Limited Liability Partnership
Introduction
Limited Liability Partnership (LLP) is an alternative form of business
organisation. It not only provides the benefits of limited liability but also
allows its members the flexibility of organising their internal affairs as a
partnership based on a mutually arrived agreement. Liability of the partners is
not as limited as that of shareholder in a company. Further there could be
unlimited liability on partners, in case that of certain other laws. In an
increasingly litigious market environment, a need for a new corporate form
providing an alternative to the traditional partnership, with unlimited personal
liability on the one hand, and, the statute-based governance structure of the
limited liability company on the other, was felt, in order to enable
professional expertise and entrepreneurial initiative to combine, organise and
operate in flexible, innovative and efficient manner. The Limited Liability
Partnership Act, 2008 (the LLP Act), except for certain sections, became
operative from 31st March, 2009. The Rules made under the LLP Act have been
notified on 1st April, 2009. First LLP was registered on 2-4-2009. Sections 55
to 58 pertaining to conversion of a firm or a company to LLP and Rules
pertaining to such conversion became operative from 31st May, 2009. Section 51
and sections 63 to 65 pertaining to winding up of an LLP have become operative
from 10th July, 2012.
Salient Features vis-à-vis Partnership, Companies & LLP
Sr. No . |
Particulars |
Partnership |
Company |
LLP |
1. |
Governing Law |
Limited Partnership Are governed by 'The Partnership Act, 1932 and
various rules made thereunder. |
Companies are governed by 'The Companies Act, 2013'. |
Limited Liability Partnerships are governed by The Limited Liability
Partnership Act, 2008 and various rules made thereunder |
2. |
Registration |
Registration is optional |
Registration with ROC is required |
Registration with ROC is required. |
3. |
Creation |
It is created by contract |
It is created by Law |
It is created by law |
4. |
Distinct Entity |
It is not a separate legal entity |
It is a separate legal entity under The Companies Act, 2013 |
It is a separate legal entity under the LLP Act, 2008. |
5. |
Choice of Name |
Any name as per choice |
Name to contain 'Limited' in case of Public company or
'Private
Limited' in case of Private Company as suffix & is subject to
availability |
Name to contain 'Limited Liability Partnership' or 'LLP' as suffix &
is subject to availability |
6. |
Cost of Formation |
Nominal cost of creating a partnership firm |
Minimum fee for incorporation of Private Company is ₹ 6,000/-
approx. and for incorporation of Public Company, the minimum fee
is ₹ 21,000/- approx. |
The cost of formation of LLP is comparatively lesser than the cost
of formation of Company. Its statutory fees range from
₹ 500/- to ₹ 5,000/- |
7. |
Perpetual Succession |
It does not have perpetual succession as this depends upon the will
of partners |
It has perpetual succession and the members may come and go. |
It has perpetual succession and partners may come and go |
8. |
Charter Document |
Partnership Deed is a charter of the firm which denotes its scope of
operation and rights and duties of the partners |
Memorandum and Articles of Association is the charter of the company
which defines its scope of operation |
LLP Agreement is a charter of the LLP which denotes its scope of
operations and rights and duties of the partners vis-à vis LLP |
9. |
Common Seal |
There is no concept of common seal in partnership |
It denotes the signature of the company and every company shall have
its own common seal |
It denotes the signature and LLP may have its own common seal
(Optional), dependent upon the Terms of the Agreement |
10. |
Formalities of Incorporation |
In case of registration, Deed along with form/affidavit required to
be filed with ROF along with requisite filing fees |
Various e-forms along the Memorandum & Articles of Association are
to be filed with The Registrar of Companies with prescribed fees |
Various e-forms are to be filed with The Registrar of Companies with
prescribed fees |
11. |
Time required for formation |
It will take nominal time. |
It will take 8-10 days (approx.) to incorporate (inclusive of time
taken to obtain DIN) |
It will take 8-10 days (approx.) to incorporate (inclusive of time
taken to obtain DPIN) |
12. |
Legal proceedings |
Only registered partnership can sue third party |
A company is a legal entity which can sue and be sued |
An LLP is a legal entity which can sue and be sued |
13. |
Foreign participation |
Foreign nationals cannot be a partner in a partnership firm. |
Foreign nationals can be a member in a company |
Foreign Nationals can be a Partner in an LLP. |
14. |
Number of members |
Minimum 2 and Maximum 10/20 |
2 to 200 members in case of private company and minimum 7 members in
case of public company |
Minimum 2 partners and there is no limit for maximum number of
partners |
15. |
Ownership of assets |
Partners have joint ownership of all the assets belonging to
partnership firm |
Company & not its members has ownership of assets |
The LLP independent of its members has ownership of assets |
16. |
Rights/Duties/obligation of the partners/managing partners/Directors |
Rights/duties/obligation of the partners are governed by partnership
deed. |
Rights/duties/obligation of the directors are governed by AOA and
resolutions passed by shareholders or directors |
Rights/duties/obligations of the partners are governed by LLP
Agreement. |
17. |
Liability of partners/ members |
Unlimited. Partners are severally and jointly liable for actions of
other partners and the firm and liability extend to their personal
assets |
Generally limited to the amount required to be paid up on each share |
Limited, to the extent their contribution towards LLP, except in
case of intentional fraud or wrongful act of omission or commission by
the partner. |
18. |
Tax liability |
Income of the Partnership is taxed at a flat rate of 30% plus
education cess |
Income of company is taxed at a flat rate of 30% plus surcharge &
education cess |
Income of LLP is taxed at a flat rate of 30% plus education cess |
19. |
Principal/agent relationship |
Partners are agents of the firm and other partners. |
