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Companies Looking at LLPs as new holding ways

The Indian government allowed the formation of Llps in India through an Act of Parliament in

2009. While it was originally meant to enefit entrepreneurial ventures y doing away with

unlimited liaility and giving etter ta! treatment" its worth as a holding company was reali#ed

over time.

$everal ig usiness houses are considering holding at least a part of their sta%e in flagship

companies through limited liaility partnership &Llp' firms" see%ing oth to save ta!es and

smoothen succession planning.

(urrently" most Indian promoters hold sta%es in their company through a clutch of private

limited firms that are liale to pay ta!es such as the dividend distriution ta! and minimum

alternate ta!. Llp firms in India are e!empt from such ta!es" ma%ing them an attractive holding

vehicle for corporate houses.

)y transferring their sta%e to Llp firms" holding companies can reduce ta! liailities such as

dividend distriution ta! and minimum alternate ta!. Also" Llp companies can help in ma%ing the

process of succession within a company smoother.

*At least a do#en usiness houses have as%ed us for advice on how they could utili#e the Llp

structure in the promoter group holding"+ said ,inesh -anaar" deputy chief e!ecutive officer

and chairman of ta!ation at -P/ India Pvt. Ltd. e refused to identify the usiness houses"

citing client confidentiality.

The ta! savings from adopting an Llp structure could e considerale" according to 1.(. egde"

mergers and acuisitions and ta! leader at consulting firm ,eloitte Touche Tohmatsu India Pvt.

Ltd.

*As per the present law and factoring for different situations li%e surcharge and cess" there could

e a difference of 334 in ta! rates in case of Llp" as the company has to pay surcharge and also a

dividend distriution ta!"+ The concept of Llp firms was rought to India through the enactmentof the Limited Liaility Partnership Act y Parliament in 2009. An Llp firm is defined y the

ministry of corporate affairs &(A' as an alternative usiness vehicle that provides the enefits

of limited liaility" ut allows its memers the fle!iility of organi#ing the internal structure as apartnership ased on a mutual agreement.

According to the (A wesite dedicated to disseminating details aout the Llp format" the

structure was introduced to *enale professional e!pertise and entrepreneurial initiative tocomine" organi#e and operate in a fle!ile manner+.

5ver time" people have reali#ed the enefits that can accrue to a company6s holding structurethrough Llps.

Aravali Polymers" one of the holding firms of 7I Ltd that sold a sta%e to 8eliance IndustriesLtd &8IL' on onday" had een classified as a private limited firm on the )omay $toc%

7!change &)$7' until the une uarter. In its announcement on onday" Aravali Polymers was

categori#ed as an Llp firm" which will help it save ta!es.In August" u%esh Amani:controlled 8IL re;igged its promoters6 shareholding y transferring

a 4 sta%e from

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The acuirer firms included 2> Llps" all of which were formed in the une uarter. The 3.0@9

illion shares transferred would e valued at 8s9>"

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$hareholding elonging to 8ILD CPromoter and Promoter GroupC

No.Name of the Shareholder

Total Shares heldShares pledged or

otherwise encumbered

1umer

As a 4

ofgrand

total

&A' E&)' E

&('

1umer

4 ofTotal

shares

held

As a 4

ofgrand

total

&A' E&)' E

&('

3-an%hal Investments And Trading(ompany Private Limited

3=F"=90"9@2 =.? : : :

2 )huvanesh 7nterprises Llp 3 : : :

< A;itesh 7nterprises Llp 32>"0=3">99 "0=3">99

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3< Pavana 7nterprises Llp ">"@00 0.23 : : :

3? $hri%rishna Tradecom Llp ?"?>>"@00 0.23 : : :

3> -amala%ar 7nterprises Llp ?"0"03? 0.2 : : :

3F 1agothane Agrofarms Private Limited @"?00"000 0.3> : : :

39 $hri. , Amani

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