llp act act_2008

8/9/2019 LLP Act Act_2008

http://slidepdf.com/reader/full/llp-act-act2008 1/154

1

LIMITED LIABILTY

PARTNERSHIP (LLP)

ANUBHAV BANSAL (C.A.),

SHREYANSH SHAH &

CA PURVI TRIVEDI

IN KIND GUIDANCE OF

C.A. CHANDRAKANT K. THAKKAR SIR

SHAH THAKKAR & CO.,

CHARTERED ACCOUNTANTS

8/9/2019 LLP Act Act_2008


2

WHAT IS LLP ?

Limited Liability partnership is a body corporateLimited Liability partnership is a body corporate

having its identity different from the partners buthaving its identity different from the partners but

the partners have the choice of making anthe partners have the choice of making an

agreement to decide their relationship with eachagreement to decide their relationship with each

other and with the firm. It is a partnership havingother and with the firm. It is a partnership having

benefit of body corporate i.e. having limited liabilitybenefit of body corporate i.e. having limited liability

plus has the flexibility of having partnershipplus has the flexibility of having partnership

agreement to decide the between the partners.agreement to decide the between the partners.

The concept is already working in other countriesThe concept is already working in other countries

though in some of the countries it is allowed for though in some of the countries it is allowed for

professionals only.professionals only.

SHAH THAKKAR & CO.,

CHARTERED ACCOUNTANT

8/9/2019 LLP Act Act_2008


3

HYBRID OF COMPANY AND

PARTNERSHIP FIRM ?

It is a combination of the Company and firmIt is a combination of the Company and firm

because it has separate entity, perpetualbecause it has separate entity, perpetual

succession and further the partners liability issuccession and further the partners liability is

Limited but it has less formalities regardingLimited but it has less formalities regarding

procedures in comparison of Companies. Further procedures in comparison of Companies. Further

the mutual rights, obligation and responsibility of the mutual rights, obligation and responsibility of

partners can be decided by agreement of LLP Sopartners can be decided by agreement of LLP So

you can say it is a hybrid of Company andyou can say it is a hybrid of Company and

traditional Partnership. So it has finer points of bothtraditional Partnership. So it has finer points of both

traditional partnership and company.traditional partnership and company.

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


4

LLP IN INDIA

In India, a concept paper on Limited LiabilityIn India, a concept paper on Limited Liability

Partnership Law was brought out by the Ministry of Partnership Law was brought out by the Ministry of

Company Affairs in 2005. In the year 2006 theCompany Affairs in 2005. In the year 2006 the

Limited Liability Partnership Bill was introduced inLimited Liability Partnership Bill was introduced in

the Parliament and then it was referred to thethe Parliament and then it was referred to the

parliamentary committee for examination andparliamentary committee for examination and

report. After considering the suggestions made byreport. After considering the suggestions made by

the committee a fresh bill in this respect has beenthe committee a fresh bill in this respect has been

moved in the Rajya Sabha on 21moved in the Rajya Sabha on 21--1010--2008 and later 2008 and later

in Lok Sabha and passed in both the Houses of in Lok Sabha and passed in both the Houses of

Parliament . It has got the assent of Hon. PresidentParliament . It has got the assent of Hon. Presidenton 7th Jan 2009 and now it has become Limitedon 7th Jan 2009 and now it has become Limited

Liability Partnership ActLiability Partnership Act-- 2008.2008.

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


5

PROLUSION

³Limited Liability Partnership Act´ came in³Limited Liability Partnership Act´ came in

presence vide Notification No. S.O.891(E) dated 31presence vide Notification No. S.O.891(E) dated 31stst

March, 2009. In all 81 sections have beenMarch, 2009. In all 81 sections have been

incorporated in the act under XIV Chapters,incorporated in the act under XIV Chapters,

followed by IV Schedules.followed by IV Schedules.

Further, in exercise of the powers conferred byFurther, in exercise of the powers conferred by

Sec.79(1) and Sec.79(2) of the LLP Act the CentralSec.79(1) and Sec.79(2) of the LLP Act the Central

Government made ³The Limited LiabilityGovernment made ³The Limited Liability

Partnership Rules, 2009´ vide Notification No. GSRPartnership Rules, 2009´ vide Notification No. GSR

229(E), dated 01.04.2009. The Rules contain XVII229(E), dated 01.04.2009. The Rules contain XVII

chapters, followed by Annexure A to Annexure D.chapters, followed by Annexure A to Annexure D.

In total 31 forms are prescribed for the purposes of In total 31 forms are prescribed for the purposes of

these rulesthese rules

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


6

CHAPTER I : PRELIMINARY

Section 1 : ShortSection 1 : Short title, extent andtitle, extent and

commencement.commencement.

Section 2 : Definitions.Section 2 : Definitions.

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


7

CHAPTER II : NATURE OF LLP

Section 3 : LLP to be body corporate.Section 3 : LLP to be body corporate.

Section 4 : NonSection 4 : Non ± ± applicability of the Indianapplicability of the Indian

Partnership Act, 1932.Partnership Act, 1932.

Section 5 : Partners.Section 5 : Partners.

Section 6 : Minimum number of partners.Section 6 : Minimum number of partners.

Section 7 : Designated Partners.Section 7 : Designated Partners.

Section 8 : Liabilities of Designated Partners.Section 8 : Liabilities of Designated Partners.

Section 9 : Changes in Designated Partners.Section 9 : Changes in Designated Partners.

Section 10 : Punishment for contravention of Section 10 : Punishment for contravention of Sections 7,Sections 7,

8 and 9.8 and 9.

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


8

Section 3 : LLP to be body

corporate.

LLP is a body corporate and separate legal entityLLP is a body corporate and separate legal entity

from its partners.from its partners.

Shall have perpetual succession.Shall have perpetual succession.

Change in partners shall not affect the existence,Change in partners shall not affect the existence,

rights or liabilities of LLP.rights or liabilities of LLP.

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


9

Section 4 : Non ± applicability of

the Indian Partnership Act, 1932.

Provisions of the Indian Partnership Act, 1932 shallProvisions of the Indian Partnership Act, 1932 shall

not apply to a limited liability partnership.not apply to a limited liability partnership.

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


10

Section 5 : Partners

Any individual or body corporate.Any individual or body corporate.

Proviso : Under following conditions individualProviso : Under following conditions individual

shall not be capable of becoming partner, if shall not be capable of becoming partner, if--

± ± found to be of unsound mind by a Court of found to be of unsound mind by a Court of

competent jurisdiction and the finding is incompetent jurisdiction and the finding is inforce;force;

± ± undischarged insolvent; or undischarged insolvent; or

± ± adjudicated as an insolvent and his applicationadjudicated as an insolvent and his application

is pending.is pending.

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


11

Section 6 : Minimum number of

partners.

At least 2 partners.At least 2 partners.

If at any time the minimum number of partnersIf at any time the minimum number of partners

required by the statutes is not met and the singlerequired by the statutes is not met and the single

partner, knowing the fact, continues the businesspartner, knowing the fact, continues the business

then he shall be personally liable for all thethen he shall be personally liable for all theobligations of the LLP incurred after 6 months fromobligations of the LLP incurred after 6 months from

the date of default. For the obligations of the 1the date of default. For the obligations of the 1stst 66

months liability will be limited as per agreement of months liability will be limited as per agreement of

the LLP.the LLP.

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


12

Section 7 : Designated Partners

Designated partners is defined as partnersDesignated partners is defined as partners

designated pursuant to section 7.designated pursuant to section 7.

LLP shall have atleast 2 designated partners whoLLP shall have atleast 2 designated partners who

areare individual individual and atleast 1 should be resident inand atleast 1 should be resident in

India.India. Prior consent in Form 9 to LLP, before becomingPrior consent in Form 9 to LLP, before becoming

designated partner.designated partner.

Every LLP is required to file above consent of eachEvery LLP is required to file above consent of each

individual with the Registrar with in 30 days of hisindividual with the Registrar with in 30 days of his

appointment, in Form 4 along with fees prescribedappointment, in Form 4 along with fees prescribedin Annexure A.in Annexure A.

Every Designated Partner shall obtain DesignatedEvery Designated Partner shall obtain Designated

Partner¶s Identification Number (DPIN) from C.G.Partner¶s Identification Number (DPIN) from C.G.

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


13

Procedure for application and

allotment of DPIN (Rule 10)

Application in Form 7.Application in Form 7.

Provisional DPIN allotted, which has a validity of 60Provisional DPIN allotted, which has a validity of 60

days.days.

Once the provisional DPIN is allotted print out of Once the provisional DPIN is allotted print out of

Form 7 is to be submitted to C.G. along with theForm 7 is to be submitted to C.G. along with thefees and other formalities mentioned in Annexure A.fees and other formalities mentioned in Annexure A.

C.G. on the basis of this application with allot theC.G. on the basis of this application with allot the

DPIN which shall be unique and for lifetime.DPIN which shall be unique and for lifetime.

Every Designated Partner shall intimate the C.G.Every Designated Partner shall intimate the C.G.

through Form 10 in event of any change inthrough Form 10 in event of any change inparticulars of Form 7.particulars of Form 7.

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


14

Section 8 : Liabilities of

designated partners.

Responsible for completing various requirementsResponsible for completing various requirements

under this act and others mentioned in LLPunder this act and others mentioned in LLP

agreement, if any.agreement, if any.

Liable for all penalties imposed on the LLP for anyLiable for all penalties imposed on the LLP for any

contravention of the provisions mentioned above.contravention of the provisions mentioned above.

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


15

Section 9 : Changes in designated

partners

LLP may appoint a designated partner within 30LLP may appoint a designated partner within 30

days of vacancy arising for any reasons anddays of vacancy arising for any reasons and

provisions of Section 7 shall apply.provisions of Section 7 shall apply.

If no designated partner is appointed, or at any timeIf no designated partner is appointed, or at any time

there is one designated partner, then each partner there is one designated partner, then each partner shall be deemed to be a designated partner.shall be deemed to be a designated partner.

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


16

Section 10 : Punishment for

contravention of sections 7, 8 and

9. On non appointment of any designated partner On non appointment of any designated partner--

± ± The LLP and its every partner shall beThe LLP and its every partner shall be

punishable with a fine which shall be not lesspunishable with a fine which shall be not less

than Rs.10,000, but may extend uptothan Rs.10,000, but may extend upto

Rs.5,00,000.Rs.5,00,000. On non filing of consent of every partner to act asOn non filing of consent of every partner to act as

designated partner by LLP to Registrar, Failure of designated partner by LLP to Registrar, Failure of

Designated Partner to satisfy the conditions &Designated Partner to satisfy the conditions &

requirements and contravention of provisions of requirements and contravention of provisions of

Section 8 and 9 will lead toSection 8 and 9 will lead to--

± ± The LLP and its every partner shall beThe LLP and its every partner shall be

punishable with a fine which shall be not lesspunishable with a fine which shall be not less

than Rs.10,000, but may extend uptothan Rs.10,000, but may extend upto

Rs.1,00,000.Rs.1,00,000.

