University School Of Management Studies

Guru Gobind Singh Indraprastha University

Sector 16-C, Dwarka, New Delhi-110006

Master Of Business Administration (FA)

(2024-2026)

Legal Aspects of Business-MFA 115

Submitted To :- Submitted By:-
Dr. Sanjay Priyanshi Kanojia
USMS, GGSIPU
01416659424 (MBA- FA)
 Limited Liability Partnership Act

Limited liability partnership act Introduc on: The Ministry of Law and Jus ce on 9th
January 2007 no fied the Limited Liability Partnership Act, 2008. The Parliament passed the
Limited Liability Partnership Bill on 12 December, 2008; the President of India a ested to the Bill
on 7th January, 2009. It is commonly known as the Limited Liability Partnership Act, 2008. The
LLP Act, 2008 comprises of 81 sec ons along with 4 schedules.

• The First Schedule relates to mutual rights and obliga ons of partners, as well as the limited
liability partnership and its partners in case there lies absence of a formal agreement regarding
them.

• The Second Schedule pertains to conversion of a firm into LLP.

• The Third Schedule relates to conversion of a private company into LLP.

• The Fourth Schedule disposes the condi ons of a public company conver ng itself to LLP.

LLP is the new limited liability legal form of business organisa on. It is an alterna ve corporate
business vehicle enabling the benefits of limited liability with low compliance costs, while at the
same me providing the flexibility of a tradi onal partnership in organizing its internal structure
among its partners. The LLP is a separate legal person, and while the LLP itself will be liable for
the full extent of its assets, liability for the partners will be limited.

Some Important Defini ons Are:

1. Body corporate means, as defined in sec on 3 of the Companies Act, 1956 (now Companies
Act, 2013), a company, and includes -

(i) a LLP registered under this Act

(ii) A LLP incorporated outside India and

(iii) A company incorporated outside India,

But does not include-

(i) A corpora on sole,

(ii) A co-opera ve society registered under any law for the me being in force and
(iii) any other body corporate (not being a company as defined in sec on 3 of the Companies
Act. 1956 or a limited liability partnership as defined in this Act), which the Central Government
may, by no fica on in the Official Gaze e, specify in this behalf.

2. "Business" means every trade, business, profession, service and occupa on.

3. Designated Partner [Sec on 2(j)]: "Designated partner" means any partner designated as
such pursuant to sec on 7.

4. En ty [Sec on 2(k)]: "En ty" means anybody corporate and includes, for the purposes of
sec ons 18. 46, 47, 48, 49, 50, 52 and 53, a firm setup under the Indian Partnership Act, 1932.

5. Financial Year [Sec on 2(L)]: "Financial year", in rela on to a LLP, means the period from the
1st day of April of a year to the 31st day of March of the following year

However, in the case of an LLP formed a er the 30th day of September of any year, the financial
year may close on the 31st day of March of the year next following that year

6. Foreign LLP [sec on 2(m)]: It means a LLP formed, incorporated or registered outside India
and which establishes a place of business within India.

7. Limited liability partnership [Sec on 2(n)]: Limited Liability Partnership means a partnership
formed and registered under this Act.

8. Limited Liability Partnership Agreement [Sec on 2(o)]: It means Partners have wri en
agreements between themselves cons tu ng the LLP or the wri en agreement between the
LLP and its partners determining mutual rights, du es of the partners, and their rights and
du es in rela on to that LLP. Partner [Sec on 2(q)): Partner, in rela on to a LLP means the
person who becomes a partner in the LLP in accordance with the LLP agreement.

9. Partner [Section 2(q)): Partner, in relation to a LLP, means any person who becomes a partner in the
LLP in accordance with the LLP agreement.
Inapplicability of Indian Partnership Act, 1932 (Sec on 4): Save as otherwise provided, the
provisions of the Indian Partnership Act, 1932 shall not apply to a LLP.

Partners (Sec on 5): Any individual or body corporate may be a partner in a LLP.

However, an individual shall not be capable of becoming a partner of an LLP if

(a) He has been found of unsound mind by a Court of competent jurisdic on and the finding is
in force; or

(b) He is an undischarged insolvent; or

(c) He has applied to be adjudicated as an insolvent and his applica on is pending.

Minimum Number of Partners (Sec on 6): Every LLP shall have at least two partners. (ii) If at
any me the number of partners of a LLP is reduced below two and the LLP carries on business
for more than six months while the number is so reduced, the person, who is the only partner
of the LLP during the me that it so carries on business a er those six months and has the
knowledge of the fact that it is carrying on business with him alone, shall be liable personally for
the obliga ons of the LLP incurred during that period.

