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LIMITED LIABILITY PARTNERSHIP

MIX OF LIMITED COMPANY AND
PARTNERSHIP

WHAT IS LLP?
• NEW BUSINESS VEHICLE
• INTRODUCED ON 1.4.2009 BY LLP ACT 2008
• GLOBAL MODEL
– US-1996
– UK 2000
– JAPAN 2005
– SINGAPORE 2005

WHY LLP ACT PASSED • POTENTIAL FOR GROWTH IN SERVICE SECTOR • DOMINANT ROLE PLAYED BY PROFESSIONALS IN COUNTRY’S ECONOMY .

EMERGENCE OF LLP LEGISLATION • ABID HUSSAIN COMMITTEE 1997 • NARESH CHANDRA COMMITTEE 2003 • DR IRANI COMMITTEE ON COMPANY LAW 2005 .

FEATURES • • • • • • • LIMITED LIABILITY PERPETUAL SUCCESSION SEPARATE LEGAL ENTITY FLEXIBLE PROFIT DISTRIBUTION FLEXIBLE MANAGEMENT STRUCTURE FEW LEGAL AND PROCEDURAL REQUIREMENTS CANNOT BE FORMED FOR CHARITABLE PURPOSE .

WHO CAN BE PARTNER IN LLP • INDIVIDUAL • BODY CORPORATE – COMPANY – LLP – FOREIGN LLP – FOREIGN COMPANY .

5 LACS . NO LIMIT AT LEAST 2 DESIGNATED PARTNERS ONLY INDIVIDUALS 1 DP TO BE RESIDENT IN INDIA DP TO BE APPOINTED FROM INCORPORATION DATE ANY VACANCY TO BE FILLED IN 30 DAYS CHANGE IN DP TO BE INTIMATED IN 30 DAYS PENALTY – MIN.10000 – MAX. RS.PARTNERS • • • • • • • • MINIMUM 2 MAX.

INCORPORATION • • • • • FOR A LAWFUL BUSINESS FOR PROFIT INCORPORATION DOCUMENT REGISTRATION WITHIN 14 DAYS CERTIFICATE OF INCORPORATION GRANTED CERTIFICATE CONCLUSIVE EVIDENCE OF INCORPORATION OF LLP .

– STATEMENT OF LIMITED LIABILITY .NAME. ADDRESS ETC • NAME TO BE OBTAINED • NAME CAN BE RESERVED FOR 3 MONTHS • INVOICES AND OFFICIAL CORRESPONDENCE TO BEAR – NAME – ADDRESS – REGISTRATION NO.

PARTNERSHIP FIRM. ADDRESS ETC • TO ADD LLP AS LAST WORDS IN NAME • CENTRAL GOVERNMENT CAN DIRECT CHANGE IN NAME ANYTIME IF IT IS – UNDESIRABLE – IDENTICAL – TOO NEARLY RESEMBLES WITH EXISTING LLP. BODY CORPORATE OR REGISTERED TRADE MARK .NAME.

PARTNERS RIGHTS/ DUTIES • INTER SE RIGHTS AND DUTIES GOVERNED BY PARTNERSHIP AGREEMENT • IF NO AGREEMENT. FIRST SCHEDULE WILL DETERMINE MUTUAL RIGHTS AND DUTIES • PARTNER CAN RESIGN AS AGREED OR BY GIVING MIN. 30 DAYS NOTICE .

PARTNERSHIP AGREEMENT • • • • • • SHARE OF PARTNERS WHO SHALL TAKE PART IN MANAGEMENT REMUNERATION OF PARTNERS ADMISSION OF NEW PARTNER DECISION IN PARTNERSHIP EXPULSION OF PARTNER .

CESSATION OF PARTNER • DEATH • CEASED PARTNER REGARDED AS PARTNER BY PERSON DEALING WITH LLP UNLESS – THAT PERSON HAS NOTICE OF CESSATION – OR SUCH NOTICE DELIVERED TO REGISTRAR .

LIABILITY OF PARTNERS • • • • AGENT OF LLP BUT NOT OF OTHER PARTNERS LIABILITY OF LLP MET OUT OF LLP PROPERTY LIABILITY OF PARTNERS LIMITED UNLIMITED LIABILITY IN CASE OF FRAUD .

CONTRIBUTION OF PARTNERS • IN THE FORM OF – TANGIBLE PROPERTY – INTANGIBLE PROPERTY – CONTRACT FOR SERVICES – MONETARY VALUE TO BE ACCOUNTED FOR IN ACCOUNTS .

40 LACS FILE ANNUAL RETURN WITHIN 60 DAYS OF CLOSE OF FINANCIAL YEAR .FINANCIAL DISCLOSURES • ACCOUNTS MAINTAINED ON CASH OR ACCRUAL BASIS • FIXED FINANCIAL YEAR • STATEMENT OF ACCOUNT AND SOLVENCY TO BE FILED WITHIN 6 MONTHS OF CLOSE OF FINANCIAL YEAR • AUDIT OF ACCOUNTS IF – CAPITAL>RS 25 LACS – OR TURNOVER >RS.

POWERS OF GOVERNMENT • • • • TO CALL FOR INFORMATION TO ORDER INVESTIGATION TO FILE FOR WINDING UP TO FILE PROCEEDINGS FOR RECOVERY OF DAMAGES OR PROPERTY .

MERGER. AMALGAMATION AND WINDING UP • CAN BE DONE • WINDING UP – VOLUNTARY – BY TRIBUNAL • NO. OF PARTNERS BELOW 2 • INABILITY TO PAY DEBTS • DEFAULT IN FILING ACCOUNTS OR ANNUAL RETURN FOR 5 CONSECUTIVE YEARS • JUST AND EQUITABLE .

PROVISIONS • • • • LOAN BY PARTNERS E FILING OF DOCUMENTS APPLICATION OF COMPANY LAW PENALTY FOR NON FILING ANNUAL RETURN/ STATEMENT OF ACCOUNTS AND SOLVENCY – LLP MIN 1 LAC MAX 5 LACS – DP-MIN 10000 MAX 1 LAC .MISC.

OF PARTNERS . NO.9% COMPANY >33% • UPTO 60% REMUNERATION OF PROFIT TO BE TAXED IN HANDS OF PARTNERS • NO MAT • NO PROFIT DISTRIBUTION TAX • NO STAMP DUTY ON TRANSFER OF PROPERTY • NO CAPITAL GAINS TAX • CARRY FORWARD AND SET OFF AVAILABLE TO LLP • NO LIMIT ON MAX.TAXATION AND OTHER CONCESSION VIS A VIS PVT. COMPANY • INCOME TAX LLP 30. LTD.

COMPANY • MINIMUM COMPLIANCE LEVEL AND COST EFFECTIVE – MEETINGS AND HUGE STATUTORY RECORDS WAIVED – GOODWILL OF COMPANY AND ITS BRAND KEPT INTACT – LEGAL RECOGNITION . LTD.TAXATION AND OTHER CONCESSION VIS A VIS PVT.