.
5) Penalty- LLP and every partner (RS. 2000 TO Rs.
25000)
NAME OF LLP AND CHANGE
THEREIN

Last words of Desirable name in Reservation

Approved Name the opinion of CG of Name

Change of Penalty for Publication

name of Improper of Name
LLP use of words and Limited
Liability
DESIRABLE NAME

LLP WORDS
WITH PROHIB BASED
1. IDENTI
CAL 2. ITED
WORDS 3. ON
APPROV
NAME AL
RESERVATION OF NAME

RESER
VATION
RESERV
OF
1. APPLICA
TION 2. ATION
FOR 3
MONTHS
3. NAME
OF
FOREIG
N LLP
CHANGE OF NAME OF LLP

DIRECT
IONS

1. ISSUED
BY
CENTRA
2. REGIST
RAR 3. LLP
ITSELF

L GOVT.
PARTNER

SEC. 2 (1) (q)- Any person who has become a

partner in the LLP in accordance with the LLP
agreement.
Who can become a partner??
An individual
An Indian company ( Private or Public)
A LLP registered in India
A LLP registered outside India
A foreign Company
 DESIGNATED PARTNERS
Any partner designated as such pursuant to
Sec.7 of the Act.
Provisions-

1. No. of 2. Who will be

3. Prior consent
designated designated
to act as DP
partners Partner ?

5. Eligibility
4. Filing of
conditions for
Particulars with Obtaining DPIN
the appointment
the Registrar
of DP
DESIGNATED PARTNERS

7. Role of 8. Liabilities
designated of designated
partners Partners

9. Changes in 10. Penalty for

DP Contravention
PARTNERS AND THEIR RELATIONS
Determined by LLP Agreement
In absence of LLP Agreement, Determined by First
Schedule to the Act
1) Equal share in profits, capital and losses
2) LLP shall indemnify partners in respect of payments
3) Partner shall indemnify LLP for any loss caused to
it by his fraud.
4) Every partner may take part in management
5) No entitlement to remuneration to any partner
6) No new partner can be introduced without the
consent of all the existing partners
7) Any issue is resolved by voting and majority
8) Every decision taken needs to be recorded as
minutes and kept in Registered office within 30 days.
PARTNERS AND THEIR RELATIONS (CONTD.)
Every partner shall render true accounts and full
information to LLP and partners.
If any partner runs the same nature of business
of LLP and competing against it , then all profits
need to be returned to LLP.
Benefit derived from the LLP without the consent
of partners or LLP needs to be returned .
No partner can be expelled by majority of
partners .
Disputes which cannot be resolved referred to
Arbitration and Conciliation Act, 1996
EXTENT AND LIMITATION OF LIABILITY OF LLP
(SECS. 26 AND 27)
Every partner agent of LLP.
Liable to the full extent of its assets
Cannot bound by the acts of partners not
authorized for it.
Bound by the acts of partners (For any wrongful
act or omissions) authorized for it.
Obligation of LLP- Obligation of LLP only
Liabilities of LLP met from properties of LLP
only.
EXTENT AND LIMITATION OF LIABILITY OF
PARTNERS (SECS. 28-30)

