8/13/2019 Institute of Chartered accounts of India

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With the growth of Indian economy, the role played by its entrepreneurs as well as its technicaland professional manpower has been acknowledged internationally. In this background, a needwas felt for a new corporate form that would provide an alternative to the traditionalpartnership which exposes its partners to unlimited personal liability and a statute basedgovernance structure of limited liability companies.

Limited Liability Partnership [LLP is viewed as an alternative corporate business vehicle that

provides the benefits of the limited liability but allows its members the flexibility of organi!ingtheir internal structure as a partnership based on a mutually arrived agreement. LLP form isexpected to enable entrepreneurs, professionals and enterprises providing services of any kindor engaged in scientific and technical disciplines, to form commercially efficient vehicles suitedto their re"uirements.

With this background, Limited Liability Partnership #ct, $%%& [LLP #ct was enacted on 'anuary

(, $%%).

*ubse"uently, +overnment of India [+I notified various provisions of LLP #ct on -st /arch

$%%). +I has, on #pril , $%%), also notified the Limited Liability Partnership 0ules, $%%) [LLP0ules in respect of registration and operational aspects under the LLP #ct.

Key Definitions

12ody 3orporate1 is defined to mean a company as defined under the 3ompanies #ct,)45 and includes LLP, LLP incorporated outside India, a foreign company but does not

include a corporation sole, a registered co6operative society and any other bodycorporate notified by the 3entral +overnment 7not being a company defined under the3ompanies #ct, )45 or LLP defined under LLP #ct8. [*ection $787d8

12usiness1 includes every trade, profession, service and occupation. [*ection $787e8

19inancial :ear1, in relation to LLP, means the period from st #pril of a year to the -st/arch of the following year. ;owever, in case of LLP incorporated after -%th *eptember,financial year may end on -st /arch of the year next following that year. [*ection $787l8

19oreign Limited Liability Partnership1 means a LLP formed, incorporated or registeredoutside India which establishes a place of business within India. [*ection $787m8

1Limited Liability Partnership1 means a partnership formed and registered under LLP#ct. [*ection $787n8

1Limited liability partnership agreement1 means any written agreement between thepartners of LLP or between the LLP and its partners which determines the mutual rightsand duties of the partners and their rights and duties in relation to that LLP. [*ection$787o8

1Partner1 in relation to LLP means a person who becomes a partner in a LLP inaccordance with the LLP agreement. [*ection $787"8

Nature of LLP

LLP is a wo or more partners are re"uired to form an LLP. #ny individual or a body corporatecan be a partner in a LLP.

In case if individual is a partner, he should not be he notice of cessation may be filed by the outgoing partner if he has reasonablecause to believe that LLP has not file the said notice.

"ontriution y partner [Sections !2 and !!]

# contribution of a partner to the capital of LLP may consist of any of the he obligation of a partner for the contribution shall be as per the LLP agreement.

3reditor, which extends credit or acts in reliance on an obligation described in the LLPagreement, without the notice of any compromise made between the partners, mayenforce the original obligation against such partner.

#udit$financial disclosures [Sections !% and !&]

LLP shall maintain the prescribed books of accounts relating to its affairs on cash oraccrual basis and according to the double entry system of accounting.

>he accounts of every LLP are re"uired to be audited, except in following situationsF

>urnover does not exceed 0s. C%,%%,%%% in any financial year= or

3ontribution does not exceed 0s. $4,%%,%%%

3entral +overnment has powers to exempt certain class of LLP from re"uirement ofcompulsory audit.

LLP are re"uired to file following documents with the 03 he

notification also provides details of modification in the provisions of the 3ompanies#ct relating to winding up for its applicability to winding up of LLP under the LLP#ct. *ubse"uently, on -% /arch $%%, issued Limited Liability Partnership 7Windingup and @issolution8 0ules, $%%.

4iscellaneous pro,isions

>he 3entral government has been empowered to apply any of the provisions of the

3ompanies #ct, )45 to LLPs with suitable changes or modification. [*ection 5( 03 may strike off the name of LLP from the register of LLP if LLP is not carrying on

business or its operation, in accordance with the provisions of LLP #ct in the manner

prescribed. [*ection (4

9ormsBdocuments re"uired to be filed under the LLP shall be filed in electronic formonline on the LLP portal duly authenticated by the partnerBdesignated partner with adigital signature and further attested by the practicing chartered accountantBcompanysecretaryBcost accountant whenever re"uired. [*ection 5&

Presently all the provisions of the LLP #ct, other than those relating to winding6up anddissolution of LLP and appellate provisions to be exercised by A3L> and Aational3ompany Law #ppellate >ribunal [A3L#>, have been brought into force.

>ill the constitution of A3L> and A3L#> under the 3ompanies #ct, )45, the powers of

A3L> and A3L#> will be exercised by the 3ompany Law 2oard or ;igh 3ourt as isspecified in the LLP #ct. [*ection &

Gnless specifically provided, the provisions of the Indian Partnership #ct, )-$ are notapplicable to LLPs. [*ection C

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