10th june, 20111 limited liability partnerships presented by : group-9 mukesh goyal neha bablani...

10th June, 2011 1

LIMITED LIABILITY PARTNERSHIPS

PRESENTED BY : Group-9

MUKESH GOYAL

NEHA BABLANI

RICHA SHARMA

ROSY JAISWAL

RIDDHI MADAN

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WHAT IS LLP ?

Governed by the Limited Liability Partnership Act, 2008.

An LLP is a body corporate.

Minimum two partners and two Designated Partners (Individuals & one of them must be resident in India).

Every Designated Partner must obtain DPIN form the Central Government.

The name of the LLP must end with either the words Limited Liability Partnerships or LLP.

LLP can carry business with profit motive only.

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CONCEPT OF LLP

LLP is an alternative corporate business form that gives the benefit of limited liability of a company and the flexibility of a partnership.

An LLP can continue its existence irrespective of change in partners.

No partner is liable on account of the independent actions of other partners.

Mutual rights and duties of the partners within an LLP are governed by an agreement.

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LLP-GENESIS

Other Countries where this form is available:-

UK, USA, various other Gulf countries, Australia and Singapore.

LLP Act is broadly based on UK LLP 2000 and Singapore LLP Act 2005.

Both these Acts allow creation of LLPs in a body corporate form.

Apr. 2, 2009 –First LLP was registered. June 6,2011-Number of LLPs Registered 5052

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COMPARISONPartnership Firm Limited Liability

PartnershipPrivate Company Public Company

Registration-Optional

Registration - Mandatory



Registering Authority-Registrar of Firms

Registering Authority- Registrar of Companies



Partnership Firm is not a Body Corporate

LLP is a Body Corporate

Private Company is a Body Corporate

Public Company is a Body Corporate

Not Independent legal entity

Is an Independent legal entity distinct from partners

Is an Independent legal entity distinct from shareholders

Is an Independent legal entity distinct from shareholders

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COMPARISON CONTD…Partnership Firm Limited Liability


Partnership firm can commence Business immediately on implied or written agreement between partners

LLP can commence Business immediately after issue of Certificate of Incorporation by the Registrar

Private Company can commence Business immediately after issue of Certificate of Incorporation by the Registrar

Public Company should obtain Certificate of Commencement of Business before commencement of Business

There is no concept of issue of ownership Certificate for capital contribution

There is no concept of issue of ownership Certificate for Contribution

Share Certificate will have to issued within 3 months of issue/allotment of shares

Share Certificate will have to issued within 3 months of issue/allotment of shares

There is no concept of capital contribution at premium

There is no concept of contribution at premium

Shares can be issued at a premium

Shares can be issued at a premium

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An Unregistered Partnership Firm can be sued by third party but it cannot sue third parties

LLP can sue and be sued in its name

Private Company can sue and be sued in its name

Public Company can sue and be sued in its name

Existence of Partnership Firm is determined by Facts

Existence is determined by Registration Certificate



Partnership Firm has no perpetual succession

LLP has perpetual succession

Private Company has perpetual succession

Public Company has perpetual succession

Min. no. of partners - 2

Min. no. of partners - 2

Min. no. of Shareholders - 2

Min. no. of Shareholders - 7

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Max. no. of Partners:

Banking - 10

Non-Banking - 20

Max. no. of Partners - No Limit

Max. no. of Shareholders - 50

Max. no. of Shareholders - No Limit

Partnership in writing is evidenced by Partnership Deed

Limited Liability Partnership Agreement

Memorandum and Articles of Association

Memorandum and Articles of Association

Voting Rights not applicable

One vote per Partner

One vote per member on show of hands

One vote per member on show of hands

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Liability of Partners is unlimited - joint and several

Liability of Partners is limited to the extent of Contribution made except under certain circumstances

Liability of shareholders is limited to the extent of shares held

Liability of shareholders is limited to the extent of shares held

A guarantee given by a Partnership Firm to a third party in the absence of agreement to the contrary stands revoked in respect of future transactions

A guarantee given by a LLP to third party shall continue and be binding on the LLP for future transactions even after the death of a partner

A guarantee given by a private company to third party shall continue and be binding on the company for future transactions even after the death of a shareholder

A guarantee given by a public company to third party shall continue and be binding on the company for future transactions even after the death of a shareholder