Partners are agents of the firm and other partners. |
Partners act as agents of LLP and not of the other partners. |
20. |
Transfer of share |
Not transferable. |
Ownership is easily transferable by way of transfer of shares. |
Regulations relating to transfer are governed by the LLP Agreement. |
21. |
Dissolution |
By agreement, mutual consent, insolvency, certain contingencies, and
by court order. |
Voluntary or by order of National Company Law Tribunal |
Voluntary or by order of National Company Law Tribunal. |
22. |
Admission as partner/member |
A person can be admitted as a partner as per the partnership
Agreement |
A person can become member by buying shares of a company. |
A person can be admitted as a partner as per the LLP Agreement |
23. |
Cessation as partner/member |
A person can cease to be a partner by resignation or due to death or
as per the agreement |
A member/shareholder can cease to be a member by selling his shares. |
A person can cease to be a partner as per the LLP Agreement or in
absence of the same by giving 30 days prior notice to the LLP |
24. |
Statutory meetings |
There is no provision with regard to holding of any meeting. |
Board meetings and general Meetings are required to be conducted at
appropriate time. |
There is no provision with regard to holding of any meeting. |
25. |
Annual filing |
No return is required to be filed with Registrar of Firms |
Annual Financial Statement and Annual Return is required to be filed
with the ROC every year. |
Annual statement of account and Solvency (e-Form 8) & Annual Return
(e-Form 11) is required to be filed with ROC every year. |
26. |
Audit of accounts |
Partnership firms are only required to have tax audit of their
accounts as per the provisions of the Income Tax Act. |
Companies are required to get their accounts audited annually as per
the provisions of The Companies Act, 2013 |
All LLPs except for those having turnover less than ₹ 40 lakh or
contribution Less than ₹ 25 lakh
in any financial year are required to get their accounts audited
annually as per the provisions of The LLP Act |
27. |
Whistle blowing |
No such provision is provided under The Partnership Act, 1932 |
No such provision is provided under The Companies Act, 2013 |
Provision has been made to provide protection to employees &
partners providing useful information during an investigation or
convicting any partner or firm. |
Steps required to Register LLP
(All the LLP Forms are e-Forms which require digital signatures)
Step 1 – Digital Signature Certificate
- Partner/Designated partner of LLP/proposed LLP, whose signatures are to
be affixed on the e-Forms, has to obtain Digital Signature Certificate (DSC)
from any authorized certifying agency.
Step 2 – Obtain Director's Identification Number (DIN)
- Every LLP must have minimum 2 DPs having DIN.
- As per rule 2(1)(v) DIN means Identification Number allotted by Central
Govt. to an individual or a nominee of a body corporate who intends to be
appointed DP of LLP.
- Any individual intending to become DP should file online application for
DIN (Rule 10)
- Applicant should attach certified copies of identity and address proofs,
affidavit along with form (scanned copy). In case of foreign national, a
certified copy of Passport should be enclosed.
- DIN is valid for life time.
- As per Rule 10(8) every DP should intimate his consent to become DP to
the LLP in Form 9 (within 30 days of admission) and the LLP shall intimate
the same to the Registrar in Form 4 (within 30 days of admission).
Step 3 – Reservation of Name (Form 1) (Rule 18(5)
- Form-1 for reservation of name shall be filed. Partners shall have to
select name of the proposed LLP (up to 6 choices can be indicated).
- Any partner or designated partner in the proposed LLP may submit Form-1
and will append his digital signature and submit the e-form.
- Approval of name for Indian LLP is valid for 3 months (fees ₹200/-).
- Approval of name for foreign LLP is valid for 3 years (fees ₹10,000/-)
(Form 25 + Rule 18(3)
- An existing entity can object allotment of name (Form 23).
Step 4 – Form 2 Incorporation: Document + Statements
- After the name is reserved by the Registrar, "Incorporation Document and
Statement" (Form 2) shall be filled up and filed electronically.
- Part A of Form 2 contains following particulars:
- Name of LLP
- Registered office address
- Details of Partners
- Value and mode of contribution
- Proposed business, etc.
- Part B of Form 2 contains a statement to be signed by a DP and a
professional engaged by LLP.
- A statement in Part B of Form 2 (the e-form) is to be digitally signed
by a person named in the incorporation document as a designated partner
having DIN.
- Also a statement to be digitally signed by an advocate/ company
secretary/chartered accountant/cost accountant in practice who is engaged in
the formation of LLP.
Step 5 – Execute LLP Agreement + Stamp
- File Form 3 which is summary of LLP Agreement. As per Rule 21 Form 3
should be filed along with the prescribed fee within 30 days of the date of
Incorporation. (Rule 21).
LLP Agreement & Main Features
- It is a written agreement between the partners of the limited liability
partnership and between the Limited Liability Partnership and its partners
which determines the mutual rights and duties of the partners and their
rights and duties in relation to that Limited Liability Partnership.
- It is not necessary to enter into an LLP agreement as per LLP Act, 2008.
In the absence of LLP agreement, the mutual rights of partners & in relation
to LLP will be determined as per Schedule I of The LLP Act, 2008.
- Due to varied nature of different type of businesses, it may not be
practically advisable to have those standard clauses as mentioned in
Schedule 1. Therefore, it is advisable to have a legally drafted agreement
LLP AGREEMENT.
- Main features of the Agreement
- Parties (individuals or body corporate Section- 5 LLP)
- Objective
- Definition and interpretation clause
- Commencement of business of LLP
- Duration of LLP
- Designated Partners (LLP Act) Working partners (IT Act).
- Role of Partners in Management (Otherwise any partner can take part in
Management)
- Contribution of Partners (in cash or in kind).
- Partners' powers, duties and authorities.