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


8/9/2019 LLP Act Act_2008


18

CHAPTER III : INCORPORATION

OF LLP AND MATTERS

INCIDENTAL THERETO Section 20 : Penalty for improper use of wordsSection 20 : Penalty for improper use of words

³Limited³Limited

Liability Partnership´ or ³LLP´Liability Partnership´ or ³LLP´

Section 21 : Publication of name and limitedSection 21 : Publication of name and limited

liability.liability.

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


19

Section 11 : Incorporation

document.

Two or more persons associated for carrying on aTwo or more persons associated for carrying on a

lawful business shall subscribe their name to anlawful business shall subscribe their name to an

incorporation document, which is to be filled withincorporation document, which is to be filled with

Registrar having jurisdiction over the state inRegistrar having jurisdiction over the state in FormForm

22 along with fees as per Annexure A.along with fees as per Annexure A.

Statement inStatement in Part B of Form 2Part B of Form 2 is to be filed alongis to be filed along

with incorporation document, signed bywith incorporation document, signed by

CA/CS/ICWA/Lawyer engaged in formation of LLPCA/CS/ICWA/Lawyer engaged in formation of LLP

and by any one who subscribed his name to theand by any one who subscribed his name to the

incorporation document, stating compliance of allincorporation document, stating compliance of all

the statutory requirements in respect of the statutory requirements in respect of incorporation and matters precedent and incidentalincorporation and matters precedent and incidental

thereto.thereto.

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


20


document.

Incorporation document shallIncorporation document shall--

± ± be in form 2be in form 2

± ± state the name of LLP.state the name of LLP.

± ± state the proposed business.state the proposed business.

± ± state the address of the registered office.state the address of the registered office.

± ± state the name and address of each personsstate the name and address of each persons

who are to be partners and designated partnerswho are to be partners and designated partners

of the LLP on incorporation.of the LLP on incorporation.

± ± contain such other information concerning thecontain such other information concerning the

proposed LLP as may be prescribed.proposed LLP as may be prescribed.

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


21


document.

If the person making statement in Part B of Form 2,If the person making statement in Part B of Form 2,

makes the statement which hemakes the statement which he--

± ± knows to be false; or knows to be false; or

± ± does not believe to be truedoes not believe to be true

shall be punishable with:shall be punishable with:--

± ± imprisonment for a term which may extend toimprisonment for a term which may extend to

two years; andtwo years; and

± ± fine which shall be not less than Rs.10,000 butfine which shall be not less than Rs.10,000 but

which may extend to Rs.5,00,000.which may extend to Rs.5,00,000.

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


22

Section 12 : Incorporation by

registration.

Registrar shall, on compliance of Section 11, withinRegistrar shall, on compliance of Section 11, within

a period of 14 daysa period of 14 days--

± ± register the incorporation document; andregister the incorporation document; and

± ± give a certificate that the LLP is incorporated bygive a certificate that the LLP is incorporated by

the name specified therein.the name specified therein. Certificate of incorporation is to be signed byCertificate of incorporation is to be signed by

Registrar and it is to be authenticated by his officialRegistrar and it is to be authenticated by his official

seal;seal;

Certificate shall be conclusive evidence that theCertificate shall be conclusive evidence that the

LLP is incorporated by the name specified therein.LLP is incorporated by the name specified therein.

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


23

Section 13 : Registered office of

LLP and change

therein. Every LLP shall have a registered office to which allEvery LLP shall have a registered office to which allcommunication and notices may be addressed andcommunication and notices may be addressed andwhere they shall be received.where they shall be received.

A document may be served on LLP or a partner or A document may be served on LLP or a partner or designated partner thereof by sending it by postdesignated partner thereof by sending it by post

under a certificate of posting or by registered postunder a certificate of posting or by registered postor by any other manner (email, fax, courier etc.)or by any other manner (email, fax, courier etc.)either at registered office or any other addresseither at registered office or any other addressspecifically declared by the LLP.specifically declared by the LLP.

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


24


LLP and change

therein. LLP may declare in addition to the registeredLLP may declare in addition to the registered

address, any other address for service of address, any other address for service of

documents, in the manner laid down in the LLPdocuments, in the manner laid down in the LLP

agreement and if nothing is mentioned inagreement and if nothing is mentioned in

agreement then with consent of all the partners for agreement then with consent of all the partners for

declaring any other address as the address for declaring any other address as the address for

service of documents.service of documents.

The above intimation is required to be given inThe above intimation is required to be given in

Form 12 within 30 days of complying with theForm 12 within 30 days of complying with the

aforesaid requirements along with the feesaforesaid requirements along with the fees

prescribed in the Annexure A.prescribed in the Annexure A.

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


25


LLP and change

therein. In the similar manner discussed above LLP canIn the similar manner discussed above LLP canchange it registered office by filing Form 15 with thechange it registered office by filing Form 15 with theregistrar and complying with other formalities.registrar and complying with other formalities.

On contravention of this section LLP and its everyOn contravention of this section LLP and its everypartner shall be punishable with fine which shall bepartner shall be punishable with fine which shall be

not less than Rs.2,000 but which may extend uptonot less than Rs.2,000 but which may extend uptoRs.25,000.Rs.25,000.

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


26

Section 14 : Effect of registration.

On registration, LLP, by its name, be capable of On registration, LLP, by its name, be capable of ± ±

± ± suing and being sued ;suing and being sued ;

± ± acquiring, owning, holding and developing or acquiring, owning, holding and developing or disposing of property, whether movable or disposing of property, whether movable or immovable, tangible or intangible;immovable, tangible or intangible;

± ± having a common seal, if it decides one; andhaving a common seal, if it decides one; and ± ± doing and suffering such other acts and things asdoing and suffering such other acts and things as

bodies corporate may lawfully do and suffer.bodies corporate may lawfully do and suffer.

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


27

Section 15 : Name.

Every LLP shall have either the words ³LimitedEvery LLP shall have either the words ³LimitedLiability Partnership´ or the acronym ³LLP´ as theLiability Partnership´ or the acronym ³LLP´ as thelast words of its name.last words of its name.

No LLP shall be registered by a name which, in theNo LLP shall be registered by a name which, in theopinion of the C.G. isopinion of the C.G. is--

± ± undesirable; or undesirable; or ± ± identical or too merely resembles to that of anyidentical or too merely resembles to that of any

other partnership firm or LLP or body corporateother partnership firm or LLP or body corporateor a registered trade mark.or a registered trade mark.

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


28

Section 16 : Reservation of name.

A person may apply to the Registrar havingA person may apply to the Registrar having jurisdiction where the registered office of the LLP is jurisdiction where the registered office of the LLP isto be situated in Form 1 along with the feesto be situated in Form 1 along with the feesprescribed in Annexure A for reservation of nameprescribed in Annexure A for reservation of nameset out in application asset out in application as--

± ± the name of a proposed LLP; or the name of a proposed LLP; or ± ± the name to which a LLP proposes to change itsthe name to which a LLP proposes to change its

name.name.

Registrar on receipt of application and subject toRegistrar on receipt of application and subject tothe provisions of section 15 and rule 18, shallthe provisions of section 15 and rule 18, shallreserve the name for a period of three months fromreserve the name for a period of three months fromthe date of intimation by the Registrar.the date of intimation by the Registrar.

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


29

Section 16 : Reservation of name.

If name is not reserved by the registrar then suchIf name is not reserved by the registrar then suchname has a validity of 7 days only from the date of name has a validity of 7 days only from the date of receipt of application.receipt of application.

In case of a foreign LLP or a foreign companyIn case of a foreign LLP or a foreign companyapplication is to be in Form 25 along with the feesapplication is to be in Form 25 along with the fees

mentioned in Annexure A for reserving its existingmentioned in Annexure A for reserving its existingname by which it is registered in the country of itsname by which it is registered in the country of itsregulation or incorporation:regulation or incorporation:

Provided that such reservation shall be valid for Provided that such reservation shall be valid for three years but may be renewed on a freshthree years but may be renewed on a freshapplication.application.

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


30

Section 17 : Change of name of

LLP.

Notwithstanding anything stated in sections 15 andNotwithstanding anything stated in sections 15 and16, Central Government may direct any LLP (whose16, Central Government may direct any LLP (whosename resembles to other LLP or body corporate or name resembles to other LLP or body corporate or other name as to be likely to be mistaken for it) toother name as to be likely to be mistaken for it) tochange its name, and the LLP shall comply with thechange its name, and the LLP shall comply with the

said direction within 3 months after the date of thesaid direction within 3 months after the date of thedirection or such longer period as the Centraldirection or such longer period as the CentralGovernment may allow.Government may allow.

On contravention of above provision LLP shall beOn contravention of above provision LLP shall bepunished with a fine not less than Rs.10,000 butpunished with a fine not less than Rs.10,000 butwhich may extend to Rs.5,00,000 AND thewhich may extend to Rs.5,00,000 AND the

designated partners shall be fined for atleastdesignated partners shall be fined for atleastRs.10,000 but maximum to Rs.1,00,000.Rs.10,000 but maximum to Rs.1,00,000.

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


31

Section 18 : Application for direction

to change name in certain

circumstances. Any entity which already has a name similar to aAny entity which already has a name similar to aname of a LLP which has been incorporatedname of a LLP which has been incorporatedsubsequently, may apply, in Form 23 to thesubsequently, may apply, in Form 23 to theRegistrar to give a direction to any LLP, on aRegistrar to give a direction to any LLP, on aground referred to in section 17 to change its name.ground referred to in section 17 to change its name.

Above application is to be made with in 24 monthsAbove application is to be made with in 24 monthsfrom the date of registration of the LLP under thatfrom the date of registration of the LLP under thatname.name.

The application shall stateThe application shall state--

± ± the LLPIN of LLP, or the CIN of the company or the LLPIN of LLP, or the CIN of the company or the registration no. of the other entity as thethe registration no. of the other entity as the

case may be;case may be;

± ± the name with which the LLP or the Co. or anythe name with which the LLP or the Co. or anyother entity was incorporated;other entity was incorporated;

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


32

Section 18 : Application for direction

to change name in certain

circumstances. ± ± grounds of objection to the name of the LLPgrounds of objection to the name of the LLPincorporated subsequently.incorporated subsequently.

