LIMITED LIABILITY

PARTNERSHIP, 2008
BY:
DR. MD. MONEEF AHMAD
ASSISTANT PROFESSOR, SCHOOL OF BUSINESS STUDIES,
SHARDA UNIVERSITY
 Limited Liability Partnership
• Limited Liability Partnership Act, 2008 (LLP Act) enacted on 12th
December, 2008 and assented to on 7th January, 2009.
• It came into force w.e.f. 31st March, 2009, and applicable to whole of
India including Jammu & Kashmir.
• A Limited Liability Partnership, popularly known as LLP combines the
advantages of both the company and partnership into a single form of an
organization.
• LLP is a partnership where all the partners have limited liability.
 Features of LLP
• A Body Corporate;
• Minimum number of Partners : 2;
• Maximum number of Partners: No Limit;
• Any individual or body corporate may be partner in a LLP;
• Mutual rights and duties: Governed by an agreement known as LLP agreement;
• Liability: liability of partners being limited to their agreed contribution in the
LLP;
 Features of LLP
• Designated Partners: At least two and at least one of them will be resident in India;
• Annual Accounts: shall maintain annual account showing true & fair view;
• Investigations: Central Government have power to investigate, if required;
• Merger & Amalgamation: In accordance with the provisions of the LLP Act;
• Conversion: A firm, Private Company or Unlisted Company would be converted;
• Winding Up: may be either voluntary or by the tribunal.
 Difference between LLP and Partnership
S. No. Basis LLP Partnership
1. Governed by LLP Act, 2008 Indian Partnership Act,
1932
2. Minimum Partners 2 2
3. Maximum Partners No Limit 50
4. Perpetual Succession Yes No
5. Charter Document LLP agreement Partnership Deed
6. Registration Mandatory Optional
7. Liability Limited to Capital Contribution Unlimited
 Difference between LLP and Partnership
S. No. Basis LLP Partnership
8. Administrative Authority Registrar of Companies Registrar of Firms
9. Property Can be held in LLP’s name Can be held in the name
of firm
10. Audit of Accounts Mandatory (If turnover and Not mandatory
capital contribution exceeds Rs.
40 & Rs. 25 lakhs respectively
11. Name of firm Name containing LLP as suffix Any name
12. Relationship Partners are agents of LLP only. Partners are agents of
firms and partners as well.
Difference between LLP and Private Limited
Company
S. No. Basis LLP Private Limited Company
1. Governed By LLP Act, 2008 Companies Act, 2013
2. Members Required Minimum-2; Minimum- 2;
Maximum- No limit Maximum- 200
3. Regulated By LLP Agreement Memorandum of Association &
Article of Association
4. Company Name Should end with LLP Should end with Private Limited
5. Profits Distributed between partners as Distributed in terms of
per LLP agreement dividends based on the
shareholdings
Difference between LLP and Private Limited
Company
S. No. Basis LLP Private Limited
Company
6. Identification Number Every partner-Designated Every Director- Designated
Partner Identification Identification Number
Number (DPIN) (DIN)
7. Conduct Business Every partner can conduct No Individual or director
business can conduct business
 Conversion and Limited Liability
Partnership Agreement
• Conversion of Partnership Firm in LLP: can be converted in accordance
with provisions of the second schedule [Sec. 55 & Rule 38]
• Limited Liability Partnership Agreement: It is a written agreement
between the partners of the LLP or between the LLP and it’s partners
which determines the mutual rights and duties of the partners and their
rights and duties in relation to LLP. [Sec. 2(1)(o)]
 Nature of Limited Liability Partnership
• 1. A Separate Legal Entity;
• 2. Limited Liability;
• 3. Taxation;
• 4. Organizational Flexibility;
• 5. Designated Partners;
• 6. Disclosure Requirements;
• 7. Accounting & Filling Requirements;
• 8. Floating Charges.
 Designated Partners
• Every LLP shall have at least two designated partners who are individuals
and at least one of them shall be resident in India, i.e., he must have
stayed in India for a period of 182 days or more during the immediate
preceding one year.
• Designated Partners Identification Number (DPIN): is an eight digit
numeric number allotted by the Central Government to each designated
partners of LLP.
 Designated Partners
• Liabilities of Designated Partners:
• A) responsible for doing all acts, measures and things as are required to be done by LLP
in respect of compliance of provisions of this Act;
• B) liable to all penalties imposed on the LLP for any contravention of these provisions.
[Sec.8].