- Define share in the capital, profit and Losses (otherwise equally as per
Schedule 1)
- Specify remuneration to working partners (otherwise no remuneration) [(see
Income-tax Act - Section. 40(b)]
- Define interest to partners [Sec. 40(b) of I.T. Act allows interest up
to 12% only]
- Power to expel (otherwise nobody can be expelled as per Schedule)
Summary of Forms List
Description |
e-Forms |
Application for reservation or change of name |
Form 1 |
Incorporation Document and Statement to Incorporation Document and
Subscriber's Statement |
Form 2 |
Information with regard to Limited Liability Partnership Agreement
and changes, if any, made therein |
Form 3 |
Notice of appointment, cessation, change in name/address/designation
of a partner/designated partner, intimation of DPIN and consent to
become a partner/designated partner |
Form 4 |
Notice for change of name |
Form 5 |
Application for allotment of Designated Partner Identification
Number |
Now DIN |
Statement of Account & Solvency |
Form 8 |
Intimation of changes in particulars by Designated Partners |
Form 10 |
Annual Return of Limited Liability Partnership |
Form 11 |
Form for intimating other address for service of documents |
Form 12 |
Notice of change of place of registered office |
Form 15 |
Application and statement for the conversion of a firm into Limited
Liability Partnership |
Form 17 |
Application and Statement for conversion of a private
company/unlisted public company into limited liability partnership. |
Form 18 |
Notice of intimation of Order of Court/Tribunal/CLB/Central
Government to the Registrar |
Form 22 |
Application for direction to LLP to change its name |
Form 23 |
Application to the Registrar for striking off name |
Form 24 |
Application for reservation/renewal of name by a foreign LLP/foreign
company |
Form 25 |
Form for registration of particulars by foreign limited liability
partnership |
Form 27 |
Alteration in the - (A) The incorporation document, or other
instrument constituting or defining the constitution of a limited
liability partnership incorporated or registered outside India; or (B)
The registered or principal office of a limited liability partnership |
Form 28 |
(A) Alteration in the certificate of incorporation or registration
of Limited Liability Partnership incorporated or registered outside
India (B) Alteration in the name or address of any of the persons
authorised to accept service on behalf of a foreign company |
Form 29 |
Application for compounding of an offence under the Act |
Form 31 |
Statements of Accounts and Solvency & Audit (Sec. 34)
- LLP is required to maintain books of account for each year as prescribed
by Rule 24. (Sec.34).
- Books of accounts to be maintained for 8 years from the date on which
they are made.
- Accounts on cash basis or on accrual basis under double entry system of
accounting.
- Every designated partner shall have deemed to approve the accounts
unless one take all reasonable steps to prevent their being approved &
signed.
- Within a period of six months from the end of the year, LLP to prepare a
Statement of A/cs and Solvency in Form No.8 as prescribed by Rule 24. It is
to be signed by the Designated Partner.
- Before 30th October in each year, the Statement of Account and Solvency
for the year ended on 31st March is required to be filed with the Registrar
(Rule 24) (Section – 35) Annual Return – Every LLP to file Annual Return
within 60 days of closure of financial year. In case of failure DP to be
fined (₹10,000/- to ₹100,000/-) additional fee of
₹ 100/- per day.
- Accounts shall be audited by auditors appointed by the LLP, in
accordance with Rule 24. Audit compulsory under LLP Act if :
- Turnover exceeds ₹40 lakh.
- Contribution by partners exceed ₹25 lakh.
- Auditor shall be appointed before the end of Financial Year for first
year. Subsequent auditor to be appointed before 30 days of end of Financial
Year.
- Auditor can resign by giving a notice 14 days prior to the last date for
the appointment of auditor along with statement of circumstances connected
(Otherwise not effective)
- Auditor's term comes to end on deposit of notice or date mentioned.
- Annual return needs to be certified by CS if Turnover exceeds ₹ 5 crore
or contribution exceeds ₹ 50 lakhs
Conversion to LLP (Sections 55 to 57)
Conversion from firm/company into limited liability partnership. (Section 55
+ Schedule – II).
- Eligibility – A firm can be converted only if all the partners agree to
become partners of LLP.
- A private company can be converted into LLP only if:
– All shareholders agree to become partners of LLP and
– There is no security interest subsisting like mortgage
(Sec. 56 Schedule – III)
- Conversion from unlisted public company into LLP. (Section 57 + Schedule
– IV)
- Registrar to issue a certificate in Form No. 19.
- On registration of LLP erstwhile firm or company will be deemed to be
dissolved.
Conversion from Firm to LLP: (as per Second Schedule)
- On incorporation of LLP all the rights and liabilities under various
agreements executed by the firm shall stand assigned to LLP as if those
agreements were executed by LLP instead of the firm.
- All the properties of previous firm would vest in LLP without any
assurance.
- If any property of the partnership firm is registered with any
authority, LLP must notify the authorities like SSI etc., about the
conversion and submit the particulars in such form as the authority may
specify.
- For a period of 12 months LLP will have to mention
its previous name and registration number and business Form.
- If the Registrar refuses registration, the Applicant may apply to the
Tribunal within 60 days from such intimation of refusal [Rule 32(2)].
- Rule 33 provides that upon such conversion the necessary intimation to
the Registrar of Firms or Registrar of Companies, as the case may be shall
be given in Form No. 14.
Striking off LLP Name (Section – 75 Read with Rule – 37)
- Section – 75 empowers Registrar to strike off the name of LLP on
- Suo motu basis
- Application by LLP
- Suo motuaction of Registrar: - LLP shall be defunct for at
least two years.
- Application by LLP (in Form – 24): - LLP shall be defunct for at least
one year.
- File overdue returns in Forms 8 and 11 up to the year in which the LLP
ceased to carry on its business or commercial operations before filing Form
24.
- Enclose the following along with Form 24.
- A statement of account disclosing nil assets and nil liabilities,
certified by a Chartered Accountant in practice made up to a date not earlier
than thirty days of the date of filing of Form 24.
- An affidavit signed by the designated partners, either jointly or
severally, to the effect,-
- That the Limited Liability Partnership has not commenced business or
where it commenced business, it ceased to carry on such business from
..........(dd/mm/yyyy);
- That the limited liability partnership has no liabilities and
indemnifying any liability that may arise even after striking off its name from
the Register;
- That the Limited Liability Partnership has not opened any Bank Account
and where it had opened, the said bank account has since been closed together
with certificate(s) or statement from the respective bank demonstrating closure
of Bank Account;
- That the Limited Liability Partnership has not filed any Income-tax
return where it has not carried on any business since its incorporation, if
applicable
- A copy of the acknowledgement of the latest Income-tax return filed
under the Income-tax Act, 1961 (43 of 1961)
- Copy of the initial LLP agreement, if entered into and not filed, along
with changes thereof in cases where the LLP has not commenced business or
commercial operations since its incorporation.