The person making the application shall attachThe person making the application shall attach--

± ± the authority under which he is making such anthe authority under which he is making such anapplication;application;

± ± a copy of the incorporation certificate of the LLP or a copy of the incorporation certificate of the LLP or the Co. or the registration certificate of the entity, asthe Co. or the registration certificate of the entity, asthe case may be.the case may be.

The above application shall be accompanied by aThe above application shall be accompanied by afee as mentioned in Annexure A.fee as mentioned in Annexure A.

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


33

Section 19 : Change of registered

name.

LLP may as per the provisions of the LLPLLP may as per the provisions of the LLPagreement and if nothing mentioned in LLPagreement and if nothing mentioned in LLPagreement then with the consent of all the partnersagreement then with the consent of all the partnersof the LLP change the name of the LLP.of the LLP change the name of the LLP.

Notice of change in name shall be given to theNotice of change in name shall be given to the

Registrar in Form 5, within 30 days withRegistrar in Form 5, within 30 days withrequirement above along with a fee as mentioned inrequirement above along with a fee as mentioned inAnnexure A.Annexure A.

Registrar on satisfaction must issue a freshRegistrar on satisfaction must issue a freshcertificate of incorporation in new name and thecertificate of incorporation in new name and thechanged name shall be effective from the date of changed name shall be effective from the date of

such certificate.such certificate.

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


34

Section 20 : Penalty for improper use

of words ³Limited Liability

Partnership´ or ³LLP´. If any person uses the words ³Limited LiabilityIf any person uses the words ³Limited LiabilityPartnership´ or ³LLP´ unless duly incorporated asPartnership´ or ³LLP´ unless duly incorporated asLLP, be punishable with fine which shall not be lessLLP, be punishable with fine which shall not be lessthan Rs.50,000 but which may extend tothan Rs.50,000 but which may extend toRs.5,00,000.Rs.5,00,000.

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


35

Section 21 : Publication of name

and

limited liability. Every LLP shall ensure that its invoices, officialEvery LLP shall ensure that its invoices, officialcorrespondence and publications bear thecorrespondence and publications bear thefollowing, namelyfollowing, namely--

± ± the name, address of its registered office andthe name, address of its registered office andregistration number of the LLP; andregistration number of the LLP; and

± ± a statement that it is registered with limiteda statement that it is registered with limitedliability.liability.

On contravention of above provision LLP shall beOn contravention of above provision LLP shall bepunishable with fine which shall not be less thanpunishable with fine which shall not be less thanRs.2,000 but which may extend to Rs.25,000.Rs.2,000 but which may extend to Rs.25,000.

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


8/9/2019 LLP Act Act_2008


37

Section23:Relationship of

partners.

Sub sectionSub section (1),(1), Save as otherwise providedSave as otherwise provided

by this Actby this Act,,

-the mutual rights and duties of the

partners of LLP, and partnership and itspartners shall be governed by the LLPagreement between the partners, or between the limited liability partnership and its partners

Sub section(2), agreement and any changes

filed with the Registr ar

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


8/9/2019 LLP Act Act_2008


39

Section24:Cessation of

partnership interest.

(1) A person may cease to be a partner in(1) A person may cease to be a partner inaccordance with an agreementaccordance with an agreement or, in theabsence of agreement, by giving a notice in

writing of not less than thirty days

(2)A person shall cease to be a partner

-on his death or dissolution LLP.

- if he is declared to be of unsound mind by a competent court.

-if he has applied to be adjudged as an insolvent or declared as an insolvent.

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


40

Section24:Cessation of

partnership interest

(3),person ceased to be a partner,(3),person ceased to be a partner, is to beregarded as still being a partner unless²

-the person has noticed that the former partner

has ceased to be a partner OR-notice that the ceased partner has been

delivered to the Registr ar .

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


41

section 24(4)&(5)

The cessation of a partner The cessation of a partner does not by itself dischar ge the partner from any obligation toLLP or to the other partners or to any other person which he incurred while being a

partner . unless otherwise provided in the limited liability

partnership agreement cease partner or a person entitled to his share in consequence of the death or insolvency of the former partner,

shall be entitled to receive from the limitedliability partnership²

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


42

Section24(5)&(6)

-- an amount equal to the capital contributionan amount equal to the capital contributionof cease partner

- his right to share in the accumulated profits

after the deduction of accumulated losses

determined as at the date the former partner ceased to be a partner .

(6)above person shall not have any right tointerfere in the management of the LLP

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


43

Section25:Registration of changes in

partners.

(1),(1), Every partner shall inform the LLP of Every partner shall inform the LLP of any change in his name or address within aany change in his name or address within aperiod of fifteen days of such change.period of fifteen days of such change.

(2), A LLP shall file notice with registra(2), A LLP shall file notice with registra

within 30 days fromwithin 30 days from ±-where a person becomes or ceases to be a

partner

-where there is any change in the name or

address of a partner

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


44

section25(3)

A notice filed with the Registrar under subA notice filed with the Registrar under sub--sectionsection(2)(2)²²

-shall be in such form and accompanied by such fees asmay be prescribed

-shall be in such form and accompanied by such fees as

may be prescribed and authenticated in a manner asmay be prescribed; and

-if it relates to an incoming partner, shall contain a

statement consents to becoming a partner, signed by him and authenticated in the manner as may be

prescribed.

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


45

Section25(4)&(5)

If If contr avenes the provisions of sub-section (2), the LLP and ever y designated partner of the LLP shall bepunishable with fine not be less than

two thousand rupees but which may extend to twenty-five thousand rupees.

(5) If any partner contr avenes theprovisions of sub-section (1),shall bepunishable with fine not be less than

two thousand rupees but which may extend to twenty-five thousand rupees.

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


46

Section25(6)

Any person who ceases to be a partner Any person who ceases to be a partner

may himself file with the Registrar themay himself file with the Registrar the

notice referred to in subnotice referred to in sub--section (3) if hesection (3) if he

has reasonable cause to believe that thehas reasonable cause to believe that the

LLP may not file the notice with theLLP may not file the notice with theRegistrar and in case of any such noticeRegistrar and in case of any such notice

filed by a partner, the Registrar shall obtainfiled by a partner, the Registrar shall obtain

a confirmation to this effect from the LLPa confirmation to this effect from the LLP

unless the LLP has also filed such notice :unless the LLP has also filed such notice :

ProvidedProvided that where no confirmation is given by thethat where no confirmation is given by the

LLP within fifteen days, the Registrar shall register LLP within fifteen days, the Registrar shall register

the notice.the notice.

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


47

CHAPTER V:EXTENT AND LIMITATION OF

LIABILITY OF LIMITED LIABILITY PARTNERSHIP AND

PARTNERS

Section 26: Partner as agent.

Ever y partner, for the purpose of thebusiness of the LLP, the agent of the LLP, butnot of other partners.

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


48

Section27:Extent of liability of

LLP. (1) A LLP is not bound by anything done by(1) A LLP is not bound by anything done by

a partner in dealing with a person if a partner in dealing with a person if

-- the partner in fact has no authority to actthe partner in fact has no authority to actfor for LLP

-the person knows that he has no authority or does not know or believe him to be a partner of the LLP

(2) The LLP is liable if a partner, is liable toany person as a result of a wrongful act or

omission on his part in the course of thebusiness of the LLP or with its authority.

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


49

secton27(3)&(4)

(3), An obligation of the LLP whether (3), An obligation of the LLP whether arising in contract or otherwise, shall bearising in contract or otherwise, shall besolely the obligation of the LLP.solely the obligation of the LLP.

(4) The liabilities(4) The liabilities shall be met out of the

property

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


50

Section28:Extent of liability of

partner.

(1) A partner is not personally liable, directly or indirectly for an obligation referred to in sub-section (3) of section 27 solely by reason of being a partner

(2) The provisions of sub-section (3) of section 27 and sub-section (1) of this section shall notaffect the personal liability of a partner for hisown wrongful act or omission, but a partner shall not be personally liable for the wrongful

act or omission of any other partner

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


51

section29:Holding out.

(1) Any person, who by words spoken or written or by conduct, represents himself, or knowingly permitshimself to be represented to be a partner, is liable toany person who has on the f aith of any suchrepresentation given credit to the LLP, whether theperson representing himself or represented to be a

partner does or does not know that the representation has reached the person so giving credit :

Provided that where any credit is received as a result of such representation, without prejudice to the liability of the person so representing himself or represented to bea partner, be liable to the extent of credit received by it

or any financial benefit derived thereon.

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


8/9/2019 LLP Act Act_2008


53

Section30(1):Unlimited liability in

case of fraud

If LLP or its partner actIf LLP or its partner act with intent to defr aud creditorsor any other person, or for any fr audulent purpose, shallbe un-limited for all or any of the debts or other liabilitiesof LLP

Provided that in case any such act the LLP is liable to thesame extent as the partner unless it is established by the LLP that such act was without the knowledge or theauthority of the LLP.

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


54

section30(2)

(2) Where any business is carried on with suchintent or for such purpose as mentioned in sub-section (1), ever y person who wasknowingly a party to the carr ying on of the

business shall be punishable withimprisonment for a term which may extend totwo years and with fine which shall not be lessthan fifty thousand rupees but which may extend to five lakh rupees.

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


55

section30(3)

(3) Where a LLP or any partner or designated partner or employee has conducted the aff airs of the LLP in a fr audulent manner, then without prejudice to any criminal proceedings which may arise under any law for the time being in force, the LLP and any such partner or

designated partner or employee shall be liable to pay compensation to any person who has suffered any lossor damage by reason of such conduct :

Provided LLP shall not liable for act of such personProvided LLP shall not liable for act of such personif they actedif they acted fr audulently without knowledge of the

LLP.

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


56

section31:Whistle blowing.

(1) The Court or Tribunal may reduce or waive any penalty if it is satisfied that, or

--theythey provided useful information during investigation

--any information given by any partner or employee(whether or not during investigation) leads to LLP or any

partner or employee of such LLP being convicted under this Act or any other Act

(2) No partner or employee of any LLP may bedischar ged, demoted, suspended, threatened, har assedor in any other manner discriminated against the termsand conditions of his LLP or employment merely

because of his providing information or causing information to be provided pursuant to sub-section (1).

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


57

Section32:Section32:Form of contribution.

(1) A contribution of a partner may consist of tangible,movable or immovable or intangible property or other benefit to the LLP, including money, promissor y notes,other agreements to contribute cash or property, and

contr acts for services performed or to be performed.

(2) The monetar y value of contribution of each partner shall be accounted for and disclosed in the accounts in the manner as may be prescribed.

