LLP NOTES – cma inter

CS Prakash Nagarajan
KS ACADEMY
FOR JUNE 2024 BATCH
Introduction to LLP  Increased penalties for fraud: Maximum imprisonment for fraudulent
activities by LLPs is increased to 5 years with fines.
 Limited Liability Partnership (LLP) is a business form with features of both  Compounding of offenses: Regional directors can now handle
a company and a partnership. compounding of certain offenses (previously by central government only).
 LLP is a separate legal entity and has perpetual succession (continues  Establishment of special courts: Faster resolution of offenses through
even if partners change). special courts with designated judges.
 LLP offers limited liability to partners, meaning their financial risk is  Appeals process: Appeals against NCLT orders streamlined, with time
limited to their contribution. limits for filing.
 Similar to a company, partners' personal actions don't bind other  Accounting and auditing standards: Central government can set
partners. accounting and auditing standards for different LLP classes
 LLP is governed by an agreement between partners, not articles of
association like a company. Members
 Advantages of LLP include low cost and less compliance compared to a
company. Minimum number of members:
 LLP structure is found in many countries including India, UK, USA and  Section 6 (1) prescribes that every LLP shall have at least two partners.
Singapore.
Reduction in minimum number of members [Section 6(2)]
Concept of LLP
 An LLP normally requires at least two partners.
 LLP offers benefits of a company (limited liability) and flexibility of a  If the number of partners falls below two and the business continues for
partnership. more than six months, the remaining sole partner becomes personally
 LLP has a continuous existence regardless of partner changes. liable for any debts incurred during that period.
 LLP can make contracts and own property under its own name.
 LLP is a separate legal entity with limited partner liability (to their Designated Partner Requirements (Section 7):
contribution).
 Every LLP must have at least two designated partners.
 Partners are not responsible for other partners' misconduct or bad
 Designated partners must be individuals, with at least one resident in
business decisions.
India for 182 days in the previous year.
 Partner rights and duties are outlined in an agreement between partners
 Partners can be designated in the incorporation document, by agreement,
or the LLP.
or all partners can be designated partners.
LLP Act
Filing Requirements (Section 7):
 The Limited Liability Partnership Act (LLP Act) was introduced in the
 Individuals must consent to become designated partners (Form 9).
Indian Parliament's upper house (Rajya Sabha) in December 2006.
 Details of consenting individuals are filed (Form 4).
 Following review and committee recommendations, the bill was enacted
 Consent to act as a partner or designated partner is filed with a fee (Form
in 2009.
2).
 The LLP Act comprises 14 chapters, 81 sections, and four schedules
 Disqualification for Designated Partner (Rule 9):
outlining:
 Cannot be insolvent within the last five years.
 Partner and LLP rights and duties in the absence of a specific partnership
 Cannot have a history of suspending payments to creditors.
agreement (Schedule 1).
 Cannot have been convicted of a crime involving moral turpitude with
 Conversion of a firm into an LLP (Schedule 2).
imprisonment exceeding 6 months.
 Conversion of a private company into an LLP (Schedule 3).
 Cannot have been convicted of an offense under Section 30 of the Act.
 Conversion of an unlisted company into an LLP (Schedule 4).
 Separate rules govern LLP formation (Limited Liability Partnership Rules, Designated Partner Liabilities (Section 8):
2009) and dissolution (The Limited Liability Partnership (Winding up and
Dissolution) Rules, 2012).  Responsible for ensuring the LLP complies with the Act (filing documents,
reports, etc.).
Limited liability partnership  Liable for penalties imposed on the LLP for non-compliance.
Section 2(1)(n) defines the expression ‘limited liability partnership’ as a Vacancy (Section 9):
partnership formed and registered under LLP Act.
 The LLP must fill a designated partner vacancy within 30 days.
Who can be a partner in an LLP?  If no replacement is appointed, or there's only one remaining partner, all
partners become designated partners.
 Individuals
 Body corporates (including Indian and foreign companies and LLPs) Punishment (Section 10):
Who cannot be a partner in an LLP?  Failing to comply with designated partner requirements (Section 7(1))
incurs a fine of ₹10,000 to ₹5 lakh for the LLP and all partners.
 Corporation sole
 Failing to comply with filing requirements (Section 7(4) & (5)), designated
 Co-operative society
partner liabilities (Section 8), or vacancy filling (Section 9) incurs a fine of
 Other body corporate not a company or LLP (unless specified by the
₹10,000 to ₹1 lakh for the LLP and all partners.
government)
 Individuals who are: Formation
o Declared unsound mind by a court
o Undischarged insolvent Reserve a Name (Section 16, Rule 18):
o Pending insolvency application
 Apply (Form 1 with fee): Submit an application (Form 1) along with a fee
Amendments to the LLP Act, 2008: to the Registrar of Companies (ROC) in the jurisdiction where your LLP will
be located.
 Decriminalization of offenses: Certain compliance-related offenses (e.g.,  Name Restrictions: The chosen name cannot violate the Emblems and
changes in partners, filing statements) are now subject to fines instead of Names (Prevention of Improper Use) Act, 1950, or be too similar to
imprisonment. existing LLPs, companies, or other entities.
 Name change penalties: The government can now assign a new name to  Registrar Approval (within 7 days): The ROC will review your application
non-compliant LLPs instead of just imposing fines. and inform you within 7 days if the name is approved or rejected.
  Reservation Validity (3 months): If approved, the name will be reserved  Submit the completed document to the ROC in the LLP's registered office
for your exclusive use for a period of 3 months from the approval date. state.