- NOC from concerned Govt. authority if regulated by them.
- Suo motunotice of ROL/application of LLP be placed on Ministry
website for a period of one month before publication of notice in Official
Gazette.
- LLP shall be dissolved w.e.f. publication of notice in Official Gazette.
LLP & TAXATION
- Worldwide LLP taxation practice.
- Tax Transparent (pass through). In U.K. & Singapore, Tax is not
payable by LLP.
- Tax opaque juridical entity. In Belgium and Australia, LLP is taxable
entity.
- Flexible – In USA – Left to the decision of the partners.
- Section - 2(23) of Income-tax Act amended to treat LLP as a Partnership
Firm.
- In India LLP is tax opaque juridical entity – Tax payable by LLP.
- LLP registered in India will be a resident even if only a part of
control and management is in India.
- No surcharge, effective tax rate 30.9%.
- No MAT (Minimum Alternate Tax). A company must pay MAT@18.5% (effective
rate 20.007% of Book Profit (Section.115JB of Income-tax Act). However LLP
must pay Alternate Minimum Tax (AMT) @ 18.5% effective rate 19.055%.
- No DDT (Dividend Distribution Tax – Section.115-O) Amount distributed by
the company as dividend is liable for additional income tax @15%.
- Profits distributed by LLP is exempt in the hands of the partners
Section 10(2A) of the Income-tax Act.
- Profit earned by the Assignee of economic Interest (as per Section – 42
of LLP Act) is taxable in his hands.
- Deemed dividend provisions do not apply to LLP – If a private limited
company gives any loan to any shareholder holding not less than 10% of share
then that loan is taxed as dividend received from the company.
[Section-2(22)(e) of Income Tax Act].
- Corporate law provisions for inter-corporate deposits will not apply.
(Sec. 58-A/73 of New Companies Act. LLP is free to receive deposits from
other LLPs whereas a company can invite deposits from public as per rules
only).
- Interest paid to partners is allowable – deduction provided capped at
12% [Section – 36(1)(iii), Section – 40(b), Section- 184 of the Income-tax
Act].
As per Section 36(1)(iii) the interest paid on the capital borrowed for the
purpose of business is allowed as deduction. However as per Section 40(b)(v)
interest paid to partners if not specified in the Partnership Deed is not
allowed. Moreover, interest is allowed only to the extent of 12%. As per Section
184 a partnership will be assessed as a firm provided there is an instrument of
partnership (Partnership Deed or LLP Agreement) and the shares of partners are
specified therein. In case of unwritten partnership the deductions for salary
and interest are not allowed. The provisions will equally apply to LLP.
- Remuneration to working partners allowed subject to cap. u/s. 40(b)(v) –
if paid in accordance with Deed/ Agreement.
- On the first 3 lakhs of book profit or in the case of loss ₹ 1,50,000/-
or 90% of book profit.
- On the balance profit in excess of 3 lakhs – @ 60% of book profit.
- Retiring/deceased partner's share in loss cannot be carried forward in
the hands of LLP Section-78(1) – There is a contrary view also.
- Foreign LLPs shall be taxed as companies under the I.T. Act (and not as
a firms).
STATUS AFTER 1-4-2011
Transfer of assets on conversion u/ss. 56 & 57 of the Act shall not be
regarded as transfer if –
- The total sales, turnover or gross receipts in business of the company
do not exceed sixty lakh rupees in any of the three previous year preceding
previous years the shareholders of the company become partners of the LLP in
the same proportion as their shareholding in the company as on the date of
the conversion;
- No consideration other than share in profit and capital contribution in
the LLP arises to partners;
- The erstwhile shareholders of the company continue to be entitled to
receive at least 50 per cent of the profits of the LLP for a period of 5
years from the date of conversion;
- All assets and liabilities of the company become the assets and
liabilities of the LLP; and
- No amount is paid, either directly or indirectly, to any partner out of
the accumulated profit standing in the account of the company as on the date
of conversion for a period of 3 years from the date of conversion. [This
condition means that no accumulated profits which are lying in reserve or in
the profit and loss (surplus) balance as on date of conversion should be
distributed to any partner or transferred to their capital accounts until 3
years from date of conversion.]
Note: – LLP is allowed carry forward and set-off of business loss to the
successor LLP which fulfils the above-mentioned conditions for a fresh period of
8 years from the expiry of the year of conversion and unabsorbed depreciation
indefinitely. Section 72A(6A)
Miscellaneous
The Government may by notification direct that provisions of The Companies
Act, 1956/2013 specified in the notification shall apply to any LLP with or
without such exception, modification or adoption as specified in notification.
Under the LLP Act and LLP Rules every form, application, document or declaration
shall be filed in 'Portable Document Format' (PDF) through the portal maintained
by the Ministry of Corporate Affairs on its website or through any other website
approved by the Central Government. Documents so filed are to be authenticated
by valid digital signature. In cases where document is required to be filed on
non-judicial stamp paper, the LLP has to submit such document in physical form
in addition to submission in the electronic form. The Central Government is to
set up and maintain secure electronic registry. It will allow access to the
public to inspect documents which are required to be in public domain under the
LLP Act on payment of fees.
Alternate Minimum Tax (AMT)
Effective F. Y. 2011-12, i.e., Assessment Year 2012-13, the Finance Act, 2011
has introduced new Chapter XII-BA titled as 'Special Provisions Relating to
Certain Limited Liability Partnership'. It consists of sections 115JC to 115JF.
For details p. 3.44.
Rules Governing FDI in LLPs
The Government of India has reviewed the extant policy on FDI and decided to
permit FDI in LLP firms in a calibrated manner vide Press Note No. 1 (2011
Series), dated 20-5-2011, effective from 1st April, 2011. These FDI guidelines
have been incorporated in the consolidated FDI Policy Circular, issued
subsequently. FDI has been allowed subject to conditions specified as below:
- FDI will be allowed, through the Government approval route, only in LLPs
operating in sectors/activities where 100% FDI is allowed, through the
automatic route and there are no FDI-linked performance conditions (such as
'Non-Banking Finance Companies' or 'Development of Townships, Housing,
Built-up infrastructure and Construction-development projects', etc.).