SHAH THAKKAR & CO.,


CHAPTER VI:CONTRIBUTIONS

8/9/2019 LLP Act Act_2008


58

Section33:Obligation to

contribute.

(1) The obligation of a partner to contribute(1) The obligation of a partner to contributemoney or other property or other benefit or money or other property or other benefit or to perform services for LLPto perform services for LLP shall be as per agreement.

(2) A creditor of LLP, which extends credit or otherwise acts in reliance on an obligation described in that agreement, any compromise

between partners, in agreement may enforcethe original obligation against such partner.

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


59

CHAPTER VII:FINANCIAL

DISCLOSURES

Section34:Maintenance of books of Section34:Maintenance of books of account, other records and audit for LLP,account, other records and audit for LLP,etc.etc.

--(1)shall maintain such books of account(1)shall maintain such books of account

as may be prescribe for the each year onas may be prescribe for the each year oncash or accrual basis and according tocash or accrual basis and according todouble entry system at registered officedouble entry system at registered officefor such period as may be prescribe.for such period as may be prescribe.

--(2) shall prepare a statement of Account(2) shall prepare a statement of Account

and Solvency for the said financial year and Solvency for the said financial year within a period of six months from the end of each financial year, in such form as may beprescribed and shall be signed by the

designated partners SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


60

Section34(3)&(4)

(3) such form as prescribe in sub section(2)(3) such form as prescribe in sub section(2)shall be filed with registrar every year inshall be filed with registrar every year insuch form and manner and accompaniedsuch form and manner and accompanied

by such fees as may be prescribed.by such fees as may be prescribed.

(4) The accounts(4) The accounts shall be audited in accordance with such rules as may beprescribed

PROVIDED that the Centr al Gover nment may give exemption , by notification in the Official

Gazette

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


61

Section34(5)

If any LLP fails to comply with thisIf any LLP fails to comply with thisprovision of this section shall beprovision of this section shall bepunishable with fine which may be betweenpunishable with fine which may be between25,000 to 5,00,000 and25,000 to 5,00,000 and

every designated partner every designated partner shall bepunishable with fine which may be betweenmay be between10,000 to 1,00,00010,000 to 1,00,000

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


62

section35:Annual return.

(1)annual return duly authenticated with the(1)annual return duly authenticated with theRegistrar within sixty days of closure of itsRegistrar within sixty days of closure of itsfinancial year in such form and manner andfinancial year in such form and manner andaccompanied by such fee as may beaccompanied by such fee as may beprescribed.prescribed.

(2)If any LLP fails to comply with this(2)If any LLP fails to comply with thisprovision of this section shall beprovision of this section shall bepunishable with fine which may be betweenpunishable with fine which may be between25,000 to 5,00,00025,000 to 5,00,000

(3) every designated partner every designated partner shall bepunishable with fine which may be betweenmay be between10,000 to 1,00,00010,000 to 1,00,000

SHAH THAKKAR & CO.,


section36 Inspection of

8/9/2019 LLP Act Act_2008


63

section36:Inspection of

documents kept by Registrar.

Documents filed by LLP with registrar Documents filed by LLP with registrar shallbe available for inspection by any person, on payment of such fee as prescribe in ³Annexure- A´

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


64

Section37:Penalty for false

statement.

If any document required to filed; is filed which isIf any document required to filed; is filed which isknowing to beknowing to be

-- false or omit in material particular false or omit in material particular

he shall, save otherwise expressly provided in thishe shall, save otherwise expressly provided in thisact, be punishable withact, be punishable with

-- imprisonment for up to 2 years ANDimprisonment for up to 2 years AND-- fine between 1,00,000 to 5,00,000fine between 1,00,000 to 5,00,000

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


65

Section38:Power of Registrar to

obtain information.

(1), registrar may may require any person(1), registrar may may require any personto answer any question or make any declar ation or supply any details or particularsin writing within reasonable time

(2), if such person not provide information within time or if registr ar not satisfied withinformation, he can issue summons to appear before him or any public officer

(3)if any person, without lawful reason f ails to

comply with summons, shall be punishablewith fine between 2,000 to 25,000

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


66

Section39: compounding of

offence

The central government may compounding anyThe central government may compounding anyoffence punishable with fine only,offence punishable with fine only,

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


67

section40:Destruction of old

records Registrar may destroy any document filed or Registrar may destroy any document filed or

registered with physically or electronic form withregistered with physically or electronic form withhim may destroy accordance with as prescribe inhim may destroy accordance with as prescribe inrulesrules

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


68

Chapter VIII: Assignment and

Transfer of Partnership Rights

Section 42 : Partner¶s Transferable InterestSection 42 : Partner¶s Transferable Interest

Rights of a partner to a share of the profits andRights of a partner to a share of the profits andlosses of LLP and to receive distributions inlosses of LLP and to receive distributions inaccordance with the LLP agreement areaccordance with the LLP agreement aretransferable either wholly or partlytransferable either wholly or partly

Such transfer of any right by any partner Such transfer of any right by any partner neither by itself causes the disassociation of neither by itself causes the disassociation of the partner or dissolution of LLP nor does itthe partner or dissolution of LLP nor does itentitle the transferee to participate in theentitle the transferee to participate in themanagement of LLP or conduct the activities of management of LLP or conduct the activities of

LLP or access information concerning theLLP or access information concerning thetransactions of LLPtransactions of LLP

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


69

Chapter IX: Investigation

Section 43: Investigation of the affairs of LLPSection 43: Investigation of the affairs of LLP

Section 44: Application by partners for Section 44: Application by partners for investigationinvestigation

Section 45: Firm, body corporate or associationSection 45: Firm, body corporate or associationnot to be appointed as inspector not to be appointed as inspector

The CG shall appoint one or more competentThe CG shall appoint one or more competentpersons (not being a firm, body corporate or persons (not being a firm, body corporate or other association) as Inspectors to investigateother association) as Inspectors to investigatethe affairs of LLP and to report thereon in suchthe affairs of LLP and to report thereon in suchmanner as it may direct, if it is of the opinionmanner as it may direct, if it is of the opinion

that there are any circumstances suggestingthat there are any circumstances suggestingthat:that:

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


70

the business of LLP is being/has been conducted:the business of LLP is being/has been conducted:

íí with an intent to defraud its creditors, partners, anywith an intent to defraud its creditors, partners, anyother person, or other person, or

íí with an unlawful/fraudulent purpose, or with an unlawful/fraudulent purpose, or

íí in a manner oppressive or unfairly prejudicial toin a manner oppressive or unfairly prejudicial to

some or any of its partners, or some or any of its partners, or the affairs of LLP are not being conducted inthe affairs of LLP are not being conducted in

accordance with the provisions of this Act, or accordance with the provisions of this Act, or

on receipt of a report of the Registrar or any other on receipt of a report of the Registrar or any other investigating/regulatory agency, there are sufficientinvestigating/regulatory agency, there are sufficientreasons that the affairs of LLP ought to bereasons that the affairs of LLP ought to beinvestigatedinvestigated

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


71

The CG shall appoint Inspectors if:The CG shall appoint Inspectors if:

íí the Tribunal, either the Tribunal, either suo motosuo moto, or on an application, or on an applicationreceived from not less than 1/5received from not less than 1/5thth of the total no. of of the total no. of partners of LLP, by order declares that the affairs of partners of LLP, by order declares that the affairs of LLP ought to be investigated, or LLP ought to be investigated, or

íí any Court, by order, declares that the affairs of LLPany Court, by order, declares that the affairs of LLPought to be investigatedought to be investigated

Such investigation can also be made if the LLP as aSuch investigation can also be made if the LLP as awhole makes such an applicationwhole makes such an application

Such application shall be supported by suchSuch application shall be supported by suchevidence as the Tribunal may require, stating thatevidence as the Tribunal may require, stating that

the applicants have good reason for requiring thethe applicants have good reason for requiring theinvestigation and security for the payment of costsinvestigation and security for the payment of costsof the investigationof the investigation

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


72

Rule 28 prescribes the following scale for theRule 28 prescribes the following scale for thepayment of costs of investigation:payment of costs of investigation:

SHAH THAKKAR & CO.,


Turnover (Rs.)Turnover (Rs.) Amount of Amount of

Security (Rs.)Security (Rs.)

Upto 1 CroreUpto 1 Crore 2 Lakh2 Lakh

1 Crore1 Crore ± ± 5 Crore5 Crore 5 Lakh5 Lakh

5 Crore5 Crore ± ± 10 Crore10 Crore 10 Lakh10 Lakh

10 Crore or more10 Crore or more 25 Lakh25 Lakh

8/9/2019 LLP Act Act_2008


73

Turnover for the above purpose would be as statedTurnover for the above purpose would be as statedin the Statement of Account of Solvency for thein the Statement of Account of Solvency for theimmediately preceding financial year immediately preceding financial year

In the absence of Statement of Account andIn the absence of Statement of Account and

Solvency such amount of security as may be fixedSolvency such amount of security as may be fixedby the CG shall be paidby the CG shall be paid

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


74

Section 46: Power of inspectors to carry outSection 46: Power of inspectors to carry out

investigation into affairs of related entities, etc.investigation into affairs of related entities, etc.

