LIMITED LIABILITY PARTNERSHIP

Presented By:-Poonam BansalDamanpreet KaurChandan Kumar GuptaRanjeet Singh

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Contents1. Introduction2. Features3. Governance4. Incorporation

a. Requirementsb. Procedure

5. Conversion from/to LLP6. Administration

a. Accounts & Returnsb. Relationship of Partnersc. List of Forms & usesd. Admission, Retirement & Death of Partner

7. Audit and Taxation8. Comparison9. Foreign LLP/FDI in LLP10. Dissolution/Winding up

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Introduction Limited Liability Partnership Hybrid between private ltd. company & partnership firm

Indian government passed LLP Act on 09/01/2009 LLP Act,2008 gets notified w.e.f March 31st, 2009 The first LLP was registered on April 2,2009

Need for LLP:- Major causes for the advent of LLP are-

To enable the professionals to deal in international activities on the concept of Limited Liability which was earlier not possible due to various restrictions

To remove the restriction posed by Indian partnership Act, 1932 that professionals are not allowed to have more than 10 or 20 partners.

LLP Act removed the above obstacles.

Partnership Firm

Limited Liability

Partnership

Private Limited Companies

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Limited liability of partners.Flexible form of organization.Administration according to LLP agreement.Required to register with ROC.LLP agreement is the main incorporation document.The economic rights of partners are freely transferrable.Perpetual Succession.Separate legal entity.Every partner is an agent of the LLP but not liable for the wrongful acts

of other partners.In the absence of any provision for distribution of profits/ losses, partners

are entitled to share profits and losses equally.LLPs are not allowed to operate as Not for profit organization

Features

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Governance

By Limited Liabilities Partnership Act 2008By Limited Liabilities Partnership Rules 2008 By Registrar of CompaniesBy LLP Agreement between Partners

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IncorporationRequirements

Partners:- Minimum two designated partners are required and no limit on maximumCapital:- No limit on maximum and minimum capital contributionNames:- At least two proposed names are requiredObjects:- As per LLP AgreementDocuments:-1) ID, Address proof and photo of all Partner and DPs. 2) LLP Agreement duly stamped as per relevant Stamp Act

of the State. 3) Subscriber Statements 4) Consent Letter from all Partner and DPs as per form9 5) Proof of Address of Registered Office

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Register DSC on MCA site

Apply for new user

registration

File incorporation document & Subscriber’s Statement in

form 2

Once approved by ministry,

LLP is registered

Steps for Incorporation of LLP

DP will apply for DIN

DSC to be applied by

DP

File form 1 for name approval

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2

3

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8

File LLP Agreement in

form 3

Procedure

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Conversion from/to LLPCONVERSION OF A PRIVATE / UNLISTED PUBLIC COMPANY INTO LLP Application for conversion in Form 18 with the following attachments :Statement of shareholders (may be attached in a tabular form)Incorporation Document & Statement in Form 2 filed electronically.Statement of Assets and Liabilities of the company duly certified as true and correct by the Chartered Accountant in practice.List of all the creditors along with their consent to the conversion (may be given in the form of a tabular statement).Copy of acknowledgement of latest income tax return.Particulars of pending proceedings from any court/Tribunal etc.Once converted into LLP, it can not be converted back to private/unlisted public company

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AdministrationACCOUNTSAccounts must be prepared for a financial year.Methods of Accounting – Cash or Accrual Books of Accounts shall include- 1) Details of all receipts and payments.2) Records of assets and liabilities.3) Statements of stock.4) Any other records which the partners decide. Records to be preserved- For 3 years from the date they were first

made.RETURNSStatement of account & solvency to be filed with ROC within 6 months

of close of financial year in form 8.Must file an annual return with registrar within 60 days from the end

of financial year in form 11. Must be accompanied by certificate issued by CS confirming veracity of

particulars / statements in return, if turnover exceeds Rs. 5 crores or contribution by all the partners exceeds Rs. 50 Lacs, else certificate must be issued by DP.

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Relationship of PartnersGoverned by LLP AgreementIn absence of any agreement, principles set out in First Schedule will applyRegistration of changes in partners / details of partners to be filed in ‘Form-6’

Schedule I

• Equal Share in capital & profits / losses• Partners not entitled to any remuneration for acting in

business or management of LLP• No admission of partner without consent of all other

partners• Any ordinary matter regarding LLP may be decided by

resolution passed by majority of partners

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List of Forms & their uses

Form DIN 1 Application for allotment of Director Identification Number

Form DIN 4 Intimation of change in particulars of Director to be given to the Central Government

Form 1 Application for reservation or change of name

Form 2 Incorporation document and subscriber’s statement

Form 2A Details in respect of designated partners and partners of Limited Liability Partnership

Form 3 Information with regard to limited liability partnership agreement and changes, if any, made therein

Form 4 Notice of appointment, cessation, change in name/ address/designation of a designated partner or partner. and consent to become a partner/designated partner

Form 4A Notice of appointment, cessation, change in particulars of a partners

Form 5 Notice for change of name

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Form 8 Statement of Account & Solvency

Form 11 Annual Return of Limited Liability Partnership (LLP)

Form 12 Form for intimating other address for service of documents

Form 15 Notice for change of place of registered office

Form 17 Application and statement for conversion of a firm into Limited Liability Partnership (LLP)

Form 18 Application and Statement for conversion of a private company/ unlisted public company into limited liability partnership (LLP)

Form 22 Notice of intimation of Order of Court/ Tribunal/CLB/ Central Government to the Registrar

Form 23 Application for direction to Limited Liability Partnership (LLP) to change its name to the Registrar

Form 24 Application to the Registrar for striking off name

Form 25 Application for reservation/ renewal of name by a Foreign Limited Liability Partnership (FLLP) or Foreign Company

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Form 27 Form for registration of particulars by Foreign Limited Liability Partnership (FLLP)

Form 28 Return of alteration in the incorporation document or other instrument constituting or defining the constitution; or the registered or principal office; or the partner or designated partner of limited liability partnership incorporated or registered outside India.

Form 29 Notice of (A) alteration in the certificate of incorporation or registration; (B) alteration in names and addresses of any of the persons authorised to accept service on behalf of a foreign limited liability partnership (FLLP) (C) alteration in the principal place of business in India of FLLP (D) cessation to have a place of business in India

Form 31 Application for compounding of an offence under the Act

Form 32 Form for filing addendum for rectification of defects or incompleteness

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Admission, Retirement & Death of Partner(s)Unless the LLP agreement says otherwise, the admission of a new member requires the unanimous consent of the existing membersAn LLP agreement can provide mandatory retirement but it needs to be objectively justifiedExistence of LLP is not affected by admission, retirement or death of partner(s) provided minimum no. of partners are maintained

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Audit & TaxationRequirement of AuditStatutory audit is mandatory if annual turnover is

more than `40 lacs or contribution exceeds ` 25 lacs

Tax audit is mandatory if turnover exceeds ` 60 lacsTaxation on LLPLLP’s will be treated as Partnership Firms for the

purpose of Income Tax w.e.f assessment year 2010-11

No surcharge will be levied on income tax.Profit will be taxed in the hands of the LLP and not

in the hands of the partners.Minimum Alternate Tax and Dividend Distribution

Tax will not be applicable for LLP instead AMT has been introduced alike to MAT.

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Remuneration to partners will be taxed as “Income from Business & Profession”

No capital gain on conversion of partnership firms/company into LLP.

Designated Partners will be liable to sign and file the Income Tax return.

LLP shall not be eligible for presumptive taxation.Capital Gain on conversion of Company into LLP will

be exempt from tax, if prescribed conditions are complied with.

On conversion, the successor LLP , will be allowed to carry forward and set off of accumulated loss and unabsorbed depreciation allowance

On conversion, the successor LLP will be allowed to amortize the expenditure incurred under voluntary retirement scheme on conversion, the successor LLP will not be allowed to take the credit of MAT paid by the predecessor company.

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Comparison between firm and LLP Basis Partnership Firms LLP

Governing Law Partnership Act, 1932 Limited Liability Partnership Act, 2008

Registration Not Compulsory; but is preferred

Compulsory

Creation By partnership Agreement By LawLegal Status Partners collectively known as

‘Firm’; no separate legal statusLLP has separate legal status apart from partners

Succession Firm would cease to exist on change in partnership, unless otherwise provided in agreement

LLP would not be affected on change in partnership (Perpetual Succession)

Ownership of Assets

Partnership cannot own assets in its name; assets must be in name of Partners

LLP can own assets in its own name

Liability of Partners

Unlimited Limited

Minor’s Position

Minor can be admitted to benefits of Partnership

Law silent on position of Minors

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Basis Company LLPGoverning Law Companies Act, 1956 Limited Liability Partnership Act,

2008

Name Must contain suffix ‘Ltd’ or ‘Pvt Ltd’

Must contain suffix ‘LLP’

Common Seal Common Seal is compulsory Common Seal is optional

Organizational Structure

Rigid & governed by Companies Act

Flexible & governed by LLP Agreement

Appointment of Auditors

Specific Resolution required for appointment of auditors at every AGM

Auditors shall be deemed to be re-appointed in case no specific appointment is made (unless otherwise decided)

Audit All companies are subject to audit of accounts

Only LLPs having turnover of more than Rs. 40 Lacs or contribution of more than Rs. 25 Lacs are subject to audit of accounts

Comparison between Pvt. Ltd. Co. and LLP

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Foreign LLP/ FDI in LLPForeign LLP Means a LLP which is formed, registered or incorporated outside

India and which establishes a place of business in India FLLP is required to file form 25 for approval of name If FLLP has been incorporated in language other than English then it

has to be certified by a notary public of their respective country in English language

If translation has been made in India then such translation is required to be certified by CA/CS/CWA/Advocate

Foreign LLP shall, within 30 days of establishment in India required to file form 27 within 30 days from its establishment

FDI LLPs with FDI will be allowed, through the Government approval

route, in those sectors/activities where 100% FDI is allowed, through the automatic route and there are no FDI-linked performance related conditions.

LLPs with FDI will not be allowed to operate in agricultural/plantation activity, print media or real estate business.

LLPs with FDI will not be eligible to make any downstream investments

DISSOLUTION/WINDING UP

Voluntary Compulsory

Where the Partners of LLP themselves mutually decides

Conditions:-If the LLP decides that it to be dissolved by TribunalIf no. of partners falls below 2 for more than

6 monthsIf LLP is unable to pay its debts.If LLP has acted against interest of the

sovereignty and integrity of India, security of state or Public order

Tribunal is of opinion that it is just and equitableOn declaration of LLP as defunct(Suomoto

by LLP or if it is not carrying business for 1 year or more)

By Tribunal

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THANK YOU