LLP MANTRA

2 1 2

P a r t i c u l a r s P a g e N o .R e g u l a r S e c t i o n – A u d i t o f L i m i t e d L i a b i l i t y P a r t n e r s h i p3 - 4 L L P i n N e w s

5 G r e y I s s u e s i n L L P6 F A Q ’ S – R o l e o f D e s i g n a t e d P a r t n e r s

7 - 8 D e s i g n a t e d P a r t n e r s S e g m e n t o n G l o b a l C o m p a r i s o n9 R e c e n t Q u e r i e s o n L L P C l u b

10 F e a t u r e s o f L L P o n l i n e . i n10 P u b l i c O p i n i o n11 O u r O f f e r i n g s11

I n s i g h t

3 1 2

Limited Liability Partnership alike Companies are required to get their accounts audited as per

the provisions provided under Limited Liability Partnership Rules 2009. I s i t n e c e s s a r y f o r a l l L L P s t o g e t t h e i r a c c o u n t s a u d i t e d ?No, Only the Limited Liability Partnership where contribution of Partners exceed Rs. 25 Lac or

the Limited Liability Partnership whose turnover exceed Rs. 40 Lac Per annum are required to

annually get their accounts audited by any Chartered Accountant in practice.

Limited Liability Partnerships who are exempted from mandatory audit may also get their

accounts audited as per the Limited Liability Partnership Rules 2009.

In case the partners do not decide for the audit of the accounts of the LLP a statement to be

included in the Statement of Account and Solvency by the partners to the effect that the

partners acknowledge their responsibilities for complying with the requirements of the Act and

the Rules with respect to preparation of books of account and a certificate in the form

mentioned below:

“ W e d e c l a r e t h a t t h e t u r n o v e r d o e s n o t e x c e e d / e x c e e d s 4 0 L a c o r t h e c o n t r i b u t i o n d o e s n o te x c e e d / e x c e e d s 2 5 L a c r u p e e s . T h e p a r t n e r s / a u t h o r i z e d r e p r e s e n t a t i v e s h a v e t a k e n p r o p e rc a r e a n d r e s p o n s i b i l i t y f o r m a i n t e n a n c e o f a d e q u a t e a c c o u n t i n g r e c o r d s a n d p r e p a r a t i o n o fa c c o u n t s i n a c c o r d a n c e w i t h t h e p r o v i s i o n s o f t h e L L P A c t a n d t h e R u l e s m a d e t h e r e u n d e r ”.

This certificate to be filed annually with the Registrar of LLP along with e Form 8 . A p p o i n t m e n t o f A u d i t o rLimited Liability Partnerships who mandatorily require auditing of their accounts shall appoint

an auditor within 30 days before the end of each Financial Year i.e. before 1st March of each

year. In case of First Financial year the auditor to be appointed before the end of the First

Financial Year.

The Designated Partners responsible for the compliances of LLP will appoint the auditor.

However if the designated partner fails to appoint the auditor then the partners may appoint

the auditor.

R e g u l a r S e c t i o n – A u d i t o f L i m i t e d L i a b i l i t y P a r t n e r s h i p

4 1 2

The auditor appointed shall remain in office until new auditor is appointed or the majority of

Partners have given a notice for the non appointment of existing auditor. Such notice of auditor

of Partners may be in hard copy or electronic Form and must be authenticated by the Partners

giving the notice.

In the absence of LLP Agreement or unless otherwise expressly provided in the LLP Agreement

remuneration of Auditors is fixed by the Designated Partners or if any procedure has been

prescribed in the LLP Agreement the remuneration to be decided as per that provision. R e s i g n a t i o n o f A u d i t o rAn auditor may resign by depositing a notice in writing to that effect at the LLP’s registered

office. Such Notice is to be accompanied by the statement of the circumstances connected with

his ceasing to hold office. In case if a auditor is unwilling to be re –appointed he shall give a

notice in writing to that effect at the LLP’s registered office, not less than 14 days before the

end of the time allowed for appointing the new auditor. R e m o v a l o f A u d i t o rAn auditor may be removed from his office at any time as per the procedure mentioned in the