The inspector shall have the power to investigateThe inspector shall have the power to investigatealso the affairs of an entity which has beenalso the affairs of an entity which has beenassociated in the past or is presently associated or associated in the past or is presently associated or any present or former partner/designated partner of any present or former partner/designated partner of

LLP, and shall report on its affairs which areLLP, and shall report on its affairs which arerelevant to the investigation of the affairs of LLPrelevant to the investigation of the affairs of LLP

Such an investigation shall be made only after Such an investigation shall be made only after obtaining the prior approval of the CGobtaining the prior approval of the CG

Proviso:Proviso: Before granting such approval, the CGBefore granting such approval, the CGshall give the entity or partner/designated partner ashall give the entity or partner/designated partner a

reasonable opportunity to show cause why suchreasonable opportunity to show cause why suchapproval should not be accordedapproval should not be accorded

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


75

Section 47: Production of documents and evidenceSection 47: Production of documents and evidence

It shall be the duty of partner/designated partners of It shall be the duty of partner/designated partners of LLP and any other entity which the inspector mayLLP and any other entity which the inspector mayrequire with the prior approval of CG to preserverequire with the prior approval of CG to preserveand produce all books and papers of or relating toand produce all books and papers of or relating toLLP or any other entity which are in their LLP or any other entity which are in their custody/power, before an inspector or any personcustody/power, before an inspector or any personauthorized by him in this behalf with the previousauthorized by him in this behalf with the previousapproval of CGapproval of CG

The inspector may keep in his custody any booksThe inspector may keep in his custody any booksand papers in his custody for not more than 30and papers in his custody for not more than 30

days. However, he may call for them again if days. However, he may call for them again if needed. Besides, if certified copies of books andneeded. Besides, if certified copies of books andpapers are produced, he shall return all books andpapers are produced, he shall return all books andpaperspapers

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


76

An inspector may examine on oath (and administer An inspector may examine on oath (and administer

the same) any partners/designated partners of LLPthe same) any partners/designated partners of LLPor any other entity (with prior approval of CG) andor any other entity (with prior approval of CG) andmay require them to appear before him personallymay require them to appear before him personally

The notes of such examination shall be taken downThe notes of such examination shall be taken downin writing and signed by the person examined onin writing and signed by the person examined onoath, a copy of which shall be furnished to him andoath, a copy of which shall be furnished to him and

used as evidence by the inspector used as evidence by the inspector If any person fails without reasonable cause or If any person fails without reasonable cause or

refuses to either produce any books or papers, or torefuses to either produce any books or papers, or tofurnish any information, appear personally beforefurnish any information, appear personally beforethe inspector or to sign notes of examination, hethe inspector or to sign notes of examination, heshall be punishable with fine of not less thanshall be punishable with fine of not less than

Rs.2000 and upto Rs.25000 and a further fine of Rs.2000 and upto Rs.25000 and a further fine of Rs.50 to 500/day after the 1Rs.50 to 500/day after the 1stst day after which theday after which thedefault continuesdefault continues

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


77

Section 48: Seizure of documents by inspector Section 48: Seizure of documents by inspector

Every search or seizure made under this sectionEvery search or seizure made under this sectionshall be carried out in accordance with theshall be carried out in accordance with theprovisions of Code of Criminal Procedure,1973(2 of provisions of Code of Criminal Procedure,1973(2 of 1974)1974)

If during the course of investigation, the inspector If during the course of investigation, the inspector has reasonable ground to believe that books or has reasonable ground to believe that books or papers relating to LLP/partner or designated partner papers relating to LLP/partner or designated partner thereof/any other entity, may be destroyed,thereof/any other entity, may be destroyed,mutilated, altered, falsified or secreted, themutilated, altered, falsified or secreted, theinspector may make an application to the Judicialinspector may make an application to the Judicial

Magistrate of the 1Magistrate of the 1stst class, or the Metropolitanclass, or the MetropolitanMagistrate having jurisdiction, for an order for Magistrate having jurisdiction, for an order for seizure of such books and papersseizure of such books and papers

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


78

The Magistrate may by order (after considering theThe Magistrate may by order (after considering theapplication and hearing the inspector) authorizeapplication and hearing the inspector) authorizehim to enter, with assistance, the places wherehim to enter, with assistance, the places wheresuch books and papers are kept, to search thosesuch books and papers are kept, to search thoseplaces in the manner stated in the order and toplaces in the manner stated in the order and toseize books and papers which the inspector seize books and papers which the inspector considers necessary for the purposes of hisconsiders necessary for the purposes of hisinvestigationinvestigation

The inspector shall return such seized books andThe inspector shall return such seized books andpapers to the concerned entity after placingpapers to the concerned entity after placingidentification marks on the same and inform theidentification marks on the same and inform theMagistrate of such returnMagistrate of such return

Proviso:Proviso: The inspector shall not keep such seizedThe inspector shall not keep such seizedmaterial for a continuous period of 6 months andmaterial for a continuous period of 6 months andalso not later than the conclusion of investigationalso not later than the conclusion of investigation

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


79

Section 49: Inspector¶s reportSection 49: Inspector¶s report

On conclusion of the investigation, the inspectorsOn conclusion of the investigation, the inspectorsshall make a final report to the CG, which shall beshall make a final report to the CG, which shall beeither written or printed, and the CG shall forward aeither written or printed, and the CG shall forward a

copy of the same to the LLP at its registered officecopy of the same to the LLP at its registered officeand to any other related entityand to any other related entity

The CG may also direct the inspectors to makeThe CG may also direct the inspectors to makeinterim reports, which are not required to beinterim reports, which are not required to beforwardedforwarded

Rule 30 prescribes that the CG may also furnish aRule 30 prescribes that the CG may also furnish a

copy of the final report to any other person affectedcopy of the final report to any other person affectedby the report on payment of fees which shall beby the report on payment of fees which shall beRs.5 per page or any part thereof Rs.5 per page or any part thereof

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


80

Section 50: ProsecutionSection 50: Prosecution

Any person/entity guilty of any offence for which heAny person/entity guilty of any offence for which heis liable, and as apparent from the report is liable tois liable, and as apparent from the report is liable tobe prosecuted by the CGbe prosecuted by the CG

It shall be the duty of all partners/designatedIt shall be the duty of all partners/designatedpartners, employees and agents of LLP to providepartners, employees and agents of LLP to provideassistance to CG in this regardassistance to CG in this regard

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


81

Section 51: Application for winding up of LLPSection 51: Application for winding up of LLP

If it appears to the CG from any of the reports that itIf it appears to the CG from any of the reports that itis expedient that the LLP should be wound up, itis expedient that the LLP should be wound up, it

may file a petition to the Tribunal for the winding upmay file a petition to the Tribunal for the winding upof LLPof LLP

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


8/9/2019 LLP Act Act_2008


83

Section 53: Expenses of investigationSection 53: Expenses of investigation

Any costs of expenses incidental to anAny costs of expenses incidental to aninvestigation or any proceedings thereafter shall beinvestigation or any proceedings thereafter shall befirst borne by the CG and thereafter shall befirst borne by the CG and thereafter shall be

reimbursed by the persons convicted onreimbursed by the persons convicted onprosecution or liable to pay damages or restore anyprosecution or liable to pay damages or restore anyproperty to the extent specifiedproperty to the extent specified

Such amount of expenses shall be recovered by theSuch amount of expenses shall be recovered by theCG as arrears of land revenueCG as arrears of land revenue

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


84

Section 54: Inspector¶s report to be evidenceSection 54: Inspector¶s report to be evidence

A copy of report of any inspector shall beA copy of report of any inspector shall beauthenticated either by:authenticated either by:

íí affixing the common seal of LLP or affixing the common seal of LLP or

íí a certificate of public officer having custody of a certificate of public officer having custody of report and in accordance with the provisions of report and in accordance with the provisions of Section 76 of Indian Evidence Act,1872 ( 1 of 1872),Section 76 of Indian Evidence Act,1872 ( 1 of 1872),

and shall be admissible and used as evidence inand shall be admissible and used as evidence inany legal proceedings in relation to any matter any legal proceedings in relation to any matter contained in the reportcontained in the report

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


85

Chapter X : Conversion to LLP

(Section 55 read with the Second Schedule(Section 55 read with the Second Schedule--

Conversion from Firm to LLP)Conversion from Firm to LLP)

A firm may convert into a LLP inA firm may convert into a LLP in

accordance with the provisions of Chapter accordance with the provisions of Chapter X and the Second Schedule and upon suchX and the Second Schedule and upon such

conversion, the partners of the firm shallconversion, the partners of the firm shall

be bound by the provisions of thisbe bound by the provisions of this

Schedule that are applicable to them.Schedule that are applicable to them.

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


86

Eligibility for Conversion:Eligibility for Conversion:

A firm may apply for conversion ³IF AND ONLYA firm may apply for conversion ³IF AND ONLY

IF´ all the partners of the firm and NO ONEIF´ all the partners of the firm and NO ONE

ELSE become the partners of LLP.ELSE become the partners of LLP.

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


87

Documents to be filed:Documents to be filed:

An application shall be made to theAn application shall be made to the

Registrar in the format provided in Part ARegistrar in the format provided in Part A

of Form 17,of Form 17,

A statement of all partners in the formatA statement of all partners in the format

provided in Part B of Form 17, alongwithprovided in Part B of Form 17, alongwith

the fees mentioned in Annexure µA¶ asthe fees mentioned in Annexure µA¶ as

prescribed by the CG,prescribed by the CG,

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


88

Incorporation document of LLP i.e. Form 2Incorporation document of LLP i.e. Form 2

stating the name, proposed business, addressstating the name, proposed business, addressof each of the persons who are to beof each of the persons who are to bepartners/designated partners of LLP, and other partners/designated partners of LLP, and other such information as stated in Section 11,such information as stated in Section 11,

A statement in prescribed form made either byA statement in prescribed form made either byan advocate, or CS/CA/ICWA who is engaged inan advocate, or CS/CA/ICWA who is engaged information of LLP and by any one whoformation of LLP and by any one whosubscribed his name to the incorporationsubscribed his name to the incorporationdocument, stating that all the requirements of document, stating that all the requirements of this Act and rules made thereunder have beenthis Act and rules made thereunder have been

complied with.complied with.

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


8/9/2019 LLP Act Act_2008


90

The Registrar may refuse to register anyThe Registrar may refuse to register any

LLP if he is not satisfied with theLLP if he is not satisfied with the

particulars or other information furnishedparticulars or other information furnishedunder the provisions of this Act.under the provisions of this Act.

However the applicant firm may apply toHowever the applicant firm may apply to

the Tribunal within 60 days from the date of the Tribunal within 60 days from the date of receipt of such intimation of refusal.receipt of such intimation of refusal.

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


91

Proviso to Section 58:Proviso to Section 58:

The LLP shall within 15 days of the date of The LLP shall within 15 days of the date of

registration inform the concerned ROF withregistration inform the concerned ROF with

which it was registered under the Indianwhich it was registered under the IndianPartnership Act, 1932 about the conversionPartnership Act, 1932 about the conversion

and about the particulars of the LLP inand about the particulars of the LLP in

Form 14.Form 14.

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


92

Effect of RegistrationEffect of Registration

On and from the date of registrationOn and from the date of registration

specified in the certificate of registration:specified in the certificate of registration:--

The LLP shall be formed under the nameThe LLP shall be formed under the namespecified in the certificate of registrationspecified in the certificate of registration

and the firm shall be deemed to beand the firm shall be deemed to be

dissolved and its name shall be removeddissolved and its name shall be removed

from the records of ROF,from the records of ROF,

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


93

All the tangible/intangible property vestedAll the tangible/intangible property vestedin the firm, either movable or immovable,in the firm, either movable or immovable,

all assets, interests, rights, privileges,all assets, interests, rights, privileges,liabilities, obligations relating to the firmliabilities, obligations relating to the firmand the whole of the undertaking of theand the whole of the undertaking of thefirm shall be transferred to the LLP, withoutfirm shall be transferred to the LLP, withoutany further procedure,any further procedure,

If any such property is registered with anyIf any such property is registered with anyauthority, the LLP shall notify suchauthority, the LLP shall notify suchauthority of the conversion and of theauthority of the conversion and of theparticulars of LLP in the mode as requiredparticulars of LLP in the mode as required

by such authority.by such authority.