Designated United Partners (Sec on 7): Every LLP shall have at least two designated partners
who are individuals and at least one of them shall be a resident in India. (ii) If in LLP, all the
partners are bodies corporate or in which one or more partners are individual and bodies
corporate at least two individuals who are partners of such LLPs shall be designated partner.

Features:-
(1) LLP is a body corporate :- Sec on 2(1)(d) of the LLP Act, 2008 provides that a LLP is a body
corporate formed and incorporated under this Act and is a legal en ty separate from that of its
partners and shall have perpetual succession. Therefore, any change in the partners of a LLP
shall not affect the existence rights or liabili es of the LLP Sec on 3 of LLP Act provides that a
LLP is a body corporate formed and incorporated under this Act and is a legal en ty separate
from that of its partners.

(2) Perpetual Succession:- The LLP can con nue 'forever' even a er the partners change. Death,
insanity, re rement, or insolvency of partners has no bearing on the LLP. It can enter into
contracts and hold property in its own name.

(3) Separate Legal En ty: The LLP is a separate legal en ty and will be liable to the fullest extent
of its assets, but the liability of the partners will be limited to the agreed contribu ons in the
LLP. In other words, creditors of LLP will be the creditors of LLP only.

(4) Mutual Agency: Further, no partner is liable on account of the independent or unauthorized
ac ons of other partners, thus individual partners are shielded from joint liability created by
another partner's wrongful business decisions or misconduct. In other words, all partners will
be the agents of the LLP alone. No one partner can bind the other partner by his acts.

5. LLP Agreement: An agreement between the partners governs mutual rights and du es of
partners in an LLP. LLP Act of 2008 added flexibility to the partners to devise the agreement as
per their desire and mutual consent. In the absence of such an agreement, however, the
provisions of the LLP Act, 2008 will apply to govern those rights and du es.

(6) Ar ficial Legal Person: An LLP is an ar ficial legal en ty because it comes into being through
a legal process and is endowed with similar rights as an individual. It has the capacity to do
everything which a natural person can, except that it cannot be sent to jail, it cannot take an
oath of allegiance neither marry nor get divorced nor can it be in any learned profession like CA
or Medicine. An LLP is invisible, intangible, immortal (it can be dissolved by law alone) but not
fic ous because it really exists.

(7) Common Seal: A LLP being an ar ficial person but can be act on behalf of its partners and/or
designated partners. An LLP may adopt a common seal if it chooses to do so (Sec on 14(c)). A
common seal is not mandatory under an LLP. This will remain in the custody of some
responsible official and shall be affixed in the presence of at least 2 designated partners of the
LLP.

(8) Limited Liability: There is no partner in a LLP whose agent may be, for the purposes of the
business of LLP, an agent of the LLP, but not of the other partners (Sec on 26). The liability of
the partners shall remain limited to the agreed contribu on made by them in the LLP. Such
contribu on may have a tangible or intangible nature or both.

(9) Management of Business: Partners are en tled to manage the business of the LLP. But only
the designated partners can be held liable for legal compliance.

(10) Minimum and Maximum number of Partners: Every LLP shall have at least two partners
and shall also have at least two individuals as designated partners, of whom at least one shall be
resident in India. There is no maximum limit on the partners in LLP.

(11) Business for Profit Only: The primary requirement for crea ng an LLP is, in essence, the
conduct of a lawful business with the aim of turning profit. Charitable and other non-profit-
making ac vi es cannot form the basis for the establishment of LLPs.

(12) Inves ga on: Central Government has powers to appoint competent authori es for the
purpose of inves ga ng affairs of LLP as and when needed.

(13) Compromise or Arrangement: Provision of LLP Act 2008 with respect to compromise or
arrangements including mergers and amalgama on of LLPs shall be applicable thereto.

(14) Conversion into LLP: A firm, private company, or unlisted public company may be
converted into an LLP in accordance with the provisions of the LLP Act, 2008.

(15) E-Filling of Documents: Every applica on, form, or other document required to be filed or
delivered under the relevant Act or rules thereof shall be filed on the website www.mca.gov.in
in an electronically readable form and authen cated by a partner or designated partner of LLP
by the electronic or digital signature.

(16) Foreign LLPs: "foreign limited liability partnership" means a limited liability partnership
being formed, incorporated, or registered outside India but established in India as a place of
business within the country". A Foreign LLP may become a partner in an Indian LLP.
FACT OF INCORPORATION OF LLP:-
Incorpora on document (Sec on 11):

(1) For a LLP to accomplish its incorpora on:

• Two or more individuals, associated for carrying out a business of lawfully engaged
interest and for profit, have to subscribe their names to an incorpora on document;

• The incorpora on document needs to be filed in such manner and along with such fees
as may be prescribed with the Registrar of the State, where the registered office of the LLP has
to be situate; and

• There will be filed a statement along with the incorpora on document.