Submit Incorporation Documents:

 Once you have a reserved name, you can proceed with filing the 3. Registration by the Registrar (Section 12):
incorporation documents with the ROC. These documents typically
include:  Registrar verifies document compliance.
 Partnership Deed: This outlines the rights, duties, and profit-sharing  If compliant, they register the LLP and issue a certificate of incorporation
arrangements between partners. within 14 days.
 Digital Signature Certificates (DSC): Each designated partner (at least two 4. Registered Office (Section 13):
required) will need a DSC for electronic filing.
 Designated Partner Identification Numbers (DPIN): Similar to Director  `Every LLP must have a registered office for receiving communications and
Identification Numbers (DIN) for companies, all designated partners must notices.
obtain a DPIN.
5. Effect of Registration (Section 14):
 Proof of Address and Identity for Partners: Documents like PAN card,
passport, voter ID, etc. will be required for all partners.  Upon registration, the LLP gains legal capacity to:
 Registered Office Address Proof: You'll need to provide documents  Sue and be sued
demonstrating the LLP's registered office location.  Own property
 Have a common seal (optional)
Register the LLP:
 Conduct business activities
 Upon successful filing of all necessary documentation, the ROC will
6. Name Requirements (Section 20, 21):
process your application and register the LLP.
 You'll receive a Certificate of Incorporation, which signifies your LLP's legal  The LLP name must end with "limited liability partnership" or "LLP."
existence.  Invoices, official correspondence, and publications must display:
 LLP name
Incorporation Document Submission (Section 11):
 Registered office address and registration number
Preparation (Form 2): Two or more partners must sign an incorporation  Statement that it's registered with the LLP
document outlining the LLP's details.  Contravention of Section 13 & 21 LLP Penalty - less than Rs. 2,000 but
which may extend to Rs. 25,000
Content: The document must specify:  Carrying on business as LLP without incorporation then penalty – shall not
 LLP name be less than Rs. 50,000 but which may extend to Rs. 5 lakhs.
 Proposed business activities 7. Service of Documents (Section 13, Rule 16):
 Registered office address
 Names and addresses of initial partners and designated partners (at least  Documents can be served on the LLP, partners, or designated partners at:
two required)  Registered office address
 Any other prescribed information  Any other declared address
 The intimation of other address for service of document shall be given to
Filing Fee: The filing fee depends on the initial capital contribution of the LLP the Registrar in Form No. 12 within 30 days of complying with the
(ranging from ₹500 to ₹5,000). requirements along with the fee.
Compliance Statement: A statement by a qualified professional (advocate, 8. Change of Registered Office (Section 13):
company secretary, accountant) and a subscribing partner confirms adherence to
the Act and rules.  The LLP can change its registered office by following the LLP agreement or
obtaining partner consent.
False Statement Penalty: Knowingly providing false information in the statement  Notice with the new address must be filed with the Registrar within 30
carries a penalty of up to 2 years imprisonment and a fine of ₹10,000 to ₹5 lakh. days (inter-state changes require additional procedures).
Document Filing: The completed incorporation document is submitted to the 9. Change of Name (Rule 20, Section 17):
Registrar in the LLP's registered office state.
 The LLP can change its name by following the LLP agreement or obtaining
Incorporation by registration partner consent.
1. Name Reservation (Section 16, Rule 18):  Notice with the new name must be filed with the Registrar within 30 days.
 The Central Government can direct an LLP to change its name if deemed
 Apply (Form 1 with fee) to the Registrar of Companies (ROC) for your undesirable or too similar to another entity's name.
desired name.  Any LLP which fails to comply with the above direction, shall be
 The name cannot violate specific restrictions and must be available. punishable with fine which shall not be less than Rs. 10,000 but which
 ROC approval within 7 days. may extend to ` 5 lakhs and the designated partner of such LLP shall be
 Reserved name valid for 3 months. punishable which shall not be less than Rs. 10,000 but which may extend
to Rs. 1 lakh.
2. Incorporation Document Preparation (Section 11):
10. Partner Relations (Chapter IV):
 Two or more partners sign the incorporation document (Form 2).
 The document specifies:  The LLP is governed by the LLP agreement made between partners.
 LLP name  Initial partners are who sign the incorporation document become
 Proposed business activities partners upon LLP formation.
 Registered office address  The agreement outlines partner rights, duties, profit sharing, and other
 Names and addresses of initial partners and designated partners (at least crucial aspects.
two required)  Agreements made before incorporation can impose obligations on the
 Any other prescribed information LLP, but require ratification by all partners after incorporation.
 Filing fee depends on the initial capital contribution.  Every LLP must file information about the agreement with the Registrar
 A qualified professional and subscribing partner confirm compliance with within 30 days of incorporation (Form 3).
the Act in a statement.  Any changes to the agreement must be filed within 30 days (Form 3).
  In the absence of an agreement, the First Schedule of the Act dictates  The LLP must file a notice with the Registrar within 30 days of a partner
partner and LLP rights and duties. joining or leaving (Form 4 with fee).
 The notice requires:
 Designated partner signature with LLP authentication.
 Incoming partner's signed consent statement with authentication.
 Verification certificate from a qualified professional (Chartered
Rights and Duties of Partners and LLP (in Absence of Agreement) Accountant, Cost Accountant, or Company Secretary).
 Penalty for non-compliance: ₹2,000 to ₹25,000 fine for the LLP and each
 Profit and Loss Sharing: All partners share equally - profits, and losses.
designated partner.
 Indemnification: The LLP indemnifies each partner for authorized
 Notice Filing by Former Partner:
business. Each partner indemnifies the LLP for any losses caused by their
 A former partner can file the change notice with the Registrar if they
fraud.
believe the LLP won't.
 Management: Every partner can participate in LLP management.
 The Registrar will seek confirmation from the LLP.
 Remuneration: Partners are not entitled to remuneration for managing
 If the LLP doesn't respond within 15 days, the Registrar will register the
the LLP.
former partner's notice.
 Introducing New Partners: Requires consent from all existing partners.
 Decision Making: Majority vote by partners decides on matters. (One vote LLP Liabilities and Accounting
per partner) Changing the nature of the business requires unanimous
partner consent. LLP Liability:
 Meeting Minutes: Every LLP must record and maintain decisions taken by  The LLP is liable for the wrongful acts or omissions of its partners during
partners within 30 days at the registered office. business operations or with the LLP's authority (Section 27).
 Information Sharing: Each partner must provide true accounts and full  The LLP is solely responsible for its contractual and other obligations
information about LLP matters to other partners or their legal (Section 27).
representatives.  A partner cannot bind the LLP if they lack authority and the other party is
 Competing Businesses: Partners cannot operate a competing business aware (Section 27).
without the LLP's consent and must surrender any profits from such  The LLP is liable for any credit received due to a partner misrepresenting
ventures to the LLP. themself as a partner (Section 29(2)).
 Profits from LLP Use: Partners must account to the LLP for any benefits  LLP liabilities are met using LLP assets (Section 27).
gained without consent from using the LLP's property, name, or business
connections. Partner Liability:
 Expulsion: Partners cannot be expelled by majority vote unless the LLP
agreement explicitly allows it.  Partners are not personally liable for the LLP's debts solely due to their
 Dispute Resolution: Unresolved disputes arising from the LLP agreement partnership status (Section 28).
go to arbitration following the Arbitration and Conciliation Act, 1996.  Partners are personally liable for their own wrongful acts or omissions
(Section 28).
Termination of Partnership Interest in an LLP  A person who misrepresents themself as a partner can be liable for credit
given based on that misrepresentation (Section 29).
Voluntary Resignation: A partner can cease their interest by:
 Following the terms of a partner agreement regarding resignation. Unlimited Liability:
 In the absence of an agreement, providing written notice to other
partners at least 30 days in advance.  If the LLP acts with the intention to defraud creditors, the LLP and
partners may have unlimited liability for the LLP's debts (Section 30).
Involuntary Cessation: A partner loses their interest upon:  Partners involved in such fraud can be imprisoned for up to 2 years and
 Death. fined (Section 30(2)).
 Dissolution of the LLP.  The LLP or its representatives may be liable to compensate those who
 Being declared mentally unsound by a court. suffered losses due to the fraud (Section 30(2)).
 Applying to be or being declared insolvent.
Accounting and Audit:
Liability of a Former Partner in an LLP
 Every LLP must maintain proper books of account (Section 34, Rule 24).
 Limited Continuing Liability: Still liable to the LLP, other partners, and  An annual Statement of Account and Solvency must be filed with the
third parties for obligations incurred while they were a partner, even after Registrar (Section 34).
they cease to be a partner.  Audits are required unless turnover is below ₹40 lakh or contribution is
 Conditions to Avoid Liability: This residual liability can be avoided if: below ₹25 lakh (Rule 24(8)).
 The former partner has no knowledge that they are still being  Partners can choose to have an audit even if not required (Rule 24(8)).
considered a partner. (or)  A qualified Chartered Accountant can be appointed as an auditor (Rule
 The LLP has notified the Registrar that the former partner is no longer 24).
a partner.  Designated partners appoint auditors before the financial year-end (Rule
24).
Rights & Restriction of a Former Partner in an LLP: Upon ceasing their interest  Partners can appoint auditors if designated partners fail to do so (Rule
(unless otherwise specified in the agreement), a former partner is entitled to 24).
receive the Capital Contribution Repayment & Share of Profits  Auditors typically hold office for one year and can be re-appointed (Rule
 Restriction: not entitled to receive the benefits of the LLP, do not have any 24(13, 14)).
right to interfere in the management of the LLP.  Partners may remove an auditor from office at any time by following the
procedure as laid down in the LLP agreement in case of no such
Registering Changes in LLP Partners procedures then consent of all partners is required (Rule 24(8)).