LLP Agreement. In the absence of LLP Agreement or unless otherwise expressly provided in the

LLP Agreement the auditor may be removed with the consent of all the Partners

5 1 2

U s e r s a c c e s s i b i l i t y t o n e w e F o r m s o n L L P P o r t a l

The users can now access following e forms on the LLP Portal of Ministry of Corporate affairs

i.e. www.llp.gov.in.

a) eForm 4: Consent of Partners

b) eForm 23: Application for directions for change of LLP Name.

c) eForm 25: Application for reservation of names by Foreign Companies/LLP

d) eForm 27: Application for registration of Foreign LLPS o u r c e : w w w . l l p . g o v . i n D o u b l e T a x a t i o n A v o i d a n c e A g r e e m e n t f o r L i m i t e d L i a b i l i t y P a r t n e r s h i p

To attract more entrepreneurs to limited liability partnerships, this new form of business

structure is likely to be recognized in double taxation avoidance (DTAA) treaties between India

and other countries. The corporate affairs ministry has proposed to the finance ministry to

avoid double taxation for LLPs to attract more entrepreneurs to this business structure,

introduced in the country from April 1 this year. DTAA treaties are signed between India and

other countries for avoiding payment of double taxes by entities. S o u r c e : E c o n o m i c T i m e sD a t e d : 0 4 t h M a y 2 0 0 9

6 1 2

Coming back in the existing series of grey areas of LLP, a segment of our research to

alert/aware you on the various unresolved issues under LLP Act 2008, are outlined herein after:

L L P N a m e

: Section 15(2) provides that the name of Limited Liability Partnership shall not

resemble with the name of any other partnership firms. However the records of the

Partnerships Firms are not available then how the name availability of Limited Liability

Partnership would be checked appropriately.

T r a n s f e r a n d A s s i g n m e n t

: Section 42 (1) & (2) unfolding the Partner’s transferable

interest provides that the Partners of LLP can transfer their right of sharing the profit and

loss but such transfer does not by itself cause the disassociation of the partner or a

dissolution and winding up of the limited liability partnership.

Further section 42(3) says that any such transfer does not by itself entitle the transferee

or assignee to participate in the management or conduct of the activities of the limited

liability partnership, or access information concerning the transactions of the limited

liability partnership.

The words used in sub –section (3) are transferee or assignee where as sub- section (1) &

(2) talks about the transfer only not the assignment. Is there any d i f f e r e n c e b e t w e e nt r a n s f e r a n d a s s i g n m e n t ?

If yes no such clarification is provided in the Act. W h a t w o u l d b e t h e r o l e o f t r a n s f e r o r i f a l l t h e r i g h t s t o s h a r e p r o f i t h a v e b e e nt r a n s f e r r e d t o t r a n s f e r e e , w h e t h e r t h e t r a n s f e r o r w o u l d b e h a n d l i n g t h e C o m p l i a n c e so n l y b e i n g a p a r t n e r w i t h o u t a n y s h a r e o f p r o f i t ?W h a t w o u l d b e t h e R o l e o f T r a n s f e r e e i n L L P a f t e r t r a n s f e r o r a s s i g n m e n t , w h e t h e r h ew o u l d b e s h a r i n g t h e p r o f i t / L o s s o n l y w i t h o u t h a v i n g a n y r e s p o n s i b i l i t y f o r c o m p l i a n c e so f L L P ?

7 1 2

W h o i s a D e s i g n a t e d P a r t n e r ?

Designated Partner is partner, who has been nominated as such in the LLP Agreement

and who shall be responsible for all the compliances required to be done under the LLP

Act and liable for all the penalties there under in case of defaults. However For

compliances of other acts all the partners would be responsible.

W h o c a n b e a ’ D e s i g n a t e d P a r t n e r ’ ?