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


94

Any pending proceedings on the date of Any pending proceedings on the date of

registration, in any Court or Tribunal or registration, in any Court or Tribunal or

before any authority by or against the firm,before any authority by or against the firm,may be continued, completed and enforcedmay be continued, completed and enforced

by or against the LLP.by or against the LLP.

Likewise, any conviction, ruling, order or Likewise, any conviction, ruling, order or judgment of any authority in favour of or judgment of any authority in favour of or

against the firm may be enforced by or against the firm may be enforced by or

against the LLP.against the LLP.

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


95

Every agreement to which the firm was aEvery agreement to which the firm was a

party immediately before the date of party immediately before the date of

registration shall have effect as from theregistration shall have effect as from thedate of registration as if the LLP were adate of registration as if the LLP were a

party to such an agreement instead of theparty to such an agreement instead of the

firm.firm.

All deeds, contracts, schemes, bonds,All deeds, contracts, schemes, bonds,

agreements, applications, instruments andagreements, applications, instruments and

arrangements subsisting before the date of arrangements subsisting before the date of

registration relating to the firm shallregistration relating to the firm shall

continue to be enforceable by or againstcontinue to be enforceable by or againstthe LLP.the LLP.

SHAH THAKKAR & CO.,


Every contract of employment in relation toEvery contract of employment in relation to

8/9/2019 LLP Act Act_2008


96

Every contract of employment in relation toEvery contract of employment in relation tosuch agreements or contracts shall alsosuch agreements or contracts shall alsocontinue to be in force as if the LLP werecontinue to be in force as if the LLP were

the employer thereunder instead of thethe employer thereunder instead of thefirm.firm.

Any authority or power conferred on theAny authority or power conferred on thefirm before the conversion shall operate asfirm before the conversion shall operate as

if it were conferred on the LLP.if it were conferred on the LLP.

Every appointment of the firm in any roleEvery appointment of the firm in any roleor capacity before registration of LLP shallor capacity before registration of LLP shall

take effect and operate as if the LLP weretake effect and operate as if the LLP wereappointed.appointed.

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


97

The benefit of any approval, permit or licenseThe benefit of any approval, permit or license

issued to the firm shall also vest in the hands of issued to the firm shall also vest in the hands of

LLP after conversion.LLP after conversion.

NOTWITHSTANDING anything stated above, everyNOTWITHSTANDING anything stated above, every

partner of a firm that has been converted into a LLPpartner of a firm that has been converted into a LLP

shall continue to be personally liable (jointly andshall continue to be personally liable (jointly and

severally with the LLP) for the liabilities andseverally with the LLP) for the liabilities and

obligations of the firm incurred/arising prior to theobligations of the firm incurred/arising prior to theconversion.conversion.

If any partner discharges any such liability or If any partner discharges any such liability or

obligation, he shall be entitled to be fullyobligation, he shall be entitled to be fully

indemnified by the LLP, UNLESS the LLPindemnified by the LLP, UNLESS the LLPagreement stipulates anything to the contrary.agreement stipulates anything to the contrary.

SHAH THAKKAR & CO.,


Notice of conversion in correspondenceNotice of conversion in correspondence

8/9/2019 LLP Act Act_2008


98


The LLP shall ensure that, within 14 days of The LLP shall ensure that, within 14 days of registration and upto a period of 12registration and upto a period of 12

months, every official correspondence of months, every official correspondence of the LLP bears:the LLP bears:--

-- a statement that it was from the date of a statement that it was from the date of registration converted into a LLP, andregistration converted into a LLP, and

-- the name and registration number of thethe name and registration number of thefirm from which it was converted.firm from which it was converted.

In case of contravention of the aboveIn case of contravention of the aboveprovision, LLP shall be punishable withprovision, LLP shall be punishable withfine of Rs.10,000 to Rs.1,00,000 and with afine of Rs.10,000 to Rs.1,00,000 and with a

further fine of Rs.50 to Rs.500/day after thefurther fine of Rs.50 to Rs.500/day after thefirst day after which the default continues.first day after which the default continues.

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


99

(Section 56 read with the Third Schedule(Section 56 read with the Third Schedule--

Conversion from Private Company intoConversion from Private Company into

LLP)LLP)

A private company may convert into a LLPA private company may convert into a LLP

in accordance with the provisions of in accordance with the provisions of

Chapter X and the Third Schedule andChapter X and the Third Schedule andupon such conversion, the company, itsupon such conversion, the company, its

shareholders, the LLP and its partnersshareholders, the LLP and its partners

shall be bound by the provisions of thisshall be bound by the provisions of this

Schedule that are applicable to them.Schedule that are applicable to them.

SHAH THAKKAR & CO.,


Eligibilit for Con ersionEligibilit for Con ersion

8/9/2019 LLP Act Act_2008


100


A private company may apply for conversionA private company may apply for conversion

³IF AND ONLY IF´ all the shareholders of the³IF AND ONLY IF´ all the shareholders of the

company and NO ONE ELSE become thecompany and NO ONE ELSE become the

partners of LLP and there is no securitypartners of LLP and there is no security

interest in its assets subsisting or in force atinterest in its assets subsisting or in force at

the time of application.the time of application.

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


101

Documents to be filed:Documents to be filed:

An application shall be made to the Registrar An application shall be made to the Registrar

in the format provided in Part A of Form 18,in the format provided in Part A of Form 18,

A statement of all shareholders in the formatA statement of all shareholders in the format

provided in Part B of Form 18, alongwith theprovided in Part B of Form 18, alongwith thefees mentioned in Annexure µA¶ as prescribedfees mentioned in Annexure µA¶ as prescribed

by the CG,by the CG,

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


102





SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


103

Registration and Effect of ConversionRegistration and Effect of Conversion

(Section 58 read with Third Schedule)(Section 58 read with Third Schedule)

Registration of ConversionRegistration of Conversion

The Registrar on satisfying that the privateThe Registrar on satisfying that the privatelimited company has complied with thelimited company has complied with the

provisions of Third Schedule, register theprovisions of Third Schedule, register the

documents and issue a certificate of documents and issue a certificate of

registration under his seal in Form 19.registration under his seal in Form 19.

SHAH THAKKAR & CO.,


Th R i t f t i tTh R i t f t i t

8/9/2019 LLP Act Act_2008


104





the Tribunal within 60 days from the date of the Tribunal within 60 days from the date of

receipt of such intimation of refusal.receipt of such intimation of refusal.

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


105



registration inform the concerned ROC withregistration inform the concerned ROC with

which it was registered under the Indianwhich it was registered under the IndianCompanies Act, 1956 about the conversionCompanies Act, 1956 about the conversion


Form 14.Form 14.

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


106





and the company shall be deemed to beand the company shall be deemed to be


from the records of ROC,from the records of ROC,

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


107

All the tangible/intangible property vestedAll the tangible/intangible property vestedin the company, either movable or in the company, either movable or

immovable, all assets, interests, rights,immovable, all assets, interests, rights,privileges, liabilities, obligations relating toprivileges, liabilities, obligations relating tothe company and the whole of thethe company and the whole of theundertaking of the company shall beundertaking of the company shall betransferred to the LLP, without any further transferred to the LLP, without any further

procedure,procedure,

If any such property is registered with anyIf any such property is registered with anyauthority, the LLP shall notify suchauthority, the LLP shall notify suchauthority of the conversion and of theauthority of the conversion and of the

particulars of LLP in the mode as requiredparticulars of LLP in the mode as requiredby such authority.by such authority.

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


108



before any authority by or against thebefore any authority by or against thecompany, may be continued, completedcompany, may be continued, completed

and enforced by or against the LLP.and enforced by or against the LLP.


against the company may be enforced byagainst the company may be enforced by

or against the LLP.or against the LLP.

SHAH THAKKAR & CO.,


Every agreement to which the companyEvery agreement to which the company

8/9/2019 LLP Act Act_2008


109


was a party immediately before the date of was a party immediately before the date of



company.company.




registration relating to the company shallregistration relating to the company shall


SHAH THAKKAR & CO.,


Every contract of employment in relation toEvery contract of employment in relation to

8/9/2019 LLP Act Act_2008


110

y p yy p ysuch agreements or contracts shall alsosuch agreements or contracts shall alsocontinue to be in force as if the LLP werecontinue to be in force as if the LLP were

the employer thereunder instead of thethe employer thereunder instead of thecompany.company.

Any authority or power conferred on theAny authority or power conferred on thecompany before the conversion shallcompany before the conversion shall

operate as if it were conferred on the LLP.operate as if it were conferred on the LLP.

Every appointment of the company in anyEvery appointment of the company in anyrole or capacity before registration of LLProle or capacity before registration of LLPshall take effect and operate as if the LLPshall take effect and operate as if the LLPwere appointed.were appointed.

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


111

The benefit of any approval, permit or The benefit of any approval, permit or

license issued to the company shall alsolicense issued to the company shall also

vest in the hands of LLP after conversion.vest in the hands of LLP after conversion.

SHAH THAKKAR & CO.,



8/9/2019 LLP Act Act_2008


112

pp

The LLP shall ensure that, within 14 days of The LLP shall ensure that, within 14 days of registration and upto a period of 12registration and upto a period of 12

months, every official correspondence of months, every official correspondence of the LLP bears:the LLP bears:--

-- a statement that it was from the date of a statement that it was from the date of registration converted into a LLP, andregistration converted into a LLP, and

-- the name and registration number of thethe name and registration number of thecompany from which it was converted.company from which it was converted.

In case of contravention of the aboveIn case of contravention of the aboveprovision, LLP shall be punishable withprovision, LLP shall be punishable withfine of Rs.10,000 to Rs.1,00,000 and with afine of Rs.10,000 to Rs.1,00,000 and with a

further fine of Rs.50 to Rs.500/day after thefurther fine of Rs.50 to Rs.500/day after thefirst day after which the default continues.first day after which the default continues.

SHAH THAKKAR & CO.,


(S ti 57 d ith th F th S h d l(S ti 57 d ith th F th S h d l

8/9/2019 LLP Act Act_2008


113

(Section 57 read with the Fourth Schedule(Section 57 read with the Fourth Schedule--

Conversion from Unlisted Public CompanyConversion from Unlisted Public Company

into LLP)into LLP)

A company may convert into a LLP inA company may convert into a LLP in

accordance with the provisions of Chapter accordance with the provisions of Chapter

X and the Fourth Schedule and upon suchX and the Fourth Schedule and upon suchconversion, the company, its shareholders,conversion, the company, its shareholders,

the LLP and its partners shall be bound bythe LLP and its partners shall be bound by

the provisions of this Schedule that arethe provisions of this Schedule that are

applicable to them.applicable to them.