Agency relationship
No personal liability for obligations of LLP
Personal liability in case:
A) For his wrongful act or omission
B) Acts undertaken beyond his authority
C) where no. of partners falls below statutory
limit
Liability in case of ‘ Holding Out’
No liability after the death of a partner
Unlimited in case of fraud (Penalty- 50,000 to
5,00,000 or jail for 2 years)
Liability for compensation
 WHISTLE BLOWING (SEC. 31)
Disclosure by organization members of illegal, immoral or
illegitimate practices under the control of their employees,
to a person/organizations that may be able to effect action.
Whistle Blower- A person who tells the public/ someone in
authority about alleged dishonest or illegal activities
occurring in a public/private organization.
Internal whistle blower
External whistle blower
PROTECTION TO THE PARTNERS/EMPLOYEES
UNDER LLP ACT
1) The court of Tribunal may reduce/waive any penalty
leviable against any partner/employee if,
2) No partner/employee may be
dicharged/demoted/suspended/ threatened/harassed/
discriminated against the t&c of LLP /employment
 CONTRIBUTION (SECS. 32 AND 33)
MEANING- What a partner intends to contribute
towards the LLP for running of his business.
No requirements of minimum contribution
Form of Contribution
Obligation to contribute
A) Acc to partnership agreement
B) In absence, Equal share
C) Can be increased by amendment in the
agreement
D) Can be withdrawn like drawings
FINANCIAL DISCLOSURES
1) Maintenance of Books of Account (Sec. 34)
2) Statement of Account and Solvency (Sec. 34)
3) Auditing of Accounts of LLP (Sec. 34 (4))
4) Annual Return (Sec. 35)
MAINTENANCE OF BOOKS OF ACCOUNT (SEC.
34)
Obligation to maintain proper books
Financial year
Basis of Accounting
Form and Content
a) All receipts and expenditures
b) Record of assets and liabilities
c) Statements of cost of goods purchased,
Inventories, WIP, FG, COGS
o Period of Preservation- 8 years from the date of
their preparation
STATEMENT OF ACCOUNT AND SOLVENCY (SEC.
34)
Obligation to prepare
Time period for preparation- within 6 months
from the end of FY
Time period for filing – in FORM 8 within 60
days from the end of 6 months of the FY to
which such statement relates
Form and Contents
a) Statement of Solvency
b) Statement of Account
 AUDITING OF ACCOUNTS OF LLP (SEC. 34 (4))
Not mandatory
Qualification and appointment
Remuneration of auditors
Removal of auditors
Resignation of auditors
Power and duties of Auditors
a) Can access books of accounts
b) Can obtain any information from DP
c) Must act honestly and diligently without neglecting his
duties
d) Should see the interest of owners
e) Bring irregularities to the notice of partners
f) Direct verification
g) Report- true and fair view
ANNUAL RETURN (SEC. 35)
File with registrar within 60 days of closure of FY
i.e., 30th May in FORM 11. Penalty – 100 per day
Contents of Annual Return
a) Name and address of RO
b) Date of closure of FY
c) Details of Business classification
d) Principal business activities of the LLP
e) Partners, DP and DPIN
f) Individuals and Body corporate
g) Contribution
h) Penalties
i) Offences
j) Certificates signed
TAXATION OF LLP
Treated at par with partnership firm
Eligibility
1) Written LLP Agreement
2) Specification of shares of Partners
3) Certified copy of LLP agreement and return of
income
4) Submission of revised LLP agreement in case of
changes
5) No failure to attend to IT notices
TAXATION TREATMENT OF LLP
Rate of TAX
In the hands of LLP
Filing and signing of ITR
Partner’s liability to pay TAX
Intangible contribution
AMT
Benefits of Presumptive Taxation not available to
LLP
Submission of Audit Report
Interest on capital and Remuneration
Share of Profit
No capital gain on conversion
 CONVERSION
Listed Public Company cannot be converted.
CONVERSION OF PARTNERSHIP FIRM INTO LLP
(SEC.55)
Chapter X – Second Schedule
MEANING- The conversion of the partnership firm into
LLP means the automatic transfer of the property,
whether tangible or intangible, assets, interests , rights,
privileges, liabilities, obligations and whole of the
undertaking of partnership firm to the LLP as a going
concern.
ELIGIBILITY FOR CONVERSION
Apply to ROC
All the partners of the converting partnership firm
become the partners of the proposed LLP
PROCEDURE FOR CONVERSION
1. Deciding The Partners And DP’s

2. Obtaining The DPIN And Digital Signature

Of DP’s

3. Checking the name availability of LLP from

ROC

4. Getting LLP Agreement And Incorporation

Document Drafted And Printed
PROCEDURE FOR CONVERSION
(CONTD.)