Only an individual can be appointed as a ’Designated Partner’ and at least one of the

Designated Partner shall be a resident of India. In case of a LLP in which all the partners

are bodies corporate or in which one or more partners are individuals and bodies

corporate, at least two individuals who are partners of such LLP or nominees of such

bodies corporate shall act as designated partners.

W h a t a r e t h e r e q u i r e m e n t s i n r e s p e c t o f ’ D e s i g n a t e d P a r t n e r s ’ ?

Appointment of at least two ’Designated Partners’ shall be mandatory for all LLPs.

H o w c a n a D e s i g n a t e d P a r t n e r b e n o m i n a t e d ?A Designated Partner may become so

a) if specified in the incorporation document for the time being or is specified that

each partner may be Designated partner as and when appointed

b) Any partner may become a designated partner by and in accordance with the limited

liability partnership agreement and a partner may cease to be a designated partner

in accordance with limited liability partnership agreement.

c) In case the LLP Agreement is silent as to the Designated Partner, every partner shall

be treated as Designated Partner

8 1 2

Provided that any person intending to become a Designated Partner is required to give a

prior consent to the LLP which shall be filed with the Registrar of LLP.

W h a t i s D e s i g n a t e d P a r t n e r I d e n t i f i c a t i o n N u m b e r ( D P I N ) ?

Designated Partner’s Identification Number (DPIN) is a eight digit numeric number

granted to any person intending to be appointed as Designated Partner for the purpose

of its identification ,on the lines similar to ’Director’s Identification Number’ (DIN)

required for Directors in case of Companies. Every Designated Partner is required to

have a DPIN for forming a LLP.

To check out all FAQ on Designated Partner, log on to www.llponline.in

9 1 2

F a c t s L L P U K S i n g a p o r e L L P U S ( C a l i f o r n i a ) L L P I n d i a n L L PN o . o fD e s i g n a t e dP a r t n e r s / M a ng e r At least 2 Designated

Partners, it can be

Company,

Corporation or

Individual and need

not to be resident of

UK Only.

Must appoint at least

one manager Singapore

Citizen and should be a

natural person of full age

and capacity.

No such concept of

Designated

Partner/Manager

exists.

Must have at least

2 Designated

Partners who shall

be an individual

and at least one of

the Designated

Partner shall be a

resident of India D e s i g n a t e dP a r t n e r n e e dt o b e P a r t n e ro r n o t Designated Partner

should be a partner.

Manager need not to be

a partner of LLP

No such provision

exist.

Designated Partner

needs to be a

Partner. Designated

Partner means any

partner who is

designated as such. D e s i g n a t e dP a r t n e r sI d e n t i f i c a t i o nN u m b e r Designated Member

should have

registration number

No such provision exist. Since the concept of

Designated Partner is

not there no such

registration required.

Designated Partner

must have a DPIN

(Designated

Partner

Identification

Number) C o n s e n t o fD e s i g n a t e dP a r t n e r t o a c ta s s u c h . Consent of the

members is required

to be filed with the

Registrar.

As per Section 23(2)

consent of the manager

is required.

No such provision

exists

Consent of the

Designated Partner

is required to be

filed with the

Registrar of LLP. C o m p l i a n c e so f D e s i g n a t e dP a r t n e r s Designated Partner is

responsible for the

Compliances all acts,

matters required to

be done by LLP.

Manger is responsible for

the Compliances

provided under Section

24, 27 and 28 relating to

Annual Disclosure of

solvency or Insolvency,

Publication of Name and

Limited Liability and

registration of changes in

particulars.

No such provision

exist.

Designated Partner

is responsible for

the Compliances all

acts, matters

required to be

done by LLP under

the LLP Act and LLP

Agreement.

1 0 1 2

I a m a n a d v o c a t e , w h e t h e r I c a n f o r m a L L P ?

W h e t h e r t h e r u l e s f o r w i n d i n g u p o f L L P h a v e b e e n n o t i f i e d ?

W h e t h e r t h e l i a b i l i t y o f P a r t n e r s w o u l d b e l i m i t e d t o t h e e x t e n t o f C o n t r i b u t i o n ?