Partner Name/Address Change: Auditor Resignation:

 Every partner must inform the LLP within 15 days of any name or address  An LLP auditor can resign by submitting a written notice to the LLP's
change (Form 6). registered office (Rule 24(19)).
 Penalty for non-compliance: ₹2,000 to ₹25,000 fine.  If not seeking reappointment, a 14-day notice before the deadline for
appointing a new auditor is required.
Change in Partner Status:
 The notice must explain the reason for resigning and is effective upon
submission or a later specified date.
Annual Return:  All correspondence (including those related to account scrutiny, annual
returns, prosecutions, reports, complaints)
 Every LLP must file an annual return (Form 11) with the Registrar (Section  Compliance statements from qualified professionals (advocates, company
35). secretaries, accountants) or incorporators
 LLPs with turnover up to ₹5 crore or contribution up to ₹50 lakh require a  Partner cessation notices and changes in partner name/address
certificate from a designated partner (other than the signatory) verifying  Registered documents of struck-off LLPs (including restoration order
the information's accuracy. copies)
 In other cases, a practicing Company Secretary's certificate verifying the  Annual returns
information's accuracy is required.  Designated partner consent filings
 Non-compliance with filing the annual return incurs a fine of ₹10,000 to  Partner consent filings
₹1 lakh.  Statements for firm/company conversion into LLP (with particulars)
Inspection of Documents:  Certified copies of Tribunal orders (Sections 60/61/62)
 LLP dissolution orders by the Tribunal
The following LLP documents are available for public inspection at the Registrar's  Statements of Account and Solvency (consider prosecution case disposal
office upon fee payment (Section 36): date if applicable)

 Incorporation document 3 Year Retention:

 Partner names and any changes
 Statement of account and solvency  All other books, records, and papers not specified above
 Annual return  Routine correspondence regarding fees, filing fees, and document return

Penalty for False Statements: Record Destruction:

Knowingly making false or omitting material facts in any return, statement, or  The Registrar can destroy records after their preservation period ends,
document required under the Act is punishable by imprisonment for up to 2 years subject to prior approval.
and a fine of ₹1 lakh to ₹5 lakh (Section 37)  A register of destroyed documents will be maintained with details and
destruction methods.
Registrar's Powers in LLP Matters:
Conversion to LLP
Information Gathering:
Businesses can change their structure to an LLP for limited liability protection and
 The Registrar can request information from anyone, including other benefits. The law allows these conversions:
current/former partners, designated partners, or LLP employees (Section
38).  Firms (partnerships): Following steps outlined in Schedule 2 of the LLP Act.
 This information can include answering questions, making declarations, or  Private companies: Following steps outlined in Schedule 3 of the LLP Act
providing written details. (likely involving shareholder approval).
 Unlisted public companies: Following steps outlined in Schedule 4 of the LLP
Summons Power: Act

 If someone fails to respond within a reasonable time or the Registrar is Converting a Firm (Partnership) into an LLP:
unsatisfied with the response, they can summon the person to appear
before them or a designated officer (Section 38).  Eligibility: All partners of the firm must become partners in the LLP.
 Process: File Form 17 with the Registrar, including firm details, registration
Penalty for Non-Compliance: date, and incorporation documents. The Registrar verifies the documents and
issues a registration certificate upon approval. Inform the Registrar of Firms
 A person who fails to comply with a valid summons or request from the
about the conversion within 15 days.
Registrar can be fined ₹200 to ₹25,000 (Section 38).
 Appeal: If registration is denied, an appeal can be filed with the Tribunal.
Compounding Offenses
Converting a Private Company into an LLP:
 The Central Government can settle certain offenses under the LLP Act,
 Eligibility: No existing security interests on company assets. All company
punishable only by a fine, by collecting a fine from the suspected offender
shareholders become partners in the LLP.
(Section 39). This fine amount cannot exceed the maximum penalty for
 Process: File Form 18 with the Registrar, including company details,
the offense.
incorporation date, and incorporation documents. The Registrar verifies the
LLP Record Retention Requirements documents and issues a registration certificate upon approval. Inform the
Registrar of Companies about the conversion and LLP details within 15 days.
The Act outlines different retention periods for various LLP records:  Appeal: If registration is denied, an appeal can be filed with the Tribunal.

Permanent Preservation: Converting an Unlisted Public Company into an LLP:

 Incorporation documents  Eligibility: No existing security interests on company assets. All company
 Registered office address notices shareholders become partners in the LLP. The company is not a listed
 LLP agreement information (including any changes) company (defined by SEBI guidelines).
 Notices of alternative addresses for serving documents  Process: File Form 18 with the Registrar, including company details,
incorporation date, and incorporation documents. The Registrar verifies the
21 Year Retention:
documents and issues a registration certificate upon approval. Inform the
Papers, registers, refund orders, and correspondence related to liquidated LLP Registrar of Companies about the conversion and LLP details within 15 days.
accounts  Appeal: If registration is denied, an appeal can be filed with the Tribunal.

5 Year Retention: Effects of Converting a Business into an LLP in India

 Government orders related to the LLP Upon successful registration for conversion from a firm/company to an LLP, the
 Registered documents of fully wound-up and dissolved LLPs (including following effects occur:
related correspondence)
A new LLP is created under the specified name.
 Legal proceeding papers from case disposal/appeal (if any)
 Copies of statistical returns submitted to the government All assets, liabilities, rights, and obligations of the original entity automatically
transfer to the LLP.
The original firm/company is dissolved and removed from official records.  If a foreign LLP closes its Indian place of business, it must notify the Registrar
within 30 days (Form 29). This terminates the filing obligation, provided no
Property Registration: The LLP must notify relevant authorities about the other Indian place of business exists and all previous filings are complete.
conversion and its details for any registered property.
Compromise or arrangement
Legal Proceedings: Any ongoing legal proceedings involving the original entity can
continue against the LLP. What is Compromise / Arragement?

Court rulings, orders, or judgments involving the original entity can be enforced A Limited Liability Partnership (LLP) may seek a compromise or arrangement
against the LLP. under various circumstances. These scenarios often involve financial difficulties,
internal disputes, or restructuring needs. Here are some common reasons:
Contracts and Agreements: Existing agreements are considered to include the LLP
instead of the original entity for future actions.  Financial Restructuring: When an LLP faces financial challenges, a compromise
or arrangement can be used to negotiate debt repayment plans with
All existing contracts, deeds, bonds, etc., involving the original entity remain valid creditors. This could involve extending debt repayment terms, reducing debt
and enforceable by/against the LLP. obligations, or converting debt into equity.
Employment and Appointments: Existing employment contracts continue with  Insolvency or Near-Insolvency: In situations of insolvency or near-insolvency, a
the LLP replacing the original entity as the employer. compromise or arrangement can be a tool to avoid formal liquidation. It
allows the LLP to propose a viable restructuring plan to creditors, potentially
Existing appointments, authorities, and powers granted to the original entity are including asset sales or business continuity measures.
transferred to the LLP.  Deadlock or Partner Disputes: Internal disagreements between partners can
lead to operational paralysis. A compromise or arrangement can be a
Any permits, licenses, or approvals issued to the original entity may also be
structured way to resolve these disputes, possibly involving changes in profit-
continued, subject to the relevant act.
sharing ratios, partner buyouts, or even dissolution of the LLP.
Notice of Conversion: The LLP must notify its conversion in official  Merger or Amalgamation: When two or more LLPs decide to merge or
correspondence for 12 months after registration. amalgamate, a compromise or arrangement can be used to establish the
terms of the consolidation, including asset and liability distribution among the
Failure to do so can result in fines. merging entities.
 Scheme of Reconstruction: An LLP may use a compromise or arrangement to
Foreign LLP Requirements in India
implement a broader scheme of reconstruction. This might involve changes in
Foreign LLP Definition: the capital structure, conversion of debt to equity, or revisions to the LLP
agreement.
A Foreign LLP is a Limited Liability Partnership formed outside India that  By utilizing a compromise or arrangement, an LLP can potentially achieve a
establishes a place of business within India. consensual resolution with its stakeholders, avoiding the complexities and
potential costs of litigation or formal insolvency proceedings.
Registration Requirements:
Who can propose a Compromise or Arrangement?
 Within 30 days of establishing a place of business in India, a foreign LLP must
file Form 27 with the Registrar. This form includes:  A Limited Liability Partnership (LLP) with its creditors.
 Copy of incorporation/registration certificate and other governing documents.  An LLP with its partners.
 Full address of the registered/principal office abroad.
 Full address of the principal place of business in India. How to Apply?
 List of partners, designated partners (if any), and 2+ resident Indian
 An application can be filed with the Tribunal by:
representatives authorized to accept legal documents on the LLP's behalf.
 The LLP itself.
Document Certification:  Any creditor of the LLP.
 Any partner of the LLP.
 The required documents need to be certified based on the country of origin:  The liquidator (if the LLP is being wound up).
 Commonwealth country: Certified by a government official, notary public, or  The application must be supported by an affidavit and a copy of the proposed
LLP officer under oath. compromise or arrangement (Form 20).
 Hague Convention country: Certified by a government official and apostilled
following the Hague Convention. Notice to Parties Involved:
 Other countries: Certified by a government official, notary public, or LLP
 If the LLP is not the applicant, a copy of the summons and affidavit must be
officer.
served on the LLP or liquidator (depending on the situation) at least 14 days
 In all cases, signatures or seals on certifications require further authentication
before the hearing (Form 21).
by a designated official.
Tribunal's Role:
Changes and Filings:
 The Tribunal will provide directions on various aspects, including:
 Any changes to the LLP's governing documents, registered office abroad,
 Identifying creditors/partners for meetings.
partners/designated partners, or Indian representatives must be filed with the
 Scheduling and location of meetings.
Registrar within specified timeframes (Form 28 or 29).
 Appointing a meeting chairperson.
 The Statement of Account and Solvency (Form 8) needs to be filed with the
 Determining quorum and voting procedures (including proxy voting).
Registrar within 30 days of the financial year's end.
 Determining creditor/partner values for meeting purposes.
 Any document not in English must be accompanied by a certified translation
 Issuing meeting notices and advertisements (if required).
authenticated by a qualified professional or affidavit.
 Setting deadlines for reporting meeting results to the Tribunal.
Additional Requirements:  Other relevant matters.

