CA D R Venkatesh
Bcom, LLB, FCA
Partner - MSSV & Co
Bangalore
Introduction
LLP – An overview
Incorporation of LLP
Financial disclosures
Investigation
Conversion to LLP
Foreign Limited Liability Partnership
Winding up and Dissolution
Proprietorship
Partnership
Companies Private
Public
Co-operative Societies
Trusts
Background
Naresh Chandra & JJ Irani committee
Concert paper on LLP 2005
Indian Partnership Act was passed in 1932
‘Partnership’ is the relation between persons who have agreed to share the profits of business carried on by all or any of them acting for all
Persons who have entered into partnership with one another called individually
“Partners” and collectively “a firm”
Unlimited Liability of Partners
Partnership Firm is not a legal entity
Firm legal entity for purpose of taxation
Partners are mutual agents
Oral or written agreement
Sharing of profit necessary
Sharing of losses is not an essential condition
Contribution of capital is not essential
Partners can be Minors, HUFs, Companies
Number of partners:
Minimum
Maximum General
Banking Business
2
20
10
Mutual agency is the real test
Partnership at Will
Particular partnership
Determination of rights and duties of partners by contract between the partners
Every partner has right to take part in business
Partner to be agent of the firm
Implied authority of partner as agent of the firm
Partners jointly and severally liable acts of the firm
Registration of firm
The Companies Act, 1956
Registration Compulsory
Legal entity separate from that of its directors / members
Perpetual succession
Liability Limited
Meeting
-
Board Meeting
AGM
EAGM
Directors / Shareholders
Company funds
Filing of documents
Complex procedures
Taxation Dividend Tax
MAT
LLP Bill 2006
14 - Chapters
73 - Clauses
4 - Schedules
LLP Bill 2008
14 - Chapters
81 - Clauses
4 - Schedules
Rajya Sabha - 24.10.2008
Lok Sabha - 12.12.2008
Chapter Particulars
I Preliminary
II
III
Nature of LLP
Incorporation of LLP & Matters incidental thereto
Partners & their relations IV
V Extent and limitation of liability of LLP & Partners
VI Contribution
VIIFinancial Disclosures -
-
-
-
-
Section
1 & 2
3 to 10
11 to 21
22 to 25
26 to31
-
34 to 41
32 & 33
Section Chapter Particulars
VIII
IX
X
XI
XII
XIII
XIV
Assignment and transfer of partnership rights
Investigation
Conversion to LLP
Foreign LLP
Compromise, arrangement or
Reconstitution of LLP
Winding up and Disclosure
Miscellaneous
-
-
-
-
-
-
42
43 to 54
55 to 58
59
60 to 62
63 & 65
66 to 81
First Schedule
Second Schedule
Third Schedule
Fourth Schedule
Provisions regarding matters relating to mutual rights and duties of partners and LLP and its partners applicable in the absence of any agreement on such matters
Conversion from Firm into LLP
Conversion from Private company into LLP
Conversion from Unlisted public company into
LLP
40 Rules
Annexure - A
Annexure - B
Annexure - C
Annexure - D
Annexure - E
Form 1 to Form 29
Fees
Document - period of preservation (Permanent)
Document
– period of preservation (5 years)
Date of and mode of destruction of documents of LLP by Registrar
310 Rules
Chapter – II
Clause 3 to 10
LLP
Body Corporate
Legal Entity
Separate from that of its partners
Perpetual succession
Any change in the partners of LLP will not affect the existence, assets or liabilities of LLP
Provisions of Indian Partnership Act, 1932 will not apply to LLP
Any individual or body corporate may be a partner in
LLP
Every LLP should have at least two partners
Every LLP should have at least two designated partners
LLP will be an alternative corporate business vehicle
LLP structure would be available for use by any enterprises
LLP shall not be any upper limit on number of partners
An LLP shall be under obligation to maintain annual accounts reflecting the true and fair view of its affairs
Provisions have been made in to bill for corporate actions like mergers, amalgamation etc.,
Winding up and dissolutions of LLP’s - provided by way of rules under the act
Chapter -
VII
Clauses -
Rules -
34 to 41
24 to 26
Accounts
LLP shall maintain such proper books of account as may be prescribed
Cash basis or accrual basis and according to the double entry system of accounting
Every LLP shall keep the accounting records which are sufficient to show and explain the LLP’s transactions
Disclose with reasonable accuracy at any time
The accounting records shall in particular contain
entries from day to day of all the sums of money received and expended
Record of the assets and liabilities
Statement of cost of goods purchased, inventories, work in progress, finished goods and cost of goods sold
Any other details which the partner may decide
Accounting records shall be preserved for Eight years
Statement of accounts and Solvency
File in Form No.8
Period of 30 days from the end of six months from the financial year
LLP’s Statement of accounts and solvency shall be signed on behalf of the LLP by designated partners
- Rs.50
Contribution does not exceed Rs.1 lakh
Contribution exceeds Rs.1 lakhs but does not exceeds Rs.5 lakhs
Contribution exceeds Rs.5 lakhs but does not exceeds Rs.10 lakhs
Contribution exceeds Rs.10 & above
- Rs.100
- Rs.150
- Rs.200
Rule 24(9) – The accounts of LLP for the financial year shall be audited
Exempted from the audit if turnover does not exceeds Rs.40 lakhs or its contribution does not exceed
Rs.25 lakhs
Rule 24(13) An auditor or auditors of LLP shall be appointed for each financial year of the LLP
Rule 24(14) An auditor or auditors must be appointed with in 30 days before the end of the financial year
Rule 24(15) The designated partners may appoint the auditor or auditors
Rule 24(15) The designated partners may appoint the auditor or auditors
At any time for the first financial year but before the end of the first financial year or
with in 30 days before the end of the each financial year or
To fill a casual vacancy in the office of auditors or
To fill up the vacancy caused by removal of an auditor
Rule (16) The partners may appoint an auditor or auditors - if designated partner fails to do so
Rule 24(17) An auditor of an LLP shall be a
Chartered Accountant in practice
Rule 24(23) An auditor of an LLP may resign his office by depositing a notice in writing to that effect at the
LLP’s registered office:
The notice is not effective unless it is accompanied by the statement of the circumstances connected with his ceasing to hold the to hold office
LLP fails to comply the above provisions relating to accounts and auditing shall be punishable with fine which shall not be less than
Rs.25,000/- but which may extend to Rs.5,00,000/- and every designated partner shall be punishable with fine which shall not be less than Rs.10,000/- but which may extend to Rs.1,00,000/-