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Highlights

LLP
  • LLP will be Body Corporate
  • LLP will be Legal Entity separate from its partners & shall have Perpetual Succession
  • Indian Partnership Act, 1932 shall not apply to LLP.
  • LLP can only carry business with profit motive
  • Multi Disciplinary Professional LLP can be formed
  • Any individual or body corporate can be a partner.
  • Minimum – 2 Partners.
  • Minimum 2 Designated Partners – individuals - one of them shall be Resident in India.
  • Every Designated Partners must obtain DIN from the Central Government. Designated Partner need not to apply for the DPIN separately.
Partners
  • Subscribers to Incorporation Document will be the Partners of LLP and new partners shall be admitted as per the Provisions of LLP agreement.
  • The mutual rights and duties of the partners of LLP and the mutual rights and duties of LLP and its partners shall be governed by LLP agreement between the partners or between LLP and its partners.
  • In the absence of such agreement relationship of Partners and LLP would be governed as per Schedule 1 of LLP Act, 2008.
Extent & Limitation of LLP & Partners
  • Partner is the agent of the LLP and not of the partners
  • LLP is not bound by the acts of partners if the partner has no authority to act for LLP.
  • LLP is liable if a partner is liable to any person as a result of wrongful act or omission on his part in the course of the business of LLP or with its authority.
  • Obligations of LLP shall be solely obligation of LLP and not the partners.
  • Partner is not personally liable, directly or indirectly for an obligation of the limited liability partnership whether arising in contract or otherwise.
  • Unlimited liability of LLP and Partners in case of fraud.
Contributions
  • Contributions by Partners may be tangible, intangible, movable or immovable.
Financial Disclosures
  • Books of Accounts to be maintained at the registered office for such period as may be prescribed.
  • Statement of accounts and Solvency (SAS) to be prepared – within 6 months from each Financial Year.
  • Accounts of LLP must be audited in case contribution/turnover exceeds 25 Lakh/40 Lakh
  • Annual Return – must be filed with ROC within 60 days of closure of its FY
Assignment & Transfer of Partnership Rights
  • Rights of a partner to share profits and losses of LLP & to receive distributions are transferable either wholly or in part.
  • Transfer of right does not cause disassociation of the partner or dissolution and winding up of LLP
  • Transfer of right does not entitle the transferee or assignee to participate in the management or conduct of activities of LLP or access information concerning the transactions of LLP.
Conversion to LLP
  • Firm / Private Company / unlisted public Company may be converted into LLP in accordance with this chapter & Schedule II/ III / IV respectively.
Foreign LLP
The Central Government may make rules for
  • establishment of place of business by foreign LLP within India and
  • Carrying on business by foreign LLP by applying the provisions of Companies Act or such regulatory mechanism as may be prescribed with such modifications, as appear appropriate.
Compromises, Arrangement or Reconstruction of LLP
  • A compromise or arrangement can be between LLP and its Creditors or partners.
  • Application is made to Tribunal by LLP, creditor or partner. In case of wound up LLP application can be made by the liquidator. Tribunal order a meeting of creditors or partners..
Winding up & Dissolution
  • Winding up of LLP may be either voluntary or by the Tribunal. LLP so wound up may de dissolved.
  • Section 64 provides Circumstances in which LLP may be wound up by the Tribunal.
Miscellaneous
  • Partner may lend money to and transact other business with LLP.
  • Applicability of Companies Act, 1956 will be directed by CG by notification in Official Gazette.
  • Late filing of documents with ROC – can be filed up to 300 days from the date within which it should be filed + payment of fees of Rs. 100 for every day of such delay + original filing fees.
  • Provisions for dissolving LLP by declaring it defunct.
  • Concept of whistle Blower has been introduced.
  • Foreign Companies & LLP can reserve their exisiting name in India for 3 years.

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