 The LLP's name and country of incorporation must be displayed in English on Meetings of Creditors/Partners:
invoices, official correspondence, and publications.
 The chairperson will send notices to creditors/partners individually, including -
 If no authorized representatives are available to accept legal documents, they
Meeting details, A copy of the proposed compromise or arrangement,
can be served at the LLP's Indian place of business.
Information on designated partners' material interests (if any), A proxy form
 The Registrar issues a certificate upon successful registration of Form 27
(Form 26).
(establishment of place of business).
 The notice may be advertised in newspapers as per the Tribunal's direction.
Cessation:
 Creditors/partners are entitled to receive a free copy of the proposal upon LLP Administrator:
request.
 The chairperson must file an affidavit confirming compliance with notice and The Tribunal appoints an LLP Administrator from a government-maintained panel
advertisement procedures at least 7 days before the meeting. for winding up and dissolving LLPs.
 Proxies must be signed and filed with the LLP 48 hours before the meeting. The Tribunal determines the terms and fees of the Administrator.
 Representatives for bodies corporate can be authorized (authorization copy
required). The Tribunal can remove and replace the Administrator for valid reasons.

Reporting Meeting Results: LLP Administrator's Report:

 The chairperson must report the meeting results to the Tribunal within a The Administrator submits a preliminary report, including the meeting's decision,
specified timeframe. to the Tribunal within 60 days of the Tribunal's order.
 The report should include:
Tribunal's Order Based on Report:
 Number of creditors/partners present (in person or by proxy) and their
individual values.  If creditors representing three-fourths of the outstanding debt value decide
 Voting details (how they voted). revival is not possible (with or without modifications), the Tribunal can:
 Initiate winding-up proceedings.
Confirmation of Compromise or Arrangement:
 Order the LLP to be wound up or the liquidator to continue.
 If the proposal is approved by at least three-fourths of the creditor/partner  Sanction the revival scheme with modifications and appoint/continue the LLP
value (with or without modifications), a petition for confirmation needs to be Administrator.
submitted to the Tribunal within 7 days.  Order of Sanction (if Revival is Possible):
 The petition can be filed by the LLP or liquidator.
The Tribunal's order can specify:
 If the LLP fails to file, a creditor or partner (with Tribunal permission) can file
the petition.  Powers and functions of the LLP Administrator.
 If the proposal is not approved or no petition is filed, the Tribunal will consider  Timeframes for completing actions in the revival scheme.
the chairperson's report and issue necessary orders.  Directions for the LLP, officers, creditors, Administrator, or others to
implement the revival plan.
Tribunal's Order:
 Any other necessary orders.
 The Tribunal can sanction the scheme if satisfied about the disclosed
Completion and Filing:
information (including financial status and any ongoing investigations).
 The Tribunal's order is binding on all creditors/partners, the LLP (or liquidator The Administrator finalizes all revival actions and submits a final report within 180
and contributories if under winding up). days of the Tribunal's order.
 The LLP must file a copy of the order with the Registrar within 30 days (Form
22 with fee). The Administrator must file a certified copy of the Tribunal's order with the
 The order only takes effect after being filed with the Registrar. Registrar within 30 days (Form 22 with fee).
 The Tribunal can stay any legal proceedings against the LLP during the
Amalgamation
application process.
Section 62 of the Act allows the Tribunal to sanction a compromise or
Reconstruction or Amalgamation of LLP
arrangement for the amalgamation of two or more LLPs. The scheme can involve
Reconstruction or Revival and Rehabilitation: transferring undertakings, properties, or liabilities between the LLPs. The
Tribunal's order can address:
An LLP can undergo reconstruction or revival and rehabilitation through a court-
sanctioned arrangement. This process is applicable when:  Transfer of assets and liabilities between the LLPs involved in the
amalgamation.
 Creditors representing 50% or more of the outstanding debt are not repaid  Continuation of legal proceedings by/against the resulting LLP.
within 30 days of a demand notice.  Dissolution of the transferor LLPs without winding up.
 A winding-up petition is pending before the Tribunal.  Provisions for dissenting members.
 The liquidator fails to submit a report as directed by the Tribunal.  Other necessary incidental matters to ensure effective amalgamation.
Who Can Apply? Penalty for Non-Filing:
The LLP itself, any creditor, or any partner (or the liquidator if the LLP is being Failure to file the Tribunal's order with the Registrar can result in a fine of up to
wound up) can file an application for revival and rehabilitation with the Tribunal. ₹50,000 for the LLP and each designated partner.
Application Requirements: Inspectors and their Powers in an Indian LLP
 Statement of accounts and solvency for the previous financial year. Appointment of Inspectors:
 Details and documents related to the proposed scheme, including debt
restructuring or rescheduling proposals.  Inspectors are individuals appointed by the Central Government to investigate
 Proposed scheme for revival and rehabilitation, including the appointment of the affairs of an LLP.
an LLP Administrator.  Firms, corporations, or other associations cannot be appointed as inspectors.