- LLPs with FDI will not be allowed to operate in agricultural/plantation
activity, print media or real estate business.
- An Indian company, having FDI, will be permitted to make downstream
investment in an LLP only if both – the company, as well as the LLP – are
operating in sectors where 100% FDI is allowed, through the automatic route
and there are no FDI-linked performance conditions.
- LLPs with FDI will not be eligible to make any downstream investments.
- Foreign Capital participation in LLPs will be allowed only by way of
cash consideration, received by inward remittance, through normal banking
channels or by debit to NRE/FCNR account of the person concerned, maintained
with an authorised dealer/authorised bank.
- Investment in LLPs by Foreign Institutional Investors (FIls) and Foreign
Venture Capital Investors (FVCIs) will not be permitted. LLPs will also not
be permitted to avail External Commercial Borrowings (ECBs).
- In case the LLP with FDI has a body corporate that is a designated
partner or nominates an individual to act as a designated partner in
accordance with the provisions of section 7 of the LLP Act, 2008, such a
body corporate should only be a company registered in India under the
Companies Act, 1956/2013 and not any other body, such as an LLP or a trust.
- For such LLPs, the designated partner "resident in India", as defined
under the 'Explanation' to Section 7(1) of the LLP Act, 2008, would also
have to satisfy the definition of "person resident in India", as prescribed
under
Section 2(v)(i) of the Foreign Exchange Management Act, 1999.
- The designated partners will be responsible for compliance with all the
above conditions and also liable for all penalties imposed on the LLP for
their contravention, if any.
- Conversion of a company with FDI, into an LLP, will be allowed only if
the above stipulations except clause (e) are met and with the prior approval
of FIPB/Government.
However, RBI vide Notification No. FEMA 298/2014-RB dated
13-3-2014 has amended the Foreign Exchange Management.
(Transfer or Issue of Security by a Person Resident Outside India)
Regulations, 2000. Post issue of RBI notification FDI in LLP is operational.
It has provided that : A person resident outside India (other than a citizen
of Pakistan or Bangladesh) or an entity incorporated outside India, (other than
an entity in Pakistan or Bangladesh), not being a registered Foreign
Institutional Investor or Foreign Venture Capital Investor or Qualified Foreign
Investor registered with SEBI or Foreign Portfolio Investor registered in
accordance with SEBI guidelines, may contribute foreign capital either by way of
capital contribution or by way of acquisition/transfer of profit shares in the
capital structure of an LLP under Foreign Direct Investment, subject to the
specified terms and conditions.
Chart 1
Forms under the Limited Liability Partnership Act, 2008
Form No. |
Rule |
Section |
Particulars |
Time Limit |
1 |
18(4), 18(5) |
16(1) |
Application for reservation or change of name |
N.A. |
2 |
11, 13 |
11(2) |
Incorporation document and statement (Form 2 also has addendum) |
Within 3 months from the approval of name by the ROC |
2A |
– |
– |
Details in respect of designated partners and partners of Limited
Liability Partnership (Addendum to Form 2) |
Within 7 days from the validity period of the approved name. |
3 |
21 |
23(2) |
Information relating to LLP Agreement and changes, if any, made
therein |
Within 30 days of Incorporation |
4 |
8 |
7(4) |
Notice of appointment of partners/designated partner and changes
among them, intimation of DPIN by LLP to the Registrar and consent of
partner to become a partner/designated partner (Form 4 also has
addendum) |
Within 30 days of Appointment |
|
22, 10 |
25(2), 25(3) |
Notice of appointment of partners and the changes among them or
consent of incoming partner to become a partner/designated partner |
Within 30 days of change |
4A |
- |
- |
Notice of appointment, cessation, change in particulars of a
partners |
(Addendum to Form 4) Within 7 days of filing of Form 4 |
5 |
20(2) |
19 |
Notice of change of name of LLP |
Within 30 days of complying requirement u/r 20(1) |
6 |
22 |
25(1) |
Intimation of particulars of name or address of a partner/changes in
particulars to the LLP by the partner |
Within 15 days |
DIR-3 (Old Form DIN 1) |
10(1) |
7(6) |
Application for allotment of Directors Identification Number (Post
Integration Designated Partner Identification Number has been integrated
under DIN) |
N.A. |
8 |
24(8) |
34(2) |
Statement of Account & Solvency |
Within 30 days from the end of 6 months of the Financial Year (30th
October) |
|
|
|
While winding up of LLP – LLP Liquidator to report quarterly to
Partners/Creditors |
Before the end of the following quarter |
9 |
7, 10(8) |
7(3) |
Consent to act as designated partner |
Prior consent |
DIR-6 (Old Form DIN 4) |
10(9) |
7(6) |
Intimation of changes in particulars by designated partner |
Within 30 days from date of such change |
11 |
25(1) |
35(1) |
Annual return of LLP |
Within 60 days of closure of its Financial Year (30th May) |
12 |
16(3) |
13(2) |
Intimation of other address for service of documents |
Within 30 days of complying requirements u/r. 16(2) |
13* |
– |
24(1) |
Specimen of notice of cessation by a ceasing partner to other
partner |
|
14 |
33, 38, 39, 40 |
58(1) |
Intimation to the Registrar of Firms/Registrar of Companies for
conversion of firm into LLP |
Within 15 days from date of registration |
15 |
17(2), 17(5) |
13(3) |
Notice of change of place of registered office |
Within 30 days of complying requirements under rules 17(1), 17(4) |
16 |
– |
12(1) |
Certificate of Incorporation |
– |
17 |
38(1) |
Para 4 of Second Schedule |
Application and statement by a firm for its conversion into LLP |
– |
18 |
39, 40 |
Para 3 of Third Schedule and Para 4 of Fourth Schedule |
Application and statement by a private company/unlisted public
company for its conversion into LLP |
– |
19 |
32, 38, 39, 40 |
Para 5 of Second Schedule, Para 4 of Third Schedule and Para 5 of
Fourth Schedule |