SHAH THAKKAR & CO.,



8/9/2019 LLP Act Act_2008


114


A company may apply for conversionA company may apply for conversion

³IF AND ONLY IF´ all the shareholders of the³IF AND ONLY IF´ all the shareholders of the

company and NO ONE ELSE become thecompany and NO ONE ELSE become the

partners of LLP and there is no securitypartners of LLP and there is no security

interest in its assets subsisting or in force atinterest in its assets subsisting or in force at

the time of application.the time of application.

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


8/9/2019 LLP Act Act_2008


116





SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


117

Registration and Effect of ConversionRegistration and Effect of Conversion

(Section 58 read with Fourth Schedule)(Section 58 read with Fourth Schedule)

Registration of ConversionRegistration of Conversion

The Registrar on satisfying that theThe Registrar on satisfying that thecompany has complied with the provisionscompany has complied with the provisions

of Fourth Schedule, register the documentsof Fourth Schedule, register the documents

and issue a certificate of registration under and issue a certificate of registration under

his seal in Form 19.his seal in Form 19.

SHAH THAKKAR & CO.,



8/9/2019 LLP Act Act_2008


118





the Tribunal within 60 days from the date of the Tribunal within 60 days from the date of

receipt of such intimation of refusal.receipt of such intimation of refusal.

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


119



registration inform the concerned ROC withregistration inform the concerned ROC with

which it was registered under the Indianwhich it was registered under the Indian

Companies Act, 1956 about the conversionCompanies Act, 1956 about the conversion


Form 14.Form 14.

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


120





and the company shall be deemed to beand the company shall be deemed to be


from the records of ROC,from the records of ROC,

SHAH THAKKAR & CO.,


All the tangible/intangible propert estedAll the tangible/intangible propert ested

8/9/2019 LLP Act Act_2008


121

All the tangible/intangible property vestedAll the tangible/intangible property vestedin the company, either movable or in the company, either movable or

immovable, all assets, interests, rights,immovable, all assets, interests, rights,privileges, liabilities, obligations relating toprivileges, liabilities, obligations relating tothe company and the whole of thethe company and the whole of theundertaking of the company shall beundertaking of the company shall betransferred to the LLP, without any further transferred to the LLP, without any further

procedure,procedure,

If any such property is registered with anyIf any such property is registered with anyauthority, the LLP shall notify suchauthority, the LLP shall notify suchauthority of the conversion and of theauthority of the conversion and of the

particulars of LLP in the mode as requiredparticulars of LLP in the mode as requiredby such authority.by such authority.

SHAH THAKKAR & CO.,


Any pending proceedings on the date ofAny pending proceedings on the date of

8/9/2019 LLP Act Act_2008


122



before any authority by or against thebefore any authority by or against thecompany, may be continued, completedcompany, may be continued, completed

and enforced by or against the LLP.and enforced by or against the LLP.


against the company may be enforced byagainst the company may be enforced by

or against the LLP.or against the LLP.

SHAH THAKKAR & CO.,



8/9/2019 LLP Act Act_2008


123


was a party immediately before the date of was a party immediately before the date of



company.company.




registration relating to the company shallregistration relating to the company shall


SHAH THAKKAR & CO.,


Every contract of employment in relation toEvery contract of employment in relation tosuch agreements or contracts shall alsosuch agreements or contracts shall also

8/9/2019 LLP Act Act_2008


124

such agreements or contracts shall alsosuch agreements or contracts shall alsocontinue to be in force as if the LLP werecontinue to be in force as if the LLP were

the employer thereunder instead of thethe employer thereunder instead of thecompany.company.

Any authority or power conferred on theAny authority or power conferred on thecompany before the conversion shallcompany before the conversion shall

operate as if it were conferred on the LLP.operate as if it were conferred on the LLP.

Every appointment of the company in anyEvery appointment of the company in anyrole or capacity before registration of LLProle or capacity before registration of LLPshall take effect and operate as if the LLPshall take effect and operate as if the LLPwere appointed.were appointed.

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


125

The benefit of any approval, permit or The benefit of any approval, permit or

license issued to the company shall alsolicense issued to the company shall also

vest in the hands of LLP after conversion.vest in the hands of LLP after conversion.

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


³Budget 2010 Proposals´

8/9/2019 LLP Act Act_2008


127

Budget 2010 Proposals

There would be no capital gains on transfer There would be no capital gains on transfer of any capital asset or intangible asset by aof any capital asset or intangible asset by aprivate company or unlisted publicprivate company or unlisted publiccompany as a result of conversion of thecompany as a result of conversion of thecompany into a LLP, w.e.f. 1company into a LLP, w.e.f. 1stst April, 2011,April, 2011,

by virtue of section 47(xiiib) of the Incomeby virtue of section 47(xiiib) of the IncomeTax Act,1961 if the following conditions areTax Act,1961 if the following conditions arefulfilled:fulfilled:--

All the assets and liabilities of the companyAll the assets and liabilities of the companyimmediately before conversion become theimmediately before conversion become the

assets and liabilities of the LLP,assets and liabilities of the LLP,

SHAH THAKKAR & CO.,



8/9/2019 LLP Act Act_2008


128

Budget 2010 Proposals

All the shareholders of the companyAll the shareholders of the companybecome the partners of the LLP with thebecome the partners of the LLP with the

capital contribution and profit sharing ratiocapital contribution and profit sharing ratio

in the same proportion as their in the same proportion as their

shareholding in the company on the date of shareholding in the company on the date of

conversion,conversion, The consideration to the shareholders isThe consideration to the shareholders is

only by way of share in profit and capitalonly by way of share in profit and capital

contribution,contribution,

SHAH THAKKAR & CO.,



8/9/2019 LLP Act Act_2008


129

The aggregate of the profit sharing ratio of The aggregate of the profit sharing ratio of the shareholders in the LLP shall not bethe shareholders in the LLP shall not beless than 51% at any time for a period of 5less than 51% at any time for a period of 5years,years,

The total sales, turnover or gross receiptsThe total sales, turnover or gross receiptsin business of the company in any of the 3in business of the company in any of the 3previous years preceeding the previousprevious years preceeding the previous

year of conversion does not exceed Rs.60year of conversion does not exceed Rs.60lakhs,lakhs,

No amount is paid to any partner out of theNo amount is paid to any partner out of thebalance of accumulated profit standing inbalance of accumulated profit standing inthe books of the company on the date of the books of the company on the date of conversion for a period of 3 years from theconversion for a period of 3 years from thedate of conversion.date of conversion.

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


8/9/2019 LLP Act Act_2008


132

As per section 115JAA of the I.T. Act,1961As per section 115JAA of the I.T. Act,1961

(w.e.f. 1(w.e.f. 1stst April,1961), MAT credit shall notApril,1961), MAT credit shall notbe available to the LLP upon conversion of be available to the LLP upon conversion of

a company into LLP, i.e. the balance of a company into LLP, i.e. the balance of

MAT credit available to the company wouldMAT credit available to the company would

lapse.lapse.

SHAH THAKKAR & CO.,


Chapter XI: Foreign Limited

8/9/2019 LLP Act Act_2008


133

Liability Partnerships

Section 59: Foreign limited liabilitySection 59: Foreign limited liabilitypartnershipspartnerships

The CG has the power to make rules for The CG has the power to make rules for

provisions in relation to establishment of provisions in relation to establishment of place of business and carrying on businessplace of business and carrying on business

by foreign LLP¶s within India by applyingby foreign LLP¶s within India by applying

the provisions of the Companies Act, 1956the provisions of the Companies Act, 1956

with appropriate modifications.with appropriate modifications.

SHAH THAKKAR & CO.,


As per Rule 34, a foreign LLP shall withinAs per Rule 34, a foreign LLP shall within

8/9/2019 LLP Act Act_2008


134

30 days of establishing a place of business30 days of establishing a place of business

in India, file with the Registrar in Form 27:in India, file with the Registrar in Form 27:--

a copy of the certificate of incorporation of a copy of the certificate of incorporation of

LLP,LLP,

full address of the registered/principal place of full address of the registered/principal place of

LLP in the country of its incorporation,LLP in the country of its incorporation,

full address of the office of LLP in Indiafull address of the office of LLP in India(deemed principal place),(deemed principal place),

list of partners/designated partners, andlist of partners/designated partners, and

names and addresses of 2 or more personsnames and addresses of 2 or more persons

resident in India, authorized to accept anyresident in India, authorized to accept any

documents on behalf of the LLP.documents on behalf of the LLP.

SHAH THAKKAR & CO.,


Where any LLP makes default in deliveringWhere any LLP makes default in delivering

8/9/2019 LLP Act Act_2008


135

to the Registrar the names and addressesto the Registrar the names and addresses

of such authorized persons resident inof such authorized persons resident in

India, or if at any time any such personsIndia, or if at any time any such persons

are dead or have ceased so to reside, or are dead or have ceased so to reside, or

refuse to accept any documents on behalf refuse to accept any documents on behalf

of the LLP, a document may be served onof the LLP, a document may be served on

the LLP by leaving it at, or sending it bythe LLP by leaving it at, or sending it bypost to, any place of business establishedpost to, any place of business established

by the LLP in India.by the LLP in India.

SHAH THAKKAR & CO.,


The incorporation documents shall beThe incorporation documents shall be

8/9/2019 LLP Act Act_2008


136

certified by:certified by:--

an official of the Government/ Notaryan official of the Government/ Notary

(Public) of the country where the original is(Public) of the country where the original is

submitted by affixing a signature or sealsubmitted by affixing a signature or seal

which is authenticated by a Diplomatic or which is authenticated by a Diplomatic or

Consular Officer, or Consular Officer, or

by an officer of the LLP in the presence of aby an officer of the LLP in the presence of a

person having authority to administer anperson having authority to administer an

oathoath

SHAH THAKKAR & CO.,


However, if the LLP is incorporated in anyHowever, if the LLP is incorporated in anypart of the Commonwealth, thepart of the Commonwealth, theincorporation documents shall be certifiedincorporation documents shall be certified

8/9/2019 LLP Act Act_2008


137

incorporation documents shall be certifiedincorporation documents shall be certifiedby an official of the Government of theby an official of the Government of thecountry where the original is submitted or country where the original is submitted or by a Notary in that part of theby a Notary in that part of theCommonwealth or by an officer of the LLPCommonwealth or by an officer of the LLPin the presence of a person havingin the presence of a person havingauthority to administer an oath in that partauthority to administer an oath in that partof the Commonwealth.of the Commonwealth.