Tribunal's Role: Inspector's Powers:

 The Tribunal must receive the application within 90 days of the demand  Investigate the affairs of the LLP and related entities.
notice expiry or the Tribunal's direction.  Report on the affairs of other entities, partners, or designated partners if
 The Tribunal will hear all parties concerned within 60 days of receiving the relevant to the LLP investigation. (Prior approval from the Central Government
application. is required).
 The Tribunal can admit or dismiss the application.  Require any entity to furnish information or produce relevant books and
 If admitted, the Tribunal can: papers for the investigation.
 Order meetings of creditors to approve the revival scheme.  Examine any entity, partner, designated partner, etc., under oath.
 Set procedures for holding meetings and appointing a meeting
Obtaining Books and Papers:
chairperson.
 Issue any other necessary directions.
If the Inspector believes books and papers might be destroyed or tampered with, Chapter XIII of the Limited Liability Partnership Act, 2008, governs the winding up
they can apply to a Judicial Magistrate for a seizure order. and dissolution of LLPs.

 The Magistrate can authorize the Inspector to: Section 65 empowers the Central Government to make rules for these processes.
 Enter the place(s) where the books and papers are kept.
 Search the place(s) in a specified manner. Applicable Rules:
 Seize relevant books and papers for the investigation.

Inspector's Report:  The Central Government initially formulated the Limited Liability Partnership
 The Inspector submits interim reports to the government and a final report (Winding up and Dissolution) Rules, 2010.
upon investigation completion (format as directed by the government).  These rules were superseded by the Limited Liability Partnership (Winding up
 The Central Government can forward a copy of the report to the LLP and any and Dissolution) Rules, 2012, issued under Notification No. GSR 550 (E) dated
person upon request. July 10, 2012.
 The 2012 Rules came into effect on July 10, 2012, and are currently
Prosecution Based on Report: applicable.

 The Central Government can prosecute any person (based on the Inspector's Modes of Winding Up an LLP in India
report) believed to have committed an offense related to the LLP or other
entities. There are two main ways to wind up an LLP in India:
 Partners, designated partners, employees, and agents of the LLP or other  Voluntary Winding Up: Initiated by the LLP itself through a partner resolution.
entities must cooperate with the prosecution if reasonably able.  Winding Up by the Tribunal: Ordered by the National Company Law Tribunal
Winding Up Based on Report: (NCLT).

If the report suggests: Voluntary Winding Up Procedure:

 The LLP is conducting business with fraudulent intent.  Partner Resolution: The LLP must pass a resolution to wind up, requiring
 The LLP is not following the Act's provisions. approval from at least three-fourths of the total partners.
 The LLP is operating in a manner oppressive to some partners.  Creditor Approval (if applicable): If the LLP has creditors (secured or
 The Central Government may initiate actions to wind up the LLP. unsecured), their approval is also mandatory.
 Filing Resolution with Registrar: A copy of the winding-up resolution must be
Recovery of Damages: filed with the Registrar (Form 1) within 30 days of passing the resolution.
 Commencement of Voluntary Winding Up: The voluntary winding-up process
The Central Government may sue the LLP to recover damages for: is deemed to begin on the date the resolution for winding up is passed.
 Fraud, misfeasance, or misconduct related to promotion, formation, or  Declaration of Solvency: In a voluntary winding up, a majority of designated
management. partners (at least two) must submit a verified declaration (Form 2).
 Misapplied or wrongfully retained property of the LLP.  This declaration states either: The LLP has no debts; The LLP can pay its debts
in full within a specified period (not exceeding one year from winding-up
Investigation Expenses: commencement).
The declaration, along with supporting documents, must be delivered to the
 The Central Government initially bears the investigation expenses, later
Registrar within 15 days before the winding-up resolution is passed.
reimbursed by the concerned LLP or entity.
 Supporting Documents for Declaration: Statement of assets and liabilities
 The recoverable amount from the LLP or entity is a first charge on any
(Form 4) covering the period since the last account was prepared up to the
recovered sums or property during the investigation.
declaration date (duly attested by at least two designated partners); Report by
 Recoverable amounts can be enforced as arrears of land revenue.
a valuer on the LLP's assets (if any).
Inspector's Report as Evidence:
These requirements ensure a clear understanding of the LLP's financial situation
A copy of the Inspector's report is admissible as evidence in legal proceedings and its ability to settle its debts during voluntary winding up.
concerning matters mentioned in the report.
Appointment of LLP Liquidator:
Striking Off Defunct LLPs:
 The LLP must appoint a Liquidator (from a government-maintained panel)
 The Registrar can initiate the process of striking off an LLP's name if it's not within 30 days of passing the winding-up resolution.
operational for two or more years.  This appointment requires approval by two-thirds of the creditors (by value)
 The Registrar will issue a notice to the LLP and partners, requesting a of the LLP.
response within a month.  If creditors don't approve, they can appoint another Liquidator and set their
 The notice and its contents will also be displayed on the Ministry of Corporate remuneration.
Affairs website for public information.  The Tribunal can appoint a Liquidator if none is chosen or approved.
 The Registrar may strike off the name after the notice period unless a valid  The Liquidator must file a declaration (Form 6) disclosing any conflict of
reason is presented. interest with the LLP or creditors.
 The Registrar must ensure sufficient provisions are made to settle the LLP's
Removal of LLP Liquidator:
liabilities before striking off the name.
 The liability of designated partners continues even after the LLP is dissolved.  The Tribunal can remove a Liquidator for cause and appoint a replacement.
 The Registrar can also request the Tribunal to remove or appoint a Liquidator.
Voluntary Strike Off:
 Partners or creditors (with partner approval) can remove the Liquidator after
 An LLP that hasn't been operational for a year or more can apply (Form 24) to providing a hearing opportunity.
the Registrar (with partner consent) to strike off its name. (No notice
Duties of the LLP Liquidator (Rule 14):
required).
 The remaining procedures for striking off the name apply as mentioned  Create a list of creditors and partners (considered prima facie evidence of
above. their liabilities).
 Seek partner or creditor approval for necessary actions.
Dissolution
 Maintain proper account books and registers.
Legal Basis:  Settle the LLP's debts and adjust partner rights.
 Act with due care and diligence.
Audit of LLP Liquidator's Accounts (Rule 15):  The petitioner might need to deposit security for costs before the LLP is
directed to respond.
The Liquidator's accounts are subject to audit.  Failure to file the statement of affairs by the LLP weakens its ability to oppose
Supervision of Winding Up (Rule 16): the petition.