5. FILING OF CONVERSION APPLICATION (RULE

38 (1))
E-form 17 (Part A)
i) Incorporation document and subscription statement
(Sec. 11 )
ii) A statement by all of its partners in Form 17 (Part B)
iii) A statement prescribing compliances
iv) Statement of assets and liabilities of the partnership
firm. Not preceding 30 days from the date of application
v) List of all creditors with their consent
vi)Approval from concerned authority, if required.
vii) Prescribed filing and registration fees
 PROCEDURE FOR CONVERSION (CONTD.)

6. Obtaining Certificate Of Registration From ROC

(Rule 38 (2))
i) Issue of certificate by ROC in FORM 19
ii) Power of ROC to refuse conversion
iii) Appeal to the Tribunal in case of refusal (within
60 days)

7. Informing the Registrar of Firms about

Conversion (Rule 38 (3))- FORM 14- within 15
days
Penalty u/s-69 Rs. 100 per day
EFFECTS OF REGISTRATION OF
CONVERSION OF PARTNERSHIP INTO
LLP (SEC. 58)

• Existence of LLP
1.

• Automatic transfer and vesting

2. of Assets and Liabilities in LLP

• Dissolution of the converting

3. entity
 CONVERSION FROM PRIVATE
COMPANY INTO LLP (SEC.55)
Chapter X – Third Schedule
MEANING- The conversion of the private company into
LLP means the automatic transfer of the property,
whether tangible or intangible, assets, interests , rights,
privileges, liabilities, obligations and whole of the
undertaking of the private company to the LLP as a
going concern.
ELIGIBILITY FOR CONVERSION
Apply to ROC
No security interest should be there in its assets
subsisting or in force at the time of application
Partners of LLP should be the shareholders of private
company and no one else.
PROCEDURE FOR CONVERSION
1. Deciding The Partners And DP’s

2. Obtaining The DPIN And Digital Signature

Of DP’s

3. Checking the name availability of LLP from

ROC

4. Getting LLP Agreement And Incorporation

Document Drafted And Printed
PROCEDURE FOR CONVERSION
(CONTD.)

5. Filing of conversion application (RULE 39)

E-form 18 (Part A)
i) Incorporation document and subscription
statement (Sec. 11 )
ii) A statement by all of its shareholders in Form
18 (Part B)
iii) A statement prescribing compliances
iv) Statement of assets and liabilities of the private
company
v) List of all creditors with their consent
vi)Approval from concerned authority
vii) Prescribed filing and registration fees
PROCEDURE FOR CONVERSION (CONTD.)

6. Obtaining Certificate Of Registration From ROC

i) Issue of certificate by ROC in FORM 19
ii) Power of ROC to refuse conversion
iii) Appeal to the Tribunal in case of refusal

7. Informing the Registrar of Companies about

Conversion (Rule 38 (3))- FORM 14
EFFECTS OF REGISTRATION OF
CONVERSION OF PARTNERSHIP INTO
LLP (SEC. 58)

• Existence of LLP
1.

• Automatic transfer and vesting

2. of Assets and Liabilities in LLP

• Dissolution of the converting

3. entity
 CONVERSION FROM UNLISTED PUBLIC
COMPANY INTO LLP (SEC.55)
Chapter X – Fourth Schedule
MEANING- The conversion of an unlisted public
company into LLP means the automatic transfer of the
property, whether tangible or intangible, assets,
interests , rights, privileges, liabilities, obligations and
whole of the undertaking of the company to the LLP as a
going concern.
ELIGIBILITY FOR CONVERSION
Apply to ROC
No security interest should be there in its assets
subsisting or in force at the time of application
Partners of LLP should be the shareholders of public
limited company and no one else.
PROCEDURE FOR CONVERSION
1. Deciding The Partners And DP’s

2. Obtaining The DPIN And Digital Signature

Of DP’s

3. Checking the name availability of LLP from

ROC

4. Getting LLP Agreement And Incorporation

Document Drafted And Printed
PROCEDURE FOR CONVERSION
(CONTD.)