Further, if the LLP is incorporated in aFurther, if the LLP is incorporated in acountry which is a party to the Haguecountry which is a party to the HagueApostile Convention, 1961, theApostile Convention, 1961, theincorporation documents shall also be dulyincorporation documents shall also be dulyapostilled in accordance with Hagueapostilled in accordance with HagueConvention.Convention.

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


If any alteration occurs in the incorporationIf any alteration occurs in the incorporation

document registered outside India,document registered outside India,

principal place of business outside India orprincipal place of business outside India or

8/9/2019 LLP Act Act_2008


139

principal place of business outside India or principal place of business outside India or

partners/designated partners registeredpartners/designated partners registered

outside India, then the foreign LLP shall fileoutside India, then the foreign LLP shall filesuch alterations in Form 28 with thesuch alterations in Form 28 with the

Registrar within 60 days of the close of theRegistrar within 60 days of the close of the

financial year.financial year.

However, if the alteration is with respect toHowever, if the alteration is with respect tothe certificate of incorporation, name or the certificate of incorporation, name or

address of persons authorized to acceptaddress of persons authorized to accept

documents on behalf of the LLP or thedocuments on behalf of the LLP or the

principal place of the LLP in India, Form 29principal place of the LLP in India, Form 29

has to be filed within 30 days from the datehas to be filed within 30 days from the dateon which the alteration occurred.on which the alteration occurred.

SHAH THAKKAR & CO.,


If any of the documents required to beIf any of the documents required to be

submitted by the LLP are not in Englishsubmitted by the LLP are not in English

8/9/2019 LLP Act Act_2008


140

submitted by the LLP are not in Englishsubmitted by the LLP are not in English

language, then a certified translationlanguage, then a certified translation

thereof is required to be filed with thethereof is required to be filed with theRegistrar, authenticated in the prescribedRegistrar, authenticated in the prescribed

manner, if such translation is made outsidemanner, if such translation is made outside

India.India.

However, if the translation is made withinHowever, if the translation is made within

India, it shall be authenticated by anIndia, it shall be authenticated by an

Advocate, CA/CS/ICWA or by an affidavit of Advocate, CA/CS/ICWA or by an affidavit of

a person who has adequate knowledge of a person who has adequate knowledge of

the original language as well as Englishthe original language as well as Englishlanguage.language.

SHAH THAKKAR & CO.,


Every foreign LLP shall file with theEvery foreign LLP shall file with the

Registrar Statement of Account andRegistrar Statement of Account and

S l i F 8 ithi i d f 30S l i F 8 ithi i d f 30

8/9/2019 LLP Act Act_2008


141

Solvency in Form 8 within a period of 30Solvency in Form 8 within a period of 30

days from the end of 6 months of thedays from the end of 6 months of the

financial year, which has to be preservedfinancial year, which has to be preserved

for a period of 8 years (as prescribed byfor a period of 8 years (as prescribed by

Annexure µC¶).Annexure µC¶).

If any foreign LLP ceases to have a place of If any foreign LLP ceases to have a place of

business in India, notice of the same shallbusiness in India, notice of the same shallbe sent to the Registrar in Form 29 withinbe sent to the Registrar in Form 29 within

30 days of its intention to close the place of 30 days of its intention to close the place of

business and thereafter the obligation of business and thereafter the obligation of

the LLP to file any document ceasesthe LLP to file any document ceases

provided it has filed all other requiredprovided it has filed all other required

documents till the date of the notice.documents till the date of the notice.

SHAH THAKKAR & CO.,


Chapter XII: Compromise,

Arrangement or Reconstruction of

8/9/2019 LLP Act Act_2008


142

Arrangement or Reconstruction of

LLP¶s

Section 60: Compromise, Arrangement or Section 60: Compromise, Arrangement or

Reconstruction of LLP¶sReconstruction of LLP¶s

Where any compromise or arrangement isWhere any compromise or arrangement is

proposed between a LLP and its creditorsproposed between a LLP and its creditorsor partners, the Tribunal may on anor partners, the Tribunal may on an

application of the LLP or creditors or application of the LLP or creditors or

partners or liquidator, order a meeting of partners or liquidator, order a meeting of

the creditors or partners, as the case maythe creditors or partners, as the case maybe.be.

SHAH THAKKAR & CO.,


The Tribunal shall also give directions inThe Tribunal shall also give directions inrespect of incidental matters such as fixingrespect of incidental matters such as fixing

8/9/2019 LLP Act Act_2008


143

respect of incidental matters such as fixingrespect of incidental matters such as fixingthe time and place of such meeting, givingthe time and place of such meeting, giving

notice of the meeting, appointing anotice of the meeting, appointing achairman, fixing the quorum, etc.chairman, fixing the quorum, etc.

The application shall be supported by anThe application shall be supported by anaffidavit in Form 20 and a copy of theaffidavit in Form 20 and a copy of theproposed compromise or arrangement.proposed compromise or arrangement.

Where the applicant is any other personWhere the applicant is any other personother than the LLP, a copy of the summonsother than the LLP, a copy of the summonsin Form 21 and the affidavit in Form 20in Form 21 and the affidavit in Form 20shall be served on the LLP not less than 14shall be served on the LLP not less than 14days before the date fixed for the hearingdays before the date fixed for the hearingof the summons.of the summons.

SHAH THAKKAR & CO.,


If the Tribunal is satisfied that all materialIf the Tribunal is satisfied that all materialfacts have been disclosed by the personfacts have been disclosed by the person

8/9/2019 LLP Act Act_2008


144

facts have been disclosed by the personfacts have been disclosed by the personmaking the application and a majoritymaking the application and a majority

representing 3/4representing 3/4thth

in value at the meetingin value at the meetingagree to any compromise or arrangement,agree to any compromise or arrangement,the compromise or arrangement shall bythe compromise or arrangement shall byorder be binding on the creditors or order be binding on the creditors or partners as the case may be and also onpartners as the case may be and also on

the LLP.the LLP. Such order shall have effect only after itSuch order shall have effect only after it

has been filed with the Registrar by the LLPhas been filed with the Registrar by the LLPwithin 30 days of making of such order,within 30 days of making of such order,nonnon--compliance of which would attract finecompliance of which would attract fine

which may extend to Rs.1 lakh in the handswhich may extend to Rs.1 lakh in the handsof every designated partner and the LLP.of every designated partner and the LLP.

SHAH THAKKAR & CO.,


Section 61: Power of the Tribunal to enforceSection 61: Power of the Tribunal to enforcecompromise or arrangementcompromise or arrangement

8/9/2019 LLP Act Act_2008


145

p gp g

The Tribunal shall have the power toThe Tribunal shall have the power tosupervise the functioning of thesupervise the functioning of thecompromise or arrangement and also tocompromise or arrangement and also togive directions in regard to any matter or give directions in regard to any matter or make necessary modifications for itsmake necessary modifications for its

proper working.proper working. If the Tribunal is satisfied that aIf the Tribunal is satisfied that a

compromise or an arrangement cannot becompromise or an arrangement cannot beworked out satisfactorily, it may either suoworked out satisfactorily, it may either suomoto or on an application of any personmoto or on an application of any person

interested in the affairs of LLP, make aninterested in the affairs of LLP, make anorder for winding up the LLP.order for winding up the LLP.

SHAH THAKKAR & CO.,


Section 62: Provisions for facilitatingSection 62: Provisions for facilitating

reconstruction or amalgamation of LLP¶sreconstruction or amalgamation of LLP¶s

8/9/2019 LLP Act Act_2008


146

Where it is shown to the Tribunal that theWhere it is shown to the Tribunal that the

compromise or arrangement has beencompromise or arrangement has beenproposed in connection with a scheme for proposed in connection with a scheme for

reconstruction of any LLP or amalgamationreconstruction of any LLP or amalgamation

of any 2 or more LLP¶s and under theof any 2 or more LLP¶s and under the

scheme the whole or any part of thescheme the whole or any part of the

undertaking is transferred to another LLP,undertaking is transferred to another LLP,the Tribunal may make provision for all or the Tribunal may make provision for all or

any of the matters in its order which itany of the matters in its order which it

thinks fit, such as, transfer of thethinks fit, such as, transfer of the

undertaking, property or liabilities,undertaking, property or liabilities,continuation of any legal proceedings, etc.continuation of any legal proceedings, etc.

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


8/9/2019 LLP Act Act_2008


If the LLP is unable to pay its debts,If the LLP is unable to pay its debts,

8/9/2019 LLP Act Act_2008


150

If the LLP has acted against the interests of If the LLP has acted against the interests of the sovereignty and integrity of India,the sovereignty and integrity of India,

security of the State or public order,security of the State or public order,

If the LLP has defaulted in filing StatementIf the LLP has defaulted in filing Statement

of Account and Solvency OR Annualof Account and Solvency OR Annual

Return for any 5 consecutive years, or Return for any 5 consecutive years, or

Any other reason which the Tribunal mayAny other reason which the Tribunal may

find just and equitable.find just and equitable.

SHAH THAKKAR & CO.,


A copy of the order of dissolution by theA copy of the order of dissolution by the

8/9/2019 LLP Act Act_2008


151

A copy of the order of dissolution by theA copy of the order of dissolution by the

Tribunal shall be preserved for a period of Tribunal shall be preserved for a period of

5 years (as prescribed by Annexure µC¶).5 years (as prescribed by Annexure µC¶).

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


Where the Registrar has reasonable causeWhere the Registrar has reasonable cause

t b li th t LLP i t it b li th t LLP i t i

8/9/2019 LLP Act Act_2008


153

to believe that a LLP is not carrying onto believe that a LLP is not carrying on

business in accordance with the provisionsbusiness in accordance with the provisionsof this Act, the name of the defunct LLPof this Act, the name of the defunct LLP

may be struck off, after giving such LLP amay be struck off, after giving such LLP a

reasonable opportunity of being heard.reasonable opportunity of being heard.

Any person who is guilty of an offenceAny person who is guilty of an offence

under this Act for which no expressunder this Act for which no expresspunishment is provided under the Act,punishment is provided under the Act,

shall be liable to a fine of Rs.5000 to Rs.5shall be liable to a fine of Rs.5000 to Rs.5

lakhs and with a further fine of Rs.50/daylakhs and with a further fine of Rs.50/day

after the first day after which the defaultafter the first day after which the defaultcontinues.continues.

SHAH THAKKAR & CO.,


8/9/2019 LLP Act Act_2008


THANK YOU!THANK YOU!