LIMITED LIABILITY LIMITED LIABILITY PARTNERSHIP ACT, PARTNERSHIP ACT,

20082008

Presented by – Presented by –

PRASENJIT MANDALPRASENJIT MANDAL

Email: Email: pmandal@ymail.compmandal@ymail.com

MeaningMeaning

•It is a body corporate with It is a body corporate with limited liability of partners. limited liability of partners. Liability is limited to the Liability is limited to the capital contribution made by capital contribution made by them. them.

Features:-Features:-

• Limited liability of partners. Limited liability of partners. • Body corporate with perpetual succession. Body corporate with perpetual succession. • Minimum 2 partners without any ceiling Minimum 2 partners without any ceiling

on maximum number. on maximum number. • Very simple registration formalities Very simple registration formalities

Detailed LLP Agreement is not mandatory Detailed LLP Agreement is not mandatory but if not done, certain inherent but if not done, certain inherent provisions will apply viz. equal share in provisions will apply viz. equal share in profit/loss, no remuneration can be paid to profit/loss, no remuneration can be paid to partners. partners.

FeaturesFeatures

• Acts of one partner will not be Acts of one partner will not be binding on other partners. They bind binding on other partners. They bind only to the LLP. only to the LLP.

• Liability of LLP must be met out of Liability of LLP must be met out of property of LLP only. The LLP Act property of LLP only. The LLP Act 2008 is to come into force from 1-4-2008 is to come into force from 1-4-2009. This date is not notified yet. 2009. This date is not notified yet.

Registration:-Registration:-

• Registration of LLP is a simple Registration of LLP is a simple process. On filing of documents after process. On filing of documents after satisfying any query by Registrar, a satisfying any query by Registrar, a certificate of registration will be certificate of registration will be issued. The name of LLP must be issued. The name of LLP must be having “LLP” as its suffix. having “LLP” as its suffix.

Designated Partner:-Designated Partner:-

Every LLP shall have at least TWO Every LLP shall have at least TWO Designated partners who are Designated partners who are individual. If LLP is between two body individual. If LLP is between two body corporate, individuals designated from corporate, individuals designated from the companies will be considered as the companies will be considered as designated partners. Such partners designated partners. Such partners shall have to take their DPIN shall have to take their DPIN (Designated Partners Identification (Designated Partners Identification Number). No partner is entitled for Number). No partner is entitled for remuneration for managing the remuneration for managing the business of LLPbusiness of LLP

Accounting:-Accounting:-

LLP can follow either Cash or LLP can follow either Cash or Mercantile system of Mercantile system of accounting .The accounts shall be accounting .The accounts shall be audited as per the rules prescribed. audited as per the rules prescribed. Presently it is if gross receipts Presently it is if gross receipts exceed 40 Lakhs or Capital exceed 40 Lakhs or Capital Contribution exceeds 25 Lakhs. Contribution exceeds 25 Lakhs.

Filling of Accounts:-Filling of Accounts:-

Annual return of LLP is to be filed Annual return of LLP is to be filed with Registrar within 60 days from with Registrar within 60 days from the end of accounting year. The the end of accounting year. The Accounts are also to be filed within 6 Accounts are also to be filed within 6 months from the end of financial months from the end of financial year.year.

Filling of AccountsFilling of Accounts

However, if LLP fails to file any However, if LLP fails to file any documents within the stipulated time documents within the stipulated time limit, a grace period of 300 days is limit, a grace period of 300 days is allowed with additional fees payment. allowed with additional fees payment. Non compliance in relation to Annual Non compliance in relation to Annual Return, a penalty not less than Return, a penalty not less than Rs.25,000 and maximum upto Rs.25,000 and maximum upto Rs.5,00,000 is levy able. Apart from Rs.5,00,000 is levy able. Apart from that, a penalty on Designated Partner is that, a penalty on Designated Partner is also levy able at minimum amount of also levy able at minimum amount of Rs.10,000 and maximum Rs.1,00,000. Rs.10,000 and maximum Rs.1,00,000.

Conversion:-Conversion:-

Conversion of present partnership or company Conversion of present partnership or company into LLP is possible after satisfying formalities into LLP is possible after satisfying formalities with registrar. However, listed public with registrar. However, listed public companies can’t be converted into LLP. companies can’t be converted into LLP. Company can be converted into LLP only after Company can be converted into LLP only after satisfying any charge on the assets of the satisfying any charge on the assets of the company. However, the said rule doesn’t apply company. However, the said rule doesn’t apply for the Partnership conversion. The main for the Partnership conversion. The main condition of the conversion is that the same condition of the conversion is that the same partners or members of the converting entity partners or members of the converting entity will remain as partners in the resulting entity. will remain as partners in the resulting entity. Once the conversion into LLP is finished, it Once the conversion into LLP is finished, it can’t be re-converted into its original entity. can’t be re-converted into its original entity.

Taxation:-Taxation:-

The LLP act is silent about tax The LLP act is silent about tax treatment, but its characteristics are treatment, but its characteristics are of a firm. Hence, All provisions of of a firm. Hence, All provisions of taxation of firms will apply to LLP. taxation of firms will apply to LLP. Taxation on Transfer applies only Taxation on Transfer applies only when there is some consideration when there is some consideration received on transfer. However, on received on transfer. However, on Conversion there is nothing received Conversion there is nothing received and hence Capital Gain doesn’t arise and hence Capital Gain doesn’t arise

Pending Issues:-Pending Issues:-

• Certain uncertainties need to be Certain uncertainties need to be addressed urgently to make this Act really addressed urgently to make this Act really functional. functional.

• E.g.E.g.• Amendments in different acts so as to Amendments in different acts so as to

have partnership with different have partnership with different professionals. CA Regulation Act and Bar professionals. CA Regulation Act and Bar Council Act needs to be amended Council Act needs to be amended accordingly still. accordingly still.

• Attracting foreign Investment in LLP Attracting foreign Investment in LLP • Whether minor can be taken as partner in Whether minor can be taken as partner in

LLP or not? LLP or not? • Compulsory insurance. Compulsory insurance.

THE END.THE END.