The incorpora on document shall be filed with a documenta on in the prescribed format, made
by an advocate, or a Company Secretary or a Chartered Accountant or a Cost Accountant
engaged in forming LLP and made by any of those subscribing their names to the incorpora on
document thereby declaring that all the requirements of this Act and the rules made
thereunder have been complied within respect of incorpora on and ma ers precedent and
incidental thereto.

(2) The incorpora on document said to be:

- Be in a form as may be prescribed.

- State the name of the LLP

- State the intended business of the LLP

- State the address of the registered office of the LLP:

- State the name and address of each of the persons who are to be partners of the LLP on
incorpora on:

- State the name and address of the persons who are to be designated partners of the LLP on
incorpora on,

- Contain such other informa on concerning the proposed LLP as may be prescribed.

3) If a person makes a statement as discussed above which he-

• Knowingly false; or
• Does not believe to be true, shall be punished with up to two years' imprisonment and fine
which shall not be less than ten thousand but can extend to five Lakhs

Incorpora on by registra on (Sec on 12):

(1) When requirements imposed by clause (b) and clause (c) of sub-sec on (1) of sec on 11
have been complied with, the incorpora on document will be retained by the Registrars and
unless clause (a) of that sub-sec on has not been complied with, shall - within a period of 14
calendar days from then:

• Register the incorpora on document, and

• Give a cer ficate that the LLP is incorporated by the name specified therein.

(2) The Registrar may accept the statement delivered under clause (c) of sub-sec on (1) of
sec on 11 as sufficient evidence that the requirement imposed by clause (a) of that sub-sec on
has been complied with.

(3) The register issued under clause (b) of sub-sec on (1) shall be signed by the Registrar and
authen c by his official seal.

(4) The cer ficate shall be conclusive evidence that the LLP is incorporated by the name
specified therein.

LLP has registered office and change (Sec on 13):

(1) The registered office of every LLP shall be the place where all communica ons and no ces
can be addressed to and where they shall be received.

(2) Document mate of being served on a LLP or any partner or designated partner thereof shall
be sent by post under a cer ficate of pos ng or registered post or by any other manner as may
be prescribed to the registered office and any other address specifically declared by the LLP for
the purpose in such form and manner as may be required.

(3) An LLP may change the place of its registered office and file a no ce of such a change with
the Registrar in such form and manner, and subject to such condi ons, as may be prescribed;
and any such change shall take effect only upon such filing.

(4) An LLP contravenes any provision of this sec on and each of its partners shall be punishable
with a fine which shall not be less than rupees 2,000 but could extend to rupees 25,000.

Effect of registra on (Sec on 14):

 sue and be sued

 do and suffer such other acts and things as bodies corporate may lawfully do and suffer
  acquire, own, hold and develop, or dispose of property, movable or immovable, tangible or
intangible
 have a common seal, if it so decides.

Name (Sec on 15).

(1) Every limited liability partnership shall have, as part of its name, either the words "limited
liability partnership" or the acronym "LLP" at the end.

(2) No LLP shall register itself with a name which, in the opinion of the Central Government, is
undesirable; iden cal; or too nearly resembles that of any other partnership firm or LLP or body
corporate or a registered trade mark, or a trade mark which is the subject ma er of an
applica on for registra on of any other person under the Trade Marks Act, 1999.

Reserva on of name (Sec on 16)

(1) A person may apply in such form and manner and accompanied by such fee as may be
prescribed to the Registrar for the reserva on of a name set out in the applica on as-

• the name of a proposed LLP, or

• the name to which a LLP proposes to change its name

Change of name of LLP (Sec on 17):

1. Not with standing anything contained in sec ons 15 and 16, the Central Government may
direct such LLP to change its name if it has been sa sfied that the LLP has been registered under
a name which-

• is amongst the names described in sub-sec on (2) of sec on 15; or

• is iden cal to or too nearly resembles name of any other LLP or body corporate or, if given a
li le different possibility, to likely be mistaken with.

The Central Government may direct such LLP to change its name, and the LLP shall comply with
the said direc on within three months a er the date of the direc on or such longer period as
the Central Government may allow.

2. Any LLP which violates a direc on under sub-sec on (1) be punishable with fine between ten
thousand rupees but which may go up to five lakhs.3. The designated partner of such LLP shall
be punishable with fine which shall not be less than 10,000 but which may extend to 1 Lakh.

Partners and Their Rela ons: Eligibility for Partnership (sec on 22): On incorpora on of LLP,
the persons who shall subscribe their names to the incorpora on document shall be partners
and they may further become a partner of the LLP by and in accordance with the LLP
agreement.