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A Minor cannot become a Partner but can be admitted to the benefits of Partnership with the consent of all the partners as per Section 30 of the Partnership Act 1932

A Minor cannot become a Partner nor admitted to the benefits of LLP since there is no provision in the LLP Act 2008 to this effect

A Minor can become a fully paid up shareholder. Share Certificate shall be issued in the Guardian’s name

A Minor can become a fully paid up shareholder. Share Certificate shall be issued in the Guardian’s name

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INCORPORATION AND REGISTERATION

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FORMATION OF LLP

Deciding the Partners & Designated Partners Obtaining DPIN (Form-7) & Digital Signatures Reservation of name of LLP (Form-1) Filing of Incorporation documents (Form-2) Filing of LLP Agreement (Form-3) Filing of consent of Partners/ Designated

Partners (Form-4) Certificate of Incorporation

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Step I: Deciding the Partners and Designated Partners

• Minimum of Two Partners (Individuals or Body Corporate through their nominees)

• At least two shall be Designated Partners, of which at least one must be an Indian Resident.

PROCESS

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Step II: Obtaining DPIN No. & Digital Signature

• Designated Partner Identification Number (DPIN): Section 7 (6) of LLP Act 2008, provides that every Designated Partner to obtain a DPIN from the Central Government.

• Digital Signature Certificate: As all the documents and forms required for incorporating an LLP in India to be filed electronically and under the signatures of Designated Partners, thus at least one Designated Partner to obtain the digital signature certificates from government recognized DSA’s.

PROCESS

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• The name of the proposed LLP shall be evaluated under the prescribed parameters and make an application in Form 1 of Rule 18(5) of the Limited Liability Partnership Act 2008, for reservation of the desired name.

•The name of the limited liability partnership shall not be similar or identical with Company or LLP already registered in India and it should not contains words prohibited under the ‘Emblems and Names (Prevention of improper use) Act, 1950’or which are also not ‘Undesirable’ in the opinion of Central Government or which satisfies the conditions prescribed under rule 18(2).

Step III: Checking the Name Availability

PROCESS

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Step IV: Drafting of LLP Agreement

• LLP Agreement governs the mutual rights and duties among the partners and among the LLP and its partners.

• The basic contents of Agreement are: 1. Name of LLP 2.Name of Partners & Designated Partners 3.Form of contribution 4.Profit Sharing ratio 5.Rights & Duties of Partners 6.Proposed Business 7.Rules for governing the LLP

• If, no agreement. Then Schedule I will be applicable.

PROCESS

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PROCESS

Step V: Filing of Incorporation Documents • eForm2: Incorporation Document

• eForm 3: Details of LLP Agreement

• eForm 4: Consent of Partners Consent of each partner to become a partner of Limited Liability Partnership along with their address and identity proof to be filed with the Registrar of Companies.

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Step VI: Certificate of Incorporation

• After the Registrar is satisfied that all the formalities with respect to the incorporation has been complied , he will issue a Certificate of Incorporation as to formation of the LLP within maximum of 14 days from date of filing of documents . The Certificate of Incorporation issued shall be the conclusive evidence of formation of the LLP.

PROCESS

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Form-3, Form-4,

Form-5, Form-15

Form-8 and Form-11

EVENT BASED REGULAR

COMPLIANCES

http://www.unclaimedpropertyspecialists.com/Websites/marketsphere/Images/AnnualCompliance.jpg

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ANNUAL COMPLIANCES

Limited Liability Partnership shall with in a period of six months from the end of every financial year prepare and file a Statement of Account and Solvency with the Registrar in such form and manner and accompanied by such fee as may be prescribed.

Limited Liability Partnership to file an Annual Return to the Registrar of Companies with in sixty days of closure of the financial year in such form and manner and accompanied by such fee as may be prescribed.

Statement

of Accounts & Solvency

Annual Return

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EVENT BASED COMPLIANCES OF LLPCompliance Section e-form Time Limit

Filing of Consent of Designated Partners

7(3) Form 4 Within 30 days of incorporation or subsequent appointments

Filing of Change in Partners

25(2) Form 3 and

Form 4

Within 30 days of Change

LLP Agreement & Changes therein

23(2) Form 3 With in 30 days of incorporation or Changes in LLP Agreement

Shifting of Registered Office

13(3) Form 15 Within 30 days of Compliance

Change of Name

19 Form 5 Within 30 days of Compliance.

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• Additional Fees for delay filing of Form - Rs.100 per day up to 300 days.

