Limited Liability Partnerships

•LLPs in India are governed by the Limited Liability Partnership

Act, 2008 that confers powers on the Central Government to
apply the provisions of the Companies Act, 1956 to LLPs.

• It has been clarified that the provisions of the Indian

Partnership Act, 1932 shall not apply to LLPs.

•Ministry of Corporate Affairs of Government of India shall

administer the law.

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 Features of LLP

• LLP is a body corporate.

• LLP has perpetual succession.
• LLP has a separate legal entity.
• Partners can manage the entity.
• For the purpose of business, partner is an agent of LLP but
not of other partners.
• Change in partners shall not affect the existence, rights or
duties of LLP.

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 LLP Name & Name Reservation
LLP Name
• LLP has the right to select its name but need to satisfy name guidelines.
• Name should reflect the business.
• LLP is required to get its name approved.
• LLP needs to have words ‘Limited Liability Partnership’ or ‘LLP’ as last
words of its name.

Name Reservation
• A foreign LLP or company can apply to the Registrar for the reservation
of a name.
• Such reservation is initially granted for three years which can be
renewed.

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 LLP Registered Office & LLP Agreement/Charter

LLP Registered Office

• LLP needs to have a registered office in India.
• LLP may change its registered office.
 
LLP Agreement/Charter
• Like partnership, LLP may have an agreement defining its name,
registered office, names of partners, designated partners, profit sharing
arrangement, rights and duties of partners, etc.

• In the absence of such an agreement, the provisions of Schedule 1 to the

LLP Act shall apply.

• Partners may amend the agreement as per rules.

 Partners
• Needs to have at least two partners that may be individuals or body corporate.
• No limit on maximum number of partners.
• Partners may consist of:
– Companies incorporated in or outside India.
– LLP incorporated in or outside India.
– Individuals residing in or outside India.
• LLP shall have at least two individuals as Designated Partners; at least one of
them should be a resident in India.
• Designated Partners should obtain Designated Partner Identification Number
(DPIN) from the Ministry of Corporate Affairs, Government of India.
• At least one of the designated partners should have Digital Signature Certificate
(DSC) as forms relating to incorporation and thereafter are to be filed online
after being digitally signed.
 Liability of Partners
• Liability of partners is limited to their agreed contribution that may be tangible or intangible in nature or both.

• Liability of LLP is not the liability of the partners.

• No partner is liable for an unauthorized act of other partners or their misconduct.

• A partner acting to defraud others or for fraudulent purposes shall have unlimited liability.

Winding Up

The winding up of LLP may be either voluntarily or by the order of the

Tribunal, to be established. Till the Tribunal is established, the powers shall
vest with the jurisdictional High Courts.
 Management & Control
and
Conversion of Existing Entities
Management & Control
• Shall be governed by LLP agreement, if no such agreement, Schedule 1 of
the Act will apply.
• LLP may appoint any partner as ‘Managing/Executive Partner(s)’.
• Other partners may also join the management.
• Designated partners have no implied authority to manage the affairs of
LLP.
• Designated partners are responsible for regulatory compliances.

Conversion of Existing Entities

• Firms, private limited companies and unlisted public limited companies
are allowed to be converted into LLP.
• Compromise and other arrangements possible like merger,
amalgamations, etc.
 Accounts & Audit

• Every LLP is to maintain proper books of account.

• Required to follow financial year from 1 st April of a year to 31st March of the
following year.
• Required to prepare a Statement of Account and Solvency for every financial
year in the prescribed manner within six months from the end of each
financial year and such statement is to be signed by the designated partners.
• LLP to file the Statement of Account and Solvency with the Registrar.
• LLP accounts are required to be audited, if its turnover exceeds 4 Million INR,
in any financial year or shareholders contribution exceed 2.5 Million INR.
• Required to file an annual return with the Registrar of Companies.
• All accounts and other documents shall be available to public for inspection.
 Advantages

• Separate legal entity with perpetual succession.

• Liability of members is limited.
• Easy to form and wind up in comparison to subsidiaries.
• Partners can manage the affairs of LLP.
• Flexibility in operations.
• Partner not an agent of other partners.
• No requirement of minimum capital contribution.
• No limit on maximum number of partners.
• Personal assets of partners not exposed.
• Simple regulations.