Rela onship of the Partners (Sec on 23)

(1) Except as otherwise provided in this Act, the mutual rights and du es of the partners of a
LLF and the mutual rights and du es of a LLP and its partners, shall be governed by the LLP
agreement between the partners, or between the LLP and its partners.

(2) The LLP agreement and any changes, if any, made therein shall be filed with the Registrar in
such form manner and accompanied by such fees as may be prescribed.

(3) A er incorpora on of the LLP, such agreement will bind the LLP if the agreement is ra fied
by all the partners.

(4) Absence of agreement about a ma er, the mutual rights and du es of the partners and the
mutual rights and du es of the LLP and the partners will be determined by the provisions
rela ng to that ma er as are set out in the First Schedule.

Cease of Partnership Interest (Sec on 24):

(1) A person may cease to remain a partner of a limited liability partnership in accordance
with an agreement with the other partners or, in the absence of agreement with the other
partners as to cessa on of being a partner, by giving a no ce in wri ng of not less than 30 days
to the other partners of his inten on to resign as partner

(2) A person shall cease to be a partner of a L.LP-

(a) on his death or dissolu on of the LLP; or

(b) if he is declared to be of unsound mind by a competent court; or

(c) if he has applied to be adjudged as an insolvent or declared as an insolvent.

(3) When a person ceases to be a partner of a LLP (herea er referred to as "former partner"),
such former partner is to be regarded (in rela on to any person dealing with the LLP) as s ll
being a partner" unless:

•that person has no ce that former partner has ceased to be a partner of the LLP; or

•no ce that former partner has ceased to be a partner of the LLP has been delivered to the
Registrar.
(4) The termina on of a partnership does not by itself discharge the LLP Member member or
partners from the obliga ons incurred during the me that he was a member.

(5) Where a partner of a LLP ceases to be a partner, unless otherwise provided in the LLP
agreement, then the former partner or a person en tled to his share in consequence of the
death or insolvency of the former partner, shall be en tled to receive from the LLP-

• the amount equal to the capital contribu on of the former partner made actually to LLP, and

• the right to share in the accumulated profits of LLP, a er the deduc on of the incurred
accumulated losses of LLP, determined as at the date the former partner ceased to be a partner.

(6) A former partner shall not, by reason of death or dissolu on, have any claim on the share
of such former partner and shall henceforth have no right over the management of the LLP

Sec on 25: Registra on of Changes in Partners:

1. Every partner must no fy the LLP of any altera on in his name or address within 15 days
from the date of such change.

2. A LLP shall

- whenever a person becomes or ceases to be a partner, file a no ce with the Registrar within
30 days from the date he becomes or ceases to be a partner, and

- where there is any change in the name or address of a partner, file a no ce with the Registrar
within 30 days of such change.

3. A no ce filled with the Registrar under sub-sec on (2)

- shall be in such form and accompanied by such fees as may be prescribed;

- shall be signed by the designated partner of the LLP and authen cated in a manner as may be
prescribed; and

- if it relates to an incoming partner, shall contain a statement by such partner that he consents
to becoming a partner, signed by him and authen cated in the manner as may be prescribed.

4. If the LLP contravenes the provisions of sub-sec on (2), the LLP and every designated partner
of the LLP shall be punishable with fine which shall not be less than 2,000 but may extend to
25,000.

5. Every partner, if contravenes provisions of sub-sec on (1), shall be punishable by fine which
will not be less than 2,000 but may extend up to 25,000.
(6) Any person who ceases to be a partner of a LLP may file the no ce referred to in sub-sec on
(3) with the Registrar himself in the event he has reasonable cause to believe that the LLP may
not file the no ce with the Registrar; and in the event of any such no ce being so filed by a
partner, the Registrar shall obtain a confirma on to this effect from the LLP.

REACH OF LIABILITIES AND LIMITATIONS OF LLP AND PARTNER:-

Partner as agent (Sec on 261: Every partner of a LLP is, for the purpose of the business of the
LLP, the agent of the LLP, but not of other partner.

Extent of Liability of LLP (Sec on 27)

1. An LLP is not liable for anything done by a partner in dealing with a person if

• the partner does not, in fact, have authority from the LLP to do that par cular act; and

• the person knows that he does not have authority or does not know or believe that he is a
partner of the LLP.

2. THE LLP is liable if by any wrongful act or omission at the business of the LLP or with result.

3. An obliga on of the LLP whether arising in contract or otherwise shall be solely the obliga on
the LLP.

4. The liabili es of the LLP shall be met out of the property of the LLP.

Personal Liability of Partner (Sec on 28)

(1) A partner shall not be held personally liable, either directly or indirectly under an obliga on
referred to in sub-sec on of sec on 27 only but solely by virtue of having been made a partner
to an LLP.