• Delay Filing of the Form beyond 300 days will attract additional fees and action against LLP and Designated Partners under the Act.

EVENT BASED COMPLIANCES OF LLP Cont…

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Books of Accounts

• Particulars of all sums of money received & expended

• A record of assets & liabilities

• Statements of cost of goods purchased

• Any other particulars as may be decided


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Audit

• Retiring auditor deemed to be reappointed if appointment not made unless otherwise provided in LLPA

• Auditor may resign by giving notice to LLP not less than 14 days from before end of time to appoint auditor

• Auditor can be removed when all partners consent or as otherwise provided in LLPA


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Who Can Convert?

Partnership Firm,

Private Company,

Unlisted Public Company.

CONVERSION

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FROM PARTNERSHIP TO LLP

STEPS:-

Deciding the partners and designated partners,Obtaining the DPIN and Digital Signatures,Checking Name Availability of LLP,Drafting of Incorporation documents,Filing Conversion Application,Certificate of Registration,Information for conversion to Registrar of Firms.

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FROM PVT. LTD. TO LLP

STEPS:

Partners and Designated partners,Obtaining the DPIN and Digital Signatures,Checking Name Availability of LLP,Drafting of Incorporation documents,Filing Conversion Application,Certificate of Registration,Certificate of Registration.

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FROM UNLISTED PUBLIC LTD. TO LLP

STEPS:

Partners and Designated partners,Obtaining the DPIN and Digital Signatures,Checking Name Availability of LLP,Drafting of Incorporation documents,Filing Conversion Application,Certificate of Registration,Information for conversion to Registrar of Firms.

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WINDING UP

Two Ways of Winding Up:a) Voluntaryb) By the tribunal :- 1. decided by the LLP 2. No. of designated partners below two, >6 months, 3. Unable to pay debts, 4. Acted against the interest sovereignty and integrity of India 5. Failed to file for 5 years consecutively, statement of account and solvency and annual return 6. Tribunal thinks, it is just and equitable to do so.

NOTE: here tribunal is established still powers are given to High Court.

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ROLE OF COMPANY SECRETARYROLE OF COMPANY SECRETARY Certification of Annual Return by

Company Secretaries -Rule 25(2) of the LLP Rules

LLP with a turnover of over Rs.5 Crore;

or

LLP with a contribution of over Rs.50 Lacs

Annual Return to be accompanied by a certificate from a Company Secretary in practice to the effect that he has verified the particulars from the books and records of the LLP and found them to be true and correct.

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ROLE OF COMPANY SECRETARYROLE OF COMPANY SECRETARY

SEIZE THE OPPORTUNITIES

Formation of LLPs/ Drafting of LLP Agreements Advisory Services –Foreign Clients–Entry options Advisory Services –Indian Clients–Corporate

Restructuring tool Conversion of existing private companies into LLP Conversion of existing partnership firms into LLP Good tool for large size NBFCs Advising the SME Sector –to forge alliances with their

foreign/ Indian counterparts Advising the upcoming entrepreneur class –to

graduate them to a body corporate status

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Two Fold Opportunities

EXPLORE FOR YOUR OWN BUSINESS/ PROFESSION

ADVISE YOUR CLIENTS/ ORGANISATIONS

ROLE OF COMPANY SECRETARYROLE OF COMPANY SECRETARY

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Separate legal entity & body corporate. Low compliance burden & cost. Limited Liability of partners. LLP is liable to the extent of its assets. More flexibility than company. Right of partners can be assigned to third party. Availability of solvency position in public domain

increases the credit worthiness. Allows Multi-disciplinary professionals

combination which provides level playing field against their international professional firm.

Easy to exit/ winding up. Venture capital funds can combined with

knowledge and expertise. Taxation benefits as compare to company.

Merits of LLP (as business model for SMEs and service providers)

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10th june, 20111 limited liability partnerships presented by : group-9 mukesh goyal neha bablani...

Documents

concept of llp llp

partners llp

body corporate llp

uk llp

parties llp

body corporate private

singapore llp act

registrar private company