 Partners or creditors can appoint committees to oversee the winding up and

assist the Liquidator. Appointment of Liquidators (Rule 29):
 The Liquidator must submit quarterly progress reports (Form 8) to partners or
creditors.  The Tribunal can appoint a liquidator (official or from a government-
 Fraud reports against non-partners/designated partners require informing maintained panel).
partners before sending a report to the Tribunal.  The official liquidator acts by default if no specific order is made.
 The Tribunal can order a shift from voluntary to compulsory winding up by the  Liquidators appointed from the panel must furnish security before taking
Tribunal. office.

Dissolution of the LLP (Rule 19): Winding Up Order Communication (Rule 31):

 Upon completion of winding-up tasks, the Liquidator prepares a report (Form  The Tribunal informs the liquidator and Registrar of a winding-up order
9) on the process, property disposal, final accounts, and explanations. within 15 days.
 Partners or creditors (two-thirds majority) must approve the report and final  The Registrar records the order and notifies it in the Official Gazette.
accounts within 30 days of receiving them.  The liquidator sends notices to various parties (registered office, partners,
 If approved, the Liquidator files: officers, employees, creditors) within 15 days of receiving the intimation.
 A copy of the final accounts, explanations, and report (Form 10) with the  The winding-up order acts as a discharge notice for employees (except
Registrar within 15 days. when business continues).
 An application with the Tribunal for a dissolution order, along with the  The winding-up order benefits all creditors and partners.
aforementioned documents.
 The Tribunal can issue a dissolution order within 60 days if satisfied with the Jurisdiction of Tribunal (Rule 32):
winding-up process. The Tribunal has exclusive jurisdiction over:
 The Liquidator files a copy of the order with the Registrar (Form 11) within 30
days.  Suits or proceedings involving the LLP.
 The Registrar publishes a notice of dissolution in the Official Gazette.  Claims by or against the LLP (including its branches in India).
 If winding up isn't completed within a year, the Liquidator must apply to the  Applications for revival or rehabilitation under the Act.
Tribunal for explanations and directions.  Revival or rehabilitation schemes under any applicable law.
 Any legal questions or issues arising during the winding-up process.
Distribution of Property (Rule 21):
Liquidator's Report (Rule 34):
After settling liabilities, remaining LLP assets are distributed among partners
according to their rights and interests (unless the LLP Agreement specifies Within 60 days of the winding-up order, the liquidator submits a report to the
otherwise). Tribunal containing details about:

Costs of Voluntary Winding Up (Rule 24):  Assets, cash balances, marketable securities held by the LLP.
 Partner contributions (received and outstanding).
 All winding-up costs (including the Liquidator's fee) are payable from LLP  Existing and contingent liabilities of the LLP.
assets, subject to secured creditor and worker claim priorities.  Debts owed to the LLP.
Winding Up by Tribunal (Rule 26):  Guarantees provided by the LLP.
 Partner list with outstanding contributions.
 This section outlines who can petition the Tribunal for compulsory winding up  Intangible assets.
of an LLP.  Subsisting contracts, joint ventures, collaborations.
 This information provides a detailed understanding of the procedures  Investments in other LLPs or companies.
involved in the voluntary winding up of an LLP in India, encompassing the  Legal cases involving the LLP.
Liquidator's role, responsibilities, and the overall dissolution process.  Custody of properties, assets, books, and records.
 Any revival or rehabilitation scheme.
Compulsory Winding Up of an LLP in India  Other relevant information.
Grounds for Compulsory Winding Up (Rule 25): The report may also include the liquidator's assessment of the business viability
 An unsatisfied creditor's demand exceeding ₹1 lakh remains unpaid for 21 and steps to maximize asset value.
days after a formal demand. Tribunal's Directions on the Report (Rule 35):
 An unsuccessful attempt to enforce a court decree or tribunal order against
the LLP.  The Tribunal sets a deadline for completing the winding-up proceedings and
 Evidence presented to the Tribunal that the LLP cannot pay its debts dissolving the LLP.
(including contingent and prospective liabilities).  The deadline can be reduced if deemed advantageous or economical.
 The liquidator can request an extension (up to 30 days) if necessary.
Tribunal's Powers (Rule 27):
Sale of the LLP (Rule 36):
 Dismiss the petition (with or without costs).
 Issue interim orders as deemed necessary.  The Tribunal can order the sale of the LLP as a going concern, its assets, or
 Direct action for LLP revival or rehabilitation (as per the Act). parts thereof.
 Appoint a provisional liquidator until a winding-up order is issued.  A Sale Committee consisting of creditors, partners, and/or LLP personnel can
 Order the LLP's winding up (with or without costs). be appointed to assist the liquidator.
 Issue any other orders deemed appropriate.
Revival or Rehabilitation (Rule 37):
Directions for Filing Statement of Affairs (Rule 28):
If the Tribunal believes the LLP can be revived or rehabilitated, it may direct action
 If a petition is filed by someone other than the LLP, the Tribunal may require under Sections 60 to 62 of the Act.
the LLP to file objections and a statement of affairs within a specified
timeframe if a prima facie case for winding up is established.
Investigation of Fraud: If a liquidator's report indicates fraud within the LLP, the  Applications for stay of proceedings, leave to commence legal actions, and
Tribunal can order an investigation and take appropriate action based on its transfer of suits
findings.  Statement of Affairs and verification process
 Investigating and reporting fraud
Custody of LLP's Properties: The liquidator takes control of all LLP assets upon a
winding-up order. Partners, trustees, and others must surrender relevant property The document then details procedures for:
and documents.
 Settlement of Creditor Lists: This involves creditors proving their claims
Application of Assets: After winding-up costs are paid, remaining assets are used and receiving distributions.
to settle liabilities pari passu (meaning in equal proportion) as per the Act and  Meetings of Creditors or Partners: This section outlines how meetings are
rules. convened, notices are given, and resolutions are passed.
 Collection and Distribution of Assets: This explains how the Tribunal
Committee of Inspection: The Tribunal may appoint a committee to assist the handles collecting assets and settling liabilities.
liquidator in complex cases.
Distributing Small Sums to Deceased Beneficiaries (Rule 245):
Periodical Reports: The liquidator must submit quarterly progress reports to the
Tribunal.  If a deceased creditor or partner is owed Rs.500 or less, the liquidator can
bypass obtaining a succession certificate (typically required for inheriting
Assistance to Liquidator: The liquidator can seek help from professionals like money) by satisfying themselves of the claimant's right.
chartered accountants or lawyers with the Tribunal's approval.  The liquidator applies to the Tribunal for approval to distribute the money.
Appeal Against Liquidator's Decisions: Parties aggrieved by the liquidator's  If approved, the liquidator pays the beneficiary after receiving a personal
actions can appeal to the Tribunal. indemnity (a guarantee from the recipient to compensate the liquidator if
there are any future claims on the money).
Books of Accounts: The liquidator maintains proper books of accounts and has
them audited. Audited statements are then sent to creditors and partners. Filing Final Accounts and Dissolution (Rule 246-248):

Control of Central Government: The Central Government oversees the conduct of  Once all affairs are settled, the liquidator submits a final account (Form
official liquidators and can investigate them if necessary. No. 89) to the Tribunal, requesting an order to dissolve the LLP.
 The Tribunal reviews the audited accounts before granting the dissolution
Provisions Applicable to All Winding Up Modes: The following rules apply to all order.
types of winding up (Tribunal-ordered or voluntary).  Upon dissolution, any unclaimed or unpaid funds are deposited into a
designated government account.
 Liquidator's Powers: The liquidator has various powers, such as paying
 The liquidator informs the Registrar and updates their records within 30
creditors in full, compromising debts, and settling outstanding
days.
contributions from partners.
 Proof of Debts: All debts and claims against the LLP, present or future, are Conclusion of Winding Up (Rule 249):
admissible for proof.
 Evidence: LLP books and papers are considered prima facie evidence of  The winding up is considered complete on the date the Registrar receives
their contents as between partners. notification of the dissolution order (for Tribunal-ordered winding up).
 Inspection of Books and Papers: Creditors and partners can inspect LLP  For voluntary winding up, the conclusion happens on the dissolution date
records under specific conditions. unless unclaimed assets remain. In that case, winding up isn't complete
 Disposal of Records: After winding up is complete, LLP records can be until those assets are distributed or deposited with the government.
disposed of as per regulations. The Central Government can also specify a Declaring a Void Dissolution (Rule 250):
retention period.
 Remittance of Money: Liquidators must deposit received funds into  The Tribunal can declare a previously declared dissolution void upon
specific bank accounts. They cannot retain money for more than ten days application with proper notice.
without authorization.  If the dissolution is voided, the applicant must inform the Registrar within
 Filing Returns: Liquidators must file reports, statements, and other 30 days.
documents as required.
 Dissolution Void: The Tribunal can declare a dissolved LLP void within two Appealing Tribunal Orders (Rule 301):
years, allowing proceedings to resume.  Anyone aggrieved by a Tribunal order can appeal to the National
 Computing Limitation Period: The period for filing a suit on behalf of a Company Law Appellate Tribunal (NCLAT) within 45 days of the order.
winding-up LLP excludes the period from winding-up commencement to
one year after the winding-up order.
 Filing with Registrar: Notices, documents, and forms must be filed
electronically with the Registrar, with fees where applicable.

Proceedings and General Procedures: This section details the procedures for
hearings before the Tribunal, including:

 Filing Petitions
 Service of Documents
 Adjournments
 Costs
 Inspection and Obtaining Copies of Proceedings

Petition for Winding Up: This section outlines the process for filing a petition to
wind up an LLP, including:

 Forms to be used
 Required documents
 Advertisement requirements
 Appointment of a provisional liquidator
 Liquidator's duties and reports
 Advertisement of winding-up order