(2) The provisions of sub-sec on (3) of sec on 27 and this sec on, sub-sec on (1), shall not
affect the personal liability of a partner for his own wrongful act or omission or, by this, a
partner should not be held personally liable for the wrongful act or omission of any other
partner of the LLP.

Holding out (Sec on 29):

(1). Any person,

• who by words spoken or wri en or by conduct,

• represents himself, or knowingly permits himself to be represented to be a partner in a

LLP,

• is liable to any person,

• who has on the faith of any such representa on,

• given credit to the LLP, whether the person represen ng himself or represented to be a
partner does or does not know that the representa on has reached the person so giving credit.

However,

• Where any credit is received by the LLP as a result of such representa on,

• The LLP shall,

• Without prejudice to the liability of the person so represen ng himself or represented to

be a partner,

• be liable to the extent of credit received by it or any financial benefit derived thereon.

(2) In the Name of the LLP the business con nues a er death of a partner; the con nuing use of
that name or of the deceased partner's name as a part thereof shall not by itself render his legal
representa ve or estate liable for any act of the LLP performed a er his death.

The sec on at issue-the unlimited liability in case of fraud (sec on 30):

(a). Acts of fraud:

• An act done either by the LLP or by any of its partners or

• for the purposes of defrauding

• the creditors of the LLP or another person, or for some fraudulent purposes

• liability of LLP and partners who acted with intent of defrauding creditors or other purposes

(b) In case such act is contemplated for such a purpose or intent in carrying on business, every
person who was knowingly a party to the carrying on of the business shall be punishable with

• Imprisonment for a term extending to 2 years.

• And a fine: which shall be not less than 50000 but which may extend to 5 Lakhs.

(3) Where a LLP or any partner or designated partner or employee of such 14 has contest of the
LLP in a fraudulent manner, then without prejudice to any criminal proceedings may arise under
any law for the me being in force, the LLP and any such partner of employee shall be liable to
pay compensa on to any person who has suffered any or damage by reason of such conduct.

Unlimited liability in case of fraud (sec on 30):

(1).Duty of one or all the partners himself when:-

- when he fraudulently acts the LLP or any of its partners.

or

- defrauds creditors of LLP or any other person, or for any fraudulent purposes, the LLP and such
partners shall be deemed as unlimited for all or any of the debts or other liabili es of the LLP.

(2) Every person who was knowingly a party to the carrying on of the business may be punished
by

- Imprisonment for a term extending to 2 years. And as a fine: which shall be not less than
50000 but may extend to 5 Lakhs.

(3) In the event of contest against the LLP in a fraudulent manner, the LLP and any such partner
of employee when criminal proceedings may arise under any law for the me being in force
shall be liable to pay compensa on to any person suffering any damage by reason of such
conduct.

Whistle Blowing (Sec on 31)

(1) The Court or Tribunal may reduce or waive any penalty leviable against any partner of an
employee da LLP, if it is sa sfied that- such partner or employee of a LLP has provided useful
informa on during inves ga on of such LLP, or when any informa on given by any partner or
employee (whether or not during into leads to LLP or any partner or employee of such LLP being
convicted under this Act.

(2) No partner or employee of any LLP may be discharged, demoted, suspended, threatened,
harassed, or in any other manner discriminated against the terms and condi ons of his LLP or
employment merely because of providing informa on or causing informa on to be provided
pursuant to this subsec on.

FINANCIAL DISCLOSURES Maintenance of Accounts Records and Audit, Etc., Sec on 34 Proper
Books of Account: The LLP shall maintain such proper books as may be prescribed: rela ng to
its affairs for each year in its existence: on cash or accrual basis and according to double-entry
system of accoun ng, and shall be maintained at its registered office for such period as may be
prescribed.

An LLP shall maintain proper books of account,

- rela ng to its affairs for each year of its existence,

- and shall maintain the same at its registered office

- for such period as may be prescribed.

I. Prescribed Time:-Every LLP shall, within 6 months from the end of each financial year, prepare a
Statement of Account and Solvency for that financial year as at the last day of the financial year
in such form as may be prescribed. Such statement shall be signed by the designated partners of
the LLP.
II. Accounts shall be audited:-Every LLP shall file within the prescribed time the Statement of
Account and Solvency prepared pursuant to sub-section (2), with the Registrar every year in
such form and manner and accompanied by such fees as may be prescribed.
III. LLP which fails to comply with the provisions of this section shall be punishable :-The accounts
of LLP shall be audited in accordance with such rules as may be prescribed. The Central
Government may, however, by notification in the Official Gazette exempt any class or classes of
LLP from the requirements of this sub-section.
 Any LLP which fails to comply with the provisions of this section shall be punishable with
fine which shall not be less than 25,000 but which may extend to 5 Lakhs.
 Every designated partner of such LLP shall be punishable with fine which shall not be
less than 10.000 but which may extend to 1 Lakh.