• Changes in Designated Partners: LLP may appoint a designated partner

within 30 days of vacancy arising for any reason. [Sec. 9].
 Other Provisions of Limited Liability
Partnership
• Incorporation of LLP [Sections 11 to 21]
• Procedure for incorporation of LLP is similar to company under the Companies Act,
2013.
• Incorporation by Registration: On compliance of the conditions of incorporation, the
registrar shall within a period of 14 days register the incorporation document and gives
a certificate that the LLP is incorporated by the name specified therein.
• Registered Office of LLP: shall have registered office to which all
communication and notices may be addressed and where they shall be
received.
 Partners and Their Relations
• Mutual rights and duties of partners of shall be governed by an agreement
between partners, or between the LLP and its partners. LLP Agreement
• In absence of LLP Agreement:
• Partners of LLP are entitled to share equally in the capital, profit & loss of the LLP;
• Every partner may take part in the management of LLP;
• Partner shall not be entitled for any remuneration;
• No admission of partner without the consent of all existing partners;
• Each partner shall render the true account and full information;
 Partners and Their Relations
• In absence of LLP Agreement:
• Majority of partners cannot expel any partner;
• Ever partner shall indemnify the LLP for any loss caused to it by any loss caused to
it by his fraud in the conduct of the LLP business;
• Issue of LLP shall be decided by a resolution passed by a majority;
• Disputes which cannot be resolved shall be referred to the arbitration as per the
provisions of the Arbitration and Conciliation Act, 1996.
 Liability of LLP and its Partners
• Liability of LLP: is liable, if a partner of LLP is liable, to any person as a
result of wrongful act or omission on his part in the course of business of
LLP. [Section 27]
• Liability of Partners: Every partner is the agent of LLP but not of other
partners. [Section 26 & 28]
• Liability of Legal Representatives of Deceased partner: Legal
representatives or deceased’s estate liable for any act of LLP done after
his death. [Section 29(2)].
 Contribution by Partner (Sec. 32 & 33)
• A contribution of partner to the capital of LLP may consist of any of the
following:
• Movable or Immovable Property;
• Tangible or Intangible Property;
• Other benefit to the LLP including money, promissory notes, contracts of services
performed or to be performed.
• Contribution shall be as per the LLP agreement.
Winding up of LLP

Winding
up of LLP

Voluntary Tribunal
 Voluntary Winding up
• Steps involved in the process of Voluntary Liquidation
• Step. 1: Declaration of Solvency
• Step. 2: Identification of an Insolvency Professional as Liquidator
• Step. 3: Designated Partner’s meeting
• Step. 4: Partner’s meeting
• Step. 5: Filling of resolutions with Registrar of companies and IBBI (Insolvency and Bankruptcy Board
of India)
• Step. 6: Liquidator in-charge of LLP
• Step. 7: Public Announcement
• Step. 8: Preliminary Report
 Voluntary Winding up
• Steps involved in the process of Voluntary Liquidation
• Step. 9: Opening of Bank Account
• Step. 10: No-objection from Tax Authorities
• Step. 11: Realization of Assets
• Step. 12: Distribution
• Step. 13: Completion of Liquidation
• Step. 14: Liquidation extending beyond 12 months & Annual Report
 Voluntary Winding up
• Step. 15: Final Report
• Step. 16: Filing
• Step. 17: Application to NCLT (National Company Law Tribunal)
• Step. 18: Order by NCLT
• Step. 19: Filing Order
• Step. 20: Preservation of Records.
 Winding up by the Tribunal [Section 64]
• Who can file petition to the Tribunal for winding up of LLP?
• LLP or any of it’s partners;
• Secured Creditor(s);
• Registrar of Companies;
• Any person authorised by Central Government;
• Central Government under section 51 of LLP Act, 2008;
• Central Government or State Government under Section 64(d).
 Winding up by the Tribunal [Section 64]
• Actions to be taken by Tribunal :
• Dismissal of Petition;
• Interim Order;
• Direction to revive the LLP as per sections 60 & 62 of LLP Act, 2008;
• Appoint a provisional Liquidator of the company to complete the process of
Liquidation;
• Order of winding up of the LLP;
• Any other order which the Tribunal thinks fit.
 Implications of Winding up of LLP
• LLP shall cease to carry on its affairs of business;
• LLP shall cease to exist from the date of its dissolution.