A s p e r t h e P r o v i s i o n s o f L L P A c t 2 0 0 8 a n L L P c a n b e m e r g e d w i t h a n o t h e r L L P . C a n aC o m p a n y b e a l s o m e r g e d w i t h L L P o r v i c e - v e r s a ?To check out the views of other professional colleagues or to submit your view log in toh t t p : / / w w w . l l p o n l i n e . i n / f o r u m /

W h a t i s L L P ?

– Know LLP with its advantages and disadvantages.

L e g a l S p h e r e

– Check out the laws of LLP on the basis of Chapter, Major Heads, Section

Notification and much more as per your convenience.

I n t e r n a t i o n a l S c e n a r i o :

Along with the international LLP Laws check out the handy

comparison of Indian LLP with the worldwide Forms of LLP.

C o m p a r e L L P –

Compare LLP with the other available Forms of Business (Company,

Partnership) and come out with the most suitable Form for your Business.

F o r m & C o n v e r t Y o u r L L P

– Check out the requirements and the simplified procedures

for formation & conversion of your LLP.

I n f o r m a t i o n C a f e :

Hub of Information relating to LLP with the outstanding features

providing Business objects for your LLP and draft LLP Agreements defining the

relationship of LLP and its Partner, Pick out these outstanding features as per your

requirement.

N a m e G u i d e l i n e s :

Check out the approval or any prohibition with your proposed names.

( P o d i u m f o r L L P d i s c u s s i o n o n L L P o n l i n e . i n )

1 1 1 2

Q u i c k L i n k s

: Revealing articles, step ahead toward your knowledge enhancement.

E – F i l i n g Z o n e

: Acquainting you with all the possible aspects of E-filing on llp.gov.in

from registration to Formation.

L L P C l u b :

Online Podium for LLP discussion.

A s k t h e E x p e r t

: Get an easy answer for any query relating to LLP.

And lot of other useful and innovative features……

Our Poll of the week “w h e t h e r S c h e d u l e I o f t h e L L P A c t s h o u l d b e m o r e e x h a u s t i v e l i k e T a b l eA i n C o m p a n i e s A c t , 1 9 5 6

” was favored by 50% audience while 50% opinion was against such

exhaustiveness of Schedule 1.

To count your vote on” w h e t h e r i n c a s e o f L L P , t h e p r o f i t s h o u l d b e t a x e d i n t h e h a n d s o f t h ep a r t n e r s

” log in to www.LLPonline.in

1 2 1 2

D i s c l a i m e r :This paper is a copyright of Corporate Professionals (India) Pvt. Ltd. The entire contents of this paper have been

developed on the basis of latest prevailing Limited Liability Partnership Act, 2008 in India. The author and the

company expressly disclaim all and any liability to any person who has read this Newsletter or otherwise, in respect

of anything, and of consequences of anything done or omitted to be done by any such person in reliance upon the

contents of this Newsletter.

O u r T e a m :

F r o m t h e h o u s e o f

C o r p o r a t e P r o f e s s i o n a l s ( I n d i a ) P r i v a t e L i m i t e dD - 2 8 , S o u t h E x t n . P a r t - I , N e w D e l h i - 1 1 0 0 4 9 ,P h : 0 1 1 - 4 0 6 2 2 2 0 0 ; F a x : 0 1 1 - 4 0 6 2 2 2 0 1 .E m a i l : i n f o @ i n d i a c p . c o m & i n f o @ L L P o n l i n e . i n

A n k i t S i n g h i – 0 1 1 - 4 0 6 2 2 2 0 8A s s t . M a n a g e r , C o r p o r a t e A f f a i r s & C o m p l i a n c e se m a i l : a n k i t @ i n d i a c p . c o m S h i p r a W a d h w a - 0 1 1 - 4 0 6 2 2 2 4 6A s s o c i a t e , C o r p o r a t e A f f a i r s & C o m p l i a n c e se m a i l : s h i p r a @ i n d i a c p . c o m