Certificate of Registration on conversion |
– |
20* |
35(1) |
60 |
Affidavit in support of summons |
– |
21* |
35(2) |
60 |
Summons for direction to convene a meeting under s. 60(1) |
– |
22 |
41(4), 35(11),
35(17) |
39, 60, 60(3), 62(3) |
Notice of intimation of order of Court/Tribunal/CLB/CG to the
Registrar |
Within 30 days of making the order u/r. 35(15) |
23 |
19 |
18 |
Application for direction to LLP to change its name |
Within 24 months from the date of registration of the LLP under that
name |
24 |
37(1) |
75 |
Application to the Registrar for striking off name |
– |
25 |
18(3) |
59 |
Application for reservation/renewal of reservation of name by
Foreign LLP/foreign company |
– |
26* |
35(4) |
Form of proxy |
Not later than 48 hours before the meeting |
|
27 |
34(1) |
59 |
Registration of particulars by foreign LLP |
Within 30 days of establishing a place of business in India |
28 |
34(3) |
59 |
Alteration in case of foreign LLP (a) the incorporation document, or
document or constituting of foreign LLP, (b) the registered or principal
office of foreign LLP, or (c) partner or designated partner of a foreign
LLP |
Within 60 days of the close of the F.Y. |
29 |
34(3), 34(8) |
59 |
Alteration in case of foreign LLP in certificate of incorporation or
name and address of persons authorised to accept service or alteration
of place of business of foreign LLP in India or cessation of business in
India |
Within 30 days from the date on which the alteration was made |
30 |
34(10) |
59 |
Certificate for establishment of place of business of foreign LLP |
– |
31 |
41(1) |
39 |
Application for compounding of an offence under the Act |
– |
32 |
36(6) |
– |
Rectification of Defects or incompleteness (Addendum) |
Within the time limit prescribed u/r. 36(7) |
* These forms are not available in the electronic form
Chart 2
Fees payable under the Limited Liability Partnership Act, 2008
Sr. No. |
Particulars |
Fees |
1. |
For registration of Limited Liability Partnership
including conversion of a firm or a private company or an unlisted
public company into Limited Liability Partnership: |
|
|
a) |
Limited Liability Partnership whose contribution does not exceed ₹ 1
lakh |
₹ 500/- |
|
b) |
Limited Liability Partnership whose contribution exceeds ₹ 1 lakh
but does not exceed ₹ 5 lakh |
₹ 2,000/- |
|
c) |
Limited Liability Partnership whose contribution exceeds ₹ 5 lakh
but does not exceed ₹ 10 lakh |
₹ 4,000/- |
|
d) |
Limited Liability Partnership whose contribution exceeds ₹ 10 lakh |
₹ 5,000/- |
2. |
The difference between the fees payable on the increased
slab of contribution and the fees paid on the preceding slab of
contribution shall be paid through Form 3 |
|
3. |
For filing, registering or recording any document, form,
statement, notice, Statement of Accounts and Solvency, annual return and
an application along with the Statement for conversion of a firm or a
private company or an unlisted public company into LLP by this Act or by
these rules required or authorised to be filed, registered or recorded: |
|
|
a) |
Limited Liability Partnership whose contribution does not exceed ₹ 1
lakh |
₹ 50/- |
|
b) |
Limited Liability Partnership whose contribution exceeds ₹ 1 lakh
but does not exceed ₹ 5 lakh |
₹ 100/- |
|
c) |
Limited Liability Partnership whose contribution exceeds ₹ 5 lakh
but does not exceed ₹ 10 lakh |
₹ 150/- |
|
d) |
Limited Liability Partnership whose contribution exceeds ₹ 10 lakh |
₹ 200/- |
3A. |
For filing, registering or recording notice of
appointment, cessation, change in name, address, designation of a
partner or designated partner, intimation of designated partner
identification number and consent to become a partner or designated
partner in Form 4 |
₹ 50/- |
4. |
Fee for any application other than application for
conversion of a firm or a private company or an unlisted public company
into LLP shall be as under: |
|
|
a) |
An application for reservation of name u/s. 16 |
₹ 200/- |
|
b) |
An application for direction to change the name u/s. 18 |
₹ 10,000/- |
|
c) |
Application for reservation of name under rule 18(3) |
₹ 10,000/- |
|
d) |
Application for renewal of name under rule 18(3) |
₹ 5,000/- |
|
e) |
Application for obtaining DPIN under rule 10(5) |
₹ 100/- |
|
f) |
Application for striking off name of defunct LLP under rule 37 |
₹ 500/- |
5. |
Fee for inspection of documents or for obtaining
certified copy thereof shall be as under:– |
|
|
a) |
For inspection of documents of an LLP under section 36 |
₹ 50/- |
|
b) |
For Copy or extract of any document under section 36 to be certified
by Registrar |
₹ 5/- per page or fractional part thereof |
6. |
Fee for filing any form or a Statement of Account and
Solvency or a notice or a document by foreign Limited Liability
Partnership |
|
|
a) |
For filing a document under rule 34(1) |
₹ 5,000/- |
|
b) |
Any other form or Statement of Account and Solvency or notice or
document |
₹ 1,000/- |
Chart 3
Penalties under the Limited Liability Partnership Act, 2008
Default under Section |
Default in Compliance |
Penal Section |
Person Liable |
Amount of Penalty/ Punishment |
Imprisonment |
7(1) |
Appointment of designated partners |
10(1) |
LLP & Partners |
Minimum ₹ 10,000 Maximum ₹ 5 lakh |
No |
7(4) |
Filing of consent of designated partners |
10(2) |
LLP & Partners |
Minimum ₹ 10,000 Maximum ₹ 1 lakh |
No |
7(5) |
Satisfaction of conditions and requirements by designated partners |
10(2) |
LLP & Partners |
Minimum ₹ 10,000 Maximum ₹ 1 lakh |
No |
8 |
Compliance of provisions by designated partners including filing of
documents |
10(2) |
LLP & Partners |
Minimum ₹ 10,000 Maximum ₹ 1 lakh |
No |
9 |
Appointment of designated partner within 30 days of vacancy |
10(2) |
LLP & Partners |
Minimum ₹ 10,000 Maximum ₹ 1 lakh |
No |
11(1)(c) |
False or untrue statement while incorporating LLP |
11(3) |
Concerned Person |
Minimum ₹ 10,000 Maximum ₹ 5 lakh |
Up to 2 years |
13(3) |
Contravention of section 13 relating to registered office or change
therein |
13(4) |
LLP & Partners |
Minimum ₹ 2,000 Maximum ₹ 25,000 |
No |
17(1) |
Failure to comply with Government's directions u/s.