5. Filing of conversion application (RULE 40)

E-form 18 (Part A)
i) Incorporation document and subscription
statement (Sec. 11 )
ii) A statement by all of its shareholders in Form 18
(Part B)
iii) A statement prescribing compliances
iv) Statement of assets and liabilities of the
partnership firm
v) List of all creditors with their consent
vi)Approval from concerned authority
vii) Prescribed filing and registration fees
PROCEDURE FOR CONVERSION (CONTD.)

6. Obtaining Certificate Of Registration From ROC

i) Issue of certificate by ROC in FORM 19
ii) Power of ROC to refuse conversion
iii) Appeal to the Tribunal in case of refusal

7. Informing the Registrar of Companies about

Conversion (Rule 38 (3))- FORM 14
EFFECTS OF REGISTRATION OF
CONVERSION OF PARTNERSHIP INTO
LLP (SEC. 58)

• Existence of LLP
1.

• Automatic transfer and vesting

2. of Assets and Liabilities in LLP

• Dissolution of the converting

3. entity
WINDING UP AND
DISSOLUTION OF
LLP
TERMS
LLP Liquidator
Provisional Liquidator
Officer
Tribunal
Registrar
 WINDING UP VS. DISSOLUTION
BASIS WINDING UP DISSOLUTION

1. Meaning Process which brings an Last stage of Liquidation.

end to the life of LLP After many legal
and creditors are paid off compliances the liquidator
out of the proceeds applies to the court for
realized from the sale of dissolution order of LLP and
assets. then the LLP is dissolved.

2. Legal Long process. After On dissolution, LLP ceases

entity winding up and prior to to exist and its name is
dissolution the legal struck off from the records of
existence of the LLP ROC and the fact is notified
continues and it can be in the official gazette.
sued by others in a court
of law.
MODES OF WINDING UP
VOLUNTARY WINDING UP

1. Passing of 2. Declaration 3. Approval of

Resolution of Solvency by creditors
(Rule 5) DP (Rule 6) (Rule 7)

5. Appointment of
4. Publication of
Liquidator (Rule
Resolution (Rule 9)
10)
MODES OF WINDING UP
VOLUNTARY WINDING UP

7. Convening of
8. Preparation
6. Performance of final report
General Meeting
of duties and and reporting to the by the
discharge of Partner/Creditors liquidator
liabilities (Rule 17)
(Rule 19)

9. Filing of documents 10. Passing of

with ROC Dissolution Order
1. PASSING OF RESOLUTION (RULE 5)
Approval of at least ¾th (in number) of the total
number of partners
Approval of creditors (secured and unsecured)
Copy of resolution filed with registrar within 30 days
of passing of the resolution.
Process begins from the date of resolution

2. DECLARATION OF SOLVENCY BY DP (RULE 6)

❑ By majority of DPs (not less than 2) – In form 2
❑ Verified by an affidavit – Not exceeding 1 year from
the date of its commencement
❑ Registered with ROC in FORM 3 within 15 days of
passing of resolution
❑ DOCUMENTS- FORM 4 Statement of assets and
liabilities, Report of the valuation of assets by Valuer.
3. APPROVAL OF CREDITORS (RULE 8)
Forward by registered post/e-mail/website
Creditors given 30 days to send their approval
Consent of atleast 2/3rd in value of creditors is
required
Notice of creditors shall be given in FORM 5
within 15 days from the date of receipt of the
consent of creditors to Registrar.

4. PUBLICATION OF RESOLUTION (RULE 9)

❑ Within 14 days of receipt of creditor’s consent

❑ Notice by advertisement
5. APPOINTMENT OF LIQUIDATOR (RULE 10)
With the consent of majority of partners within 30 days
of filing of consent of creditors
Liquidator- from the panel of CG
Appointment- leads to cessation of the powers of
DPs/other partners
Notice to Registrar in FORM 10 within 10 days

6. PERFORMANCE OF DUTIES AND DISCHARGE OF

LIABILITIES
As per LLP Act, 2008/LLP (Winding and Dissolution)
Rules, 2012
 7. CONVENING OF GENERAL MEETING AND
REPORTING TO THE PARTNER/CREDITORS
(RULE 17)
Convened by Liquidator
Report of Progress quarterly-in FORM 8 to partners
and creditors
Accounts of the LLP Liquidator audited – Rule 56
8. PREPARATION OF FINAL REPORT BY THE
LIQUIDATOR (RULE 19)
❑ After winding up affairs fully wound up- Final report in
Form 9
rd rd
❑ Approval for 2/3 partners or 2/3 in the value of
creditors – By passing a resolution within 30 days of
receipt of report
❑ In case of Disapproval, matter transferred to Tribunal-
Rule 23
 9. FILING OF DOCUMENTS WITH ROC
By LLP Liquidator – within 15 days of their approval
from partners/creditors along with the MOM in Form
10

10. PASSING OF DISSOLUTION ORDER

❑ If satisfied, Tribunal passes order within 60 days of the
receipt of application.
❑ Liquidator file final copy of order for dissolution to
Registrar within 30 days in Form 11.
❑ Registrar publish a notice in the Official Gazette that
the LLP stands dissolved. (Sub-rule- 4)
 COMPULSORY WINDING-UP BY
TRIBUNAL
CIRCUMSTANCES:
1. Petition by LLP
2. Number of partners below statutory limit
3. Inability to pay its debts – Rule 25 of the LLP (Winding up
and Dissolution) Rules, 2012
3 cases:
a) Amount exceeding Rs. 1,00,000. Fails to pay within a
period of 21 days after demand
b) If a decree has been issued by the tribunal in favor of a
creditor
c) Proved to the satisfaction of Tribunal
4. Against national interests
5. Default in filing statement of account of solvency or AR
with ROC- for consecutive 5 financial years
6. Just and Equitable
WHO MAY FILE PETITION FOR WINDING UP?
By LLP or any of its partners
By any creditor
By the registrar
By any person authorized by central govt.
By central govt. in a case falling under section.51 of the
act.
By central or state govt. in a case falling under clause
(d) of section.64 of the act.
POWERS OF TRIBUNAL
Dismiss the petition with or without costs;
Make any interim order that it thinks fit;
Direct the action for revival or rehabilitation of
the LLP
Appoint a provisional Liquidator
Make an order for winding up
Make any other order that it thinks fit
DUTIES OF LIQUIDATOR
To carry on the business of the LLP for beneficial winding
up
To do all acts and to execute all deeds, receipts and other
documents and for that purpose use LLP seal
To take custody of property, assets, books of accounts and
other documents
To sell property by public auction/tenders/ contracts
To inspect the records and returns of the LLP
To prove rank and claim in the insolvency of any partner for
any balance against his estate(if a partner get insolvent the
claim needs to be taken care of)
To draw, accept, make and endorse negotiable instruments
on behalf of LLP(Bills of exchange etc.)
To make all necessary communication in his official name
for obtaining payment(he tries to get payment from debtors)
To apply to the tribunal for further orders
DUTIES OF LIQUIDATOR (CONTD.)
To make security arrangements for property(So no
other party creates problem)

To make out an inventory of assets

To appoint valuer/ CA
To give an advertisement to sell the property
Apply to the tribunal for the verification of the
statement of affairs(Conduct investigation in LLP)
To carry out investigation for fraud
To maintain separate bank account for each LLP
To maintain proper books of accounts(A report is created
for creditors as well)

To invite claims from the creditors, examine the

proof
To do all such acts which seems necessary