Annual Return (Sec on 35):

(1) Every LLP shall file an annual return personally authen cated with the Registrar in such form
and manner specified and with such fees under the prescribed rules within 60 days a er the
comple on of its financial year.

(2) Any LLP which fails to comply with this Sec on shall be punishable with a fine which shall
not be less than Rs. 25,000 but which may extend to Rs. 5 Lakhs.

(3) If an LLP contravenes the provisions of this Sec on, the designated partner of such an LLP
shall be liable to punishment by imposi on of fine which shall not be less than 10,000 but may
extend up to 1 Lakh.

Conversion into LLP:-

Conversion of a firm to LLP (Sec on 55): A firm may convert into LLP in the manner provided
for in this Chapter and the Second Schedule.

Private company to LLP conversion (Sec on 56): A private company may convert into a LLP in
accordance with the provisions of this Chapter and the Third Schedule.

Conversion from unlisted public company to LLP (Sec on 57): Such unlisted public company
may convert into a LLP under the provisions of this Chapter and Fourth Schedule.
Registra on and effec ng conversion (Sec on 58):

1. The Registrar a er sa sfying that the firm, private company or an unlisted public company,
as the case may, has fulfilled the provisions of the various schedules, provisions of the act and
the rules made thereunder, will register the documents and issue the registra on cer ficate in
such form as may be determined by the Registrar, sta ng that the LLP is, on and from the date
specified therein, registered under this Act.

2. The LLP must, within 15 days from the date of registra on, no fy the concerned Registrar of
Firms or Registrar of Companies, as applicable, with which it was registered under the
provisions of the Indian Partnership Act, 1932 or the Companies Act, 1956 (Now Companies Act,
2013) as the case may be, concerning the conversion and the par culars of the LLP in such form
and manner as may be prescribed.

3. Upon such conversion, they partners of the firm, to which shareholders of private company
or unlisted public company, as the case may be, the LLP to which such firm or such company has
converted, and the partners of the LLP shall be bound by the provisions of the various
schedules, as the case may be applicable to them.

4. In consequence of such conversion, with effect from the date of issuance of the cer ficate of
registra on, the effects of the conversion will be as specified in the various schedules, as
applicable in this case.

Any Act of registra on is in spite of any other law that may be in force at the relevant me. The
date of registra on, as specified in the cer ficate of registra on issued under the Schedule, shall
be the date:

• There shall be a LLP by that name specified in the cer ficate of registra on, registered under
this Act,

• all the tangible (movable or immovable) or intangible property which was vested in the firm or
the company, as the case may be, all assets, interests, rights, privileges, liabili es, obliga ons
rela ng to the firm or the company, as the case may be, and the whole of the undertaking of
the firm or the company as the case may be, shall be transferred to and shall vest in the limited
liability partnership without further assurance, act or deed, and

• the firm or company, as the case may be, shall be dissolved and removed from the records of
the Registrar of Firms or where applicable, Registrar of Companies.

Foreign LLP:

Foreign Limited Liability Partnerships (Sec on 59): The Central Government may establish rules
for provisions related to establishment of a place of business by foreign LLPs in India and
carrying on their business or any part of it therein by adop ng or incorpora ng, with such
modifica ons, as appear appropriate, provisions of the Companies Act, 1956 or other regulatory
mechanism with composi on as may be prescribed.

WINDING UP DISSOLUTION:-

Winding up and dissolu on (sec on 63):- The winding up of a limited liability partnership can be
either voluntary or by the Tribunal, and, on such winding up, a limited liability partnership
would also be dissolved.

Circumstances under which LLP can be wound up by the Tribunal (sec on 64); ALLP may be
wound up by Court

if the LLP resolves that the LLP be wound up by the Tribunal; if less than two the number of
partners of the LLP is reduced for a period exceeding six months: if it is unable to pay debts: if
the LLP has acted against the interests of sovereignty and integrity of India, security of state or
public order; if the LLP has made default in filing with the Registrar the Statement of Account
and Solvency or annual return for any five consecu ve financial years; or if the Tribunal is of the
opinion that it is just and equitable that the LLP be wound up.

Rules for winding up and dissolu on (sec on 65): The Central Government may make rules for
the provisions in rela on to the winding up and dissolving of LLPs.

Miscellaneous:-- Business transac ons of partner with LLP (sec on 66): Every partner could lend
money or transact other businesses within the LLP and shall have the same rights and
obliga ons with respect to loan or other transac ons as would be available to a person not
being a partner.