17(1) to rectify any undesirable name |
17(2) |
LLP |
Minimum ₹ 10,000 Minimum ₹ 5 lakh |
No |
Designated Partner |
Minimum ₹ 1,000 Maximum ₹ 1 lakh |
20 |
Carrying business under LLP without registering as LLP |
20 |
Any person |
Minimum ₹ 50,000 Maximum ₹ 5 lakh |
No |
21(1) |
Non-publication of name, address and limited liability on invoices,
official correspondence, etc. |
21(2) |
LLP |
Minimum ₹ 2,000 Maximum ₹ 25,000 |
No |
25(2) |
Non-filing particulars of changes in partnership of LLP within 30
days |
25(4) |
LLP & Designated Partners |
Minimum ₹ 2,000 Maximum ₹ 25,000 |
No |
25(1) |
Non-intimation by partner about change of particulars of name,
address, etc. within 15 days of change |
25(5) |
Concerned Partner |
Minimum ₹ 2,000 Maximum ₹ 25,000 |
No |
30(1) |
Carrying business with fraudulent intention/purpose |
30(2) |
Every person party to such acts |
Minimum ₹ 50,000 Maximum ₹ 5 lakh |
Up to 2 years |
30 |
Conducting affairs of LLP in fraudulent manner |
30(3) |
LLP Designated Partner, Partners, Employee |
Compensation to be paid to persons suffering loss |
No |
34(1) to 34(4) |
Maintenance of proper books of account, filing annual
statement of account, audit of LLP accounts |
34(5) |
LLP |
Minimum ₹ 25,000 Maximum ₹ 5 lakh |
No |
Designated Partner |
Minimum ₹ 10,000 Maximum ₹ 1 lakh |
35(1) |
Filing of annual return within 60 days |
35(2) |
LLP |
Minimum ₹ 25,000 Maximum ₹ 5 lakh |
No |
35(3) |
Designated Partners |
Minimum ₹ 10,000 Maximum ₹ 1 lakh |
No |
37 |
False statement in any returns statement or documents |
37 |
Concerned Person |
Minimum ₹ 1 lakh Maximum ₹ 5 lakh
(save as otherwise expressly provided) |
Up to 2 years |
38(1), (2) |
Failure without excuse to comply with summons or requisition by
Registrar |
38(3) |
Concerned Person |
Minimum ₹ 2,000 Maximum ₹ 25,000 |
No |
47 |
Failure to produce evidence or documents or information or failure
to appear before inspector without reasonable cause |
47(5) |
Any Person |
Minimum ₹ 2,000 Maximum ₹ 25,000 Further fine of up to Minimum ₹ 50
but not less than ₹ 500 per day of continuing default |
No |
49 |
Guilty of offence arising out of investigation report |
50 |
Any Person |
Liable for prosecution |
No |
60(3) |
Filing of Tribunal's order by LLP with Registrar within 30 days in
case of compromise of arrangement |
60(4) |
LLP Designated Partner |
Minimum not specified Maximum ₹ 1 lakh |
No |
62(3) |
Filing of certified copy of Tribunal order in
reconstruction/amalgamation of LLP within 30 days before Registrar |
62(4) |
LLP Designated Partner |
Up to ₹ 50,000 |
No |
Non-compliance of any order passed by Tribunal |
73 |
Any Person |
Up to ₹ 50,000 |
Yes up to
6 months |
Any offence for which no punishment is expressly provided |
74 |
Any Person |
Minimum ₹ 5,000 Maximum ₹ 5 lakh Further fine up to ₹50 per day of
continuing default |
No |
Para 17(1) II Schedule |
Notice of conversion in correspondence for 12 months |
Para 17(2) II Schedule |
LLP |
Minimum ₹ 10,000 Maximum ₹ 1 lakh Further fine between
₹ 50 and ₹ 500 per day of continuing default |
No |
Para 15(1) III Schedule |
Notice of conversion in correspondence for 12 months |
Para 15(2) III Schedule |
LLP |
Minimum ₹ 10,000 Maximum ₹ 1 lakh Further fine between
₹ 50 and ₹ 500 per day of continuing default |
No |
Para 16(1) IV Schedule |
Notice of correspondence for 12 months |
Para 16(2) IV Schedule |
LLP |
Minimum ₹ 10,000 Maximum ₹ 1 lakh Further fine between
₹ 50 and ₹ 500 per day of continuing default |
No |
Notes
- In terms of section 70, in case of second and subsequent offence the
person will be punishable with imprisonment provided and in cases where fine
is prescribed; it will be twice the amount of fine for such offence.
- Under section 39, an offence which is punishable with fine only may be
compounded. Compounding fee may extend to the maximum amount of fine
prescribed for the offence.
- Under section 76, where offence is committed by an LLP and it is proved
that it was committed with the consent or connivance of a partner or a
designated partner or is attributable to gross neglect of a partner or a
designated partner, then the LLP as well such partner or designated partner
shall be guilty and punishable.
