Limited Liability Partnership (incorporated under the LLP Act, 2008) & various rules made there under By: Rajesh Batra Head, Centre for MSME
CONTENTS Background / Basic Concept of LLP Key Benefits of LLP Structure Incorporation formalities for LLP Major compliance requirements of LLP Winding up / closure of LLP
Background / Basic Concept of LLP The Limited Liability Partnership (LLP) Bill, 2008 was passed by Rajya Sabha on 24 th October, 2008 and by the Lok sabha on 12 th December, 2008. The bill received assent of the President on 7 th January, 2009 and was subsequently notified as the Limited Liability Partnership Act, 2008. Limited Liability Partnership (LLP) Act came into force, for most part, on 31 st March, 2009 followed by its rules on Ist April 2009. On 11 th June 2012, the Ministry of Corporate Affairs (MCA) achieved a new milestone by integrating e- Governance project for Limited Liability Partnership (LLP) under the platform of MCA 21. In retrospect, the desirability of the LLP form has been expressed in the context of small enterprises from time to time by various Government committees / Expert Groups. LLP is viewed as an alternative corporate business vehicle that provides the benefit of limited liability but allows its partners the flexibility of organizing their internal structure as a partnership based on a mutually arrived agreement.
Concept and Legal status / structure of an LLP LLP is an alternative corporate business form that gives the benefits of Limited Liability of a company and the flexibility of a partnership. Since LLP contains elements of both a corporate structure as well as a partnership firm structure. LLP is called a hybrid between a company and a partnership. LLP shall be a body corporate and a legal entity separate from its partners. It will have perpetual succession. Any change in the partners of an LLP shall not affect the existence, rights or liabilities of the LLP. Any two or more persons associated for carrying on a lawful business with a view to earn profit may form a limited liability partnership by subscribing their names to an incorporation document and registration with the registrars of companies.
Intention of Law Makers Behind LLP Limited liability partnership concept was introduced in order to adopt a corporate form, which combines the organizational flexibility and tax status of a partnership with advantage of limited liability for its partners. LLP is a body corporate formed and incorporated under the LLP Act, 2008 which is a distinct legal entity separate from its partners. Introducing LLPs, as a new business structure was to fill the gap between business firms such as sole proprietorship and partnership, which are generally unregulated and Limited Liability Companies; which are governed by the Companies Act, 1956. In addition to an alternative business structure, LLPs would also foster the growth of the services sector. The regime of limited liability partnership will provide a platform to small and medium enterprises and professional firms of Company Secretaries, Chartered Accountants, Advocates etc. to conduct their business / profession efficiently which would in turn increase their global competitiveness.
LLP AND MSME LLP as a business model, introduced under LLP Act, 2008 encourages small and medium business entities to come under corporate regulations enabling them to have higher access to credit market. The LLP form has opened the door for SME sector to enjoy the dual advantage of easy compliance with limitation of liability. However the corporate structure and the statutory disclosure requirements would enable higher access to credit in the market. Another advantage for SMEs is that in the new LLP form unlike Companies, only the LLPs with turnover exceeding Rs.40 lacs and contribution exceeding Rs. 25 lacs have to get their accounts audited, providing a step ahead in the flexibility. The introduction of LLP form of business would also promote entrepreneurship, particularly in relation to the knowledge based industries such as the information technology and biotechnology sectors.
MSME UNIVERSE Total no. of MSMEs Number of micro enterprises Number of small enterprises Number of medium enterprises 3 cr 90% 9% <1% 97% of the MSMEs are partnerships or proprietorships. 3% of MSMEs are in the form of companies. 38% contribution of micro, small & medium enterprises to the GDP. The corporate form does not appear to be widely prevalent amongst SMEs. The reason for non presence of corporate firm appears to be a high compliance cost. The sector is losing credit facilities from the bankers due to opacity and lack of credibility of the proprietorship firm.
MSME UNIVERSE MSMEs in India classified as under:- Category Micro Enterprise Manufacturing Enterprises (Investment in Plant & Machinery) Up to Rs. 2.5 Million (USD 40500) Service Enterprises (Investment in Equipment) Up to Rs. 1 Million (USD 16200) Small Enterprise Above Rs. 2.5 Million up to Rs. 50 Million (USD 40500 but does not exceed USD 810000) Above Rs. 1 Million up to Rs. 20 Million (USD 16200 but does not exceed USD 24000) Medium Enterprise Above Rs.50 Million up to Rs. 100 Million (USD 810000 but does not exceed USD 1620000) Above Rs. 20 Million up to Rs. 50 Million (USD 324000 but does not exceed USD 810000)
2% 2% 2% 2% 1% 1% Business Services DISTRIBUTION OF ACTIVE LLP BY ECONOMIC ACTIVITY AS ON 31.03.2016 10% 8% 11% 12% 12% 39