Applica on of provisions of Companies Act (Sec on 67):

(1) The Central Government may, by no fica on in the Official Gaze e, provide that any of the
provisions of the Companies Act, 1956 specified in the no fica on

• shall apply to any LLP; or

• shall apply to any LLP with such excep on, modifica on, and adapta on as may be specified in
the no fica on.

(2) A copy of every no fica on proposed to be issued under sub-sec on (1)

• shall be laid, in dra , before each House of Parliament while it is in session,

• for a total period of 30 days which may be comprised in one session or in two or more
successive sessions, and

• if before the expiry of the session immediately following the session or the successive
sessions, both Houses agree in disapproving the issue of the no fica on or both Houses agree
in making any modifica on in the no fica on,

• the no fica on shall not be issued or, as the case may be,

• shall be issued only in such modified form as may be agreed upon by both the Houses.

Electronic filing of documents (Sec on 68):

(1) Any document that is to be filed, recorded or registered under this Act may be filed,
recorded or registered electronically through the prescribed process.

(2) A copy or an extract from an electronic document lodged with or submi ed to the Registrar
that is supplied or issued by the Registrar and cer fied through affixing digital signature as per
the Informa on Technology Act, 2000 to be a true copy of or extract from such document shall,
in any proceedings, be admissible in evidence as of equivalent validity as the original document.

(3) Any informa on supplied by the Registrar that is cer fied by the Registrar through affixing
digital signature to be a true extract from any document filed with or submi ed to the Registrar
shall be admissible in evidence and should be presumed, unless evidence to the contrary is
adduced, as a true extract from such document.

Payment of addi onal fee (Sec on 69):

Any document or return required to be filed or registered under this Act with the Registrar, if, is
not filed or registered in me provided therein, may be filed or registered a er that me upto a
period of 300 days from the date within which it should have been filed, on payment of
addi onal fee of 100 for every day of such delay in addi on to any fee as is payable for filling of
such document or return.

DIFFERENCES WITH OTHER FORMS OF ORGANISATION:-

Distinction between LLP and Partnership Firm: The points of distinction between a limited
liability partnership and partnership firm are tabulated as follows:-

BASIS LLP PARTNERSHIP FIRM

Regulating Act The Limited Liability The Indian Partnership Act,
Partnership Act, 2008. 1912

Body corporate It is a body corporate.

 It is not a body
corporate

Separate legal entity It is a legal entity it is a group of persons

separate from its with to separate legal
members. entity

Creation It is created by a legal It is created by an

process called agreement between the
registration under the partners.
LLP Act, 2008.

Registration Registration is mandatory. LLP Registration is

can sue and be sued in its own voluntary. Only the
name registered partnership
firm can sue the third
parties.

Perpetual succession The death, insanity, The death, insanity,

retirement or retirement or
insolvency of the insolvency of the
partner(s) does not partnership may affect
affect its existence of its existence. It has no
LLP, Members may join perpetual succession.
or leave but its
existence continues
forever.

Name Name of the LLP to No guidelines. The

contain the word partners can have any
limited liability partners name as per their
(LLP) as suffix. choice.

Liability Liability of each partner Liability of each partner

limited to the extent to is unlimited. It can be
agreed contribution extended upto the
except in case of willful personal assets of the
fraud. partners

Mutual agency Each partner can bind Each partner can bind
the LLP by his own acts the firm as well as other
but not the other partners by his own acts
partners.

Designated partners At least two designated There is no provision for

partners and atleast such partners under the
partnership Act, 1932.
 one of them shall be
resident in India.

Common seal It may have its common There is no such

seal as its official concept in partnership
signatures.

Legal compliances Only designated All partners are

partners are responsible for all the
responsible for all the compliances and
compliances and penalties under the Act.
penalties under this Act.

Annual filing LLP is required to file: Partnership firm is not

documents (i) Annual statement of required to file any
accounts annual document with
the registrar of firms.
(ii) Statement of
solvency

(iii) Annual return with

the registration of LLP
every year

Foreign partnership Foreign nationals can Foreign nationals

become a partner in a cannot become a
LLP partner in a partnership
firm

Minor as partner Minor cannot be Minor can be admitted

admitted to the to the benefits of the
benefits of LLP partnership with the
prior consent of the
existing partners

Distinction between LLP and Limited Liability Company:-

Basis LLP Limited Liability

Company

The LLP Act, 2008. The Companies Act,

Regulating Act 2013.
Members/Partners The persons who The persons who invest
contribute to LLP are the money in the shares
known as partners of are known as members
the LLP of the company

Internal structure The internal governance The internal governance

governance structure of a LLP is structure of a company
governed by contract is regulated by statute
agreement between the (i.e. Companies Act,
partners. 2013)

Name Name of the LLP to Name of the public

contain the word company to contain the
"Limited Liability word "limited" and Pvt.
partnership" or "LLP" as Co. to contain the word
suffix. "Private limited" as
suffix

No. of Minimum - 2 members Private company

members/partners
Maximum No such limit Minimum - 2 members
on the members in the
Act. The members of Maximum 200
the LLP can be members
individuals/ or body
corporate through the Public company
nominees.
Minimum-7 members

Maximum No such limit

on the members.

Members can be
organizations, trusts,
another business form
or individuals.

Liability of members/ Liability of a partners is Liability of a member is

partners limited to the extent of limited to the amount
agreed contribution in unpaid on the shares
case of intention is held by them.
fraud.

Management The business of the The affairs of the

company managed by company are managed
the partners including by board of directors
the designated partners elected by the
shareholders.
 authorized in the
agreement.

Minimum number of Minimum 2 designated Pvt. Co.-2 directors

directors/designated partners.
partners Public co.-3 directors

Questionnaire:-
1. What is a Limited Liability Partnership (LLP) in India?
Answer:
Limited Liability Partnership drew an understanding of business in India. It
emerged as a structure combining the features of both partnership and limited
liability company and acts in such a way that partners will have limited liability
in respect of their personal assets being protected from liabilities of the
business. The LLP is governed by the Limited Liability Partnership Act, 2008.

2. What are the key features of an LLP in India?

Answer:
Some of the key features of an LLP in India include:

Limited liability: Partners will be fiscally responsible only up to the amount they contribute to
the LLP thus protec ng their private assets.
 Separate legal entity: The LLP as an independent entity is separate from its partners, enabling it
to own property, enter into contracts, and sue or be sued all in its own name.
 No minimum capital requirement: An LLP can be created without meeting any minimum
requirements of contribution in the capital.
 Flexibility in management: Their management structure and operational rules can now be
changed by the partners through the LLP agreement.
 Perpetual succession: LLP's continue to exist even when a partner retires or dies.

3. How is an LLP formed in India?

Answer:
To form an LLP in India, the following steps must be followed:

1. Obtain Digital Signature Certificate (DSC)- It is mandatory that designated partners obtain
a DSC in order to be able to sign the electronic form.
2. Apply for Director Identification Number: All designated partners must obtain a DIN.

3. Name Reservation: Reserve the name of the LLP and apply through the RUN-LLP (Reserve
Unique Name for LLP) service on the portal of Ministry of Corporate Affairs (MCA).

4. Filing of Incorporation Documents: Incorporation documents encompass the LLP

agreement and Form (Form for incorporation) and need to be filed with the Registrar of
Companies, which is also known as ROC.

5. LLP Agreement: Draft and sign an agreement for LLP specifying the entitlements and
responsibilities of the partners. After approval from the ROC, the LLP is registered and issued a
Certificate of Incorporation.

4. What are the compliance requirements for an LLP in India?

Answer:
An LLP in India must comply with several statutory requirements, including:

•Annual Return Filing: Each LLP is required to file an annual return with the ROC in Form 11.
•Accounts Statement: The LLP shall file a Statement of Accounts and Solvency on Form 8 every
year.
•Audit: Small LLPs (having a turnover of less than Rs. 40 lakh or capital of less than Rs. 25 lakh)
are given exemp on from statutory audit, but the others are required to have their accounts
audited.
•Income Tax Returns: LLPs must annually file their income tax returns.
•Partnership Agreement: Any modifica ons to the Partnership Agreement i.e., change in
partners or capital contribu on are to be informed to the ROC.

5. What are the advantages of choosing an LLP over a tradi onal partnership in India?

Answer:
Some key advantages of forming an LLP over a traditional partnership include:

 Limited Liability Protection: All partners in a regular partnership bear unlimited liability.
In an LLP, however, they are only liable to the extent of their contributions, thus
safeguarding their private assets.
 Separate Legal Entity: An LLP is a legal entity in itself, can hold assets, enter into
contracts, and function separately from its partners.
 Tax Benefits: LLPs are being taxed at a lower rate compared to companies, and also it is
outside the purview of dividend distribution tax.
  Easy Transferability of Ownership: Ownership in an LLP would easily transfer by
agreeing the terms of such without affecting the entity's existence.in case of occurrence
of changes in partners.
 There is No Restriction with Respect to Number of Partners: An LLP could have a
minimum of two partners and no maximum limit, which gives flexibility for growth.

Bibliography
ICAI-Board of Studies (The Indian Ins tute of Chartered Accountants of India) ISBN978-81-8441-
872-9

References
h ps://www.investopedia.com

h ps://mca.gov.in

indiacode.nic.in