Chart 4
Notifications under the Limited Liability Partnership Act, 2008
Notification No. |
Date |
Particulars |
GSR 470(E) [F. No. 17/61/2016-CL-V] |
16-05-2017 |
Limited Liability Partnership (Amendment) Rules, 2017 – Amendments
in Form 24 and insertion of Rule 37(1A) |
GSR 593(E) [F. No. 17/31/2015-CL-V] |
10-06-2016 |
Limited Liability Partnership (Second Amendment) Rules, 2016 –
Amendments in Forms 2, 3, 4 and 11 |
GSR 418(E) [F. No. 2/15/2014-CL-V] |
13-04-2016 |
Limited Liability Partnership (Amendment) Rules, 2016 – Amendment in
Form 14 |
GSR 786 (E) [F. No. 2/15/2014 – CL – V] |
15-10-2015 |
Limited Liability Partnership (Amendment) Rules, 2015 – Amendment in
Forms 14, 2, 4, 16, 19 and 30. |
GSR 333 (E) [F. No. 1/2/2013 – CL – V] |
29-4-2015 |
Applicability of Section 458 of Companies Act, 2013 to LLP |
GSR 692 (E) [F. No. 1/11/2012 – CL – V] |
14-9-2012 |
Limited Liability Partnership (Second Amendment) Rules, 2012 –
Amendment in Form No. 11 Annual Return of LLP |
GSR 550 (E) [F. No. 1/7/2012 – CL – V] |
10-7-2012 |
Limited Liability Partnership (Winding up and Dissolution) Rules,
2012 – Suppression of LLP (Winding up and Dissolution) Rules, 2010 |
GSR 549 (E) [F. No. 1/7/2012 – CL – V] |
10-7-2012 |
Notified date for certain provisions of LLP Act – Amendment in
Notification No. 891(E), dated 31-3-2009 |
GSR 485(E) |
21-6-2012 |
Limited Liability Partnership (Amendment) Rules, 2012 – Corrigendum |
GSR 430 (E) [F. No. 1/1/2011 – CL.V] |
5-6-2012 |
Limited Liability Partnership (Amendment) Rules, 2012 – Amendment in
Rules 8, 18, Annexure A and substitution of Form Nos. 1 to 31 |
F. No. 2/17/2011- CLV |
4-11-2011 |
LLP (Amendment) Rules, 2011 – Amendment in Rule 24 |
GSR 680 (E) [ F. No. 2/17/2011- CLV] |
14-9-2011 |
Limited Liability Partnership (Second Amendment) Rules, 2011 –
Substitution of Form 8 |
GSR 506 (E) [F. No. 2/1/2011 – CL. V] |
5-7-2011 |
Limited Liability Partnership (Amendment) Rules, 2011 – Amendment in
Rules 2, 10 and deletion of Forms 7 and 10 |
F. No. 2/2/2011- CL.V |
23-5-2011 |
Section 2(7), r.w. section 226 of The Companies Act, 1956 – Body
Corporate or Corporation – Definition of – Limited Liability Partnership
specified as a body corporate for the purpose of section 226(3)(A) |
GSR 914(E) |
15-11-2010 |
Limited Liability Partnership (Second Amendment) Rules, 2010 –
Substitution of Form 10 in the Annexure |
GSR 266(E) |
30-3-2010 |
Limited Liability Partnership (Winding up and Dissolution) Rules,
2010 |
GSR 24(E) |
11-1-2010 |
Limited Liability Partnership (Amendment) Rules, 2010 – Substitution
of Rules 10, 12 Forms 1 to 7 in the Annexure and Amendment in Rule 21
and Annexure 'A' |
GSR 6(E) |
6-1-2010 |
Application of certain provisions of Companies Act, 1956 to Limited
Liability Partnerships with modifications |
GSR 386(E) |
4-6-2009 |
Section 78 of the Limited Liability Partnership Act, 2008 – Power to
alter schedules – Amendment in Schedules |
GSR 385(E) |
4-6-2009 |
Limited Liability Partnership (Amendment) Rules, 2009 – Amendment in
Rule 32 |
SO 1324(E) |
22-5-2009 |
Section 79 of the Limited Liability Partnership Act, 2008 – Power to
make rules – Enforcement of certain rules |
SO 1323(E) |
22-5-2009 |
Notified Date for certain provisions of Limited Liability
Partnership Act |
GSR 229(E) |
1-4-2009 |
Limited Liability Partnership Rules, 2009 |
SO 891(E) |
31-3-2009 |
Notified Date for certain provisions of Limited Liability
Partnership Act |
Chart 5
Circulars under the Limited Liability Partnership Act, 2008
Circular No. |
Date |
Particulars |
7/2016 |
31-5-2016 |
Relaxation of additional fees and extension of time and filing of
e-Forms by the Companies under Companies Act, 2013 and for filing of
Annual Return (Form 11) by the LLPs under the Limited Liability
Partnership Act, 2008 |
37/2014 |
14-10-2014 |
Clarification with regard to Trust/trustee as a partner in the
Limited Liability Partnerships (LLPs). |
2/2014 |
11-2-2014 |
Use of word 'National' in the names of Companies of Limited
Liability Partnerships (LLPs) |
13/2013 |
29-7-2013 |
Whether Hindu Undivided Family (HUF)/its Karta can become
Partner/Designated Partner (DP) in Limited Liability Partnership (LLP) |
9/2013 |
30-4-2013 |
Conversion of firm into Limited Liability Certificate –
Clarification |
15/2012 |
29-6-2012 |
Extension of time in Filing of Annual Return by Limited Liability
Partnerships (LLPs) |
13/2012 |
6-6-2012 |
Extension of time in Filing of Annual Return by Limited Liability
Partnerships |
2/2012 |
1-3-2012 |
Registration of Companies or LLPs which have one of their objects is
to carry on the profession of Chartered Accountant, Cost Accountant,
Architect, Company Secretary etc. |
44/2011 |
8-7-2011 |
Circular for the Integration of DPIN with the DIN |
17/165/2011-CL-V (PT) |
10-10-2011 |
Registration of Companies or LLPs which have one of their Objectives
to do Business of Architect |
30A/2011 |
26-5-2011 |
Clarification regarding 'Body Corporate' for the purpose of section
226(3)(a) of the Companies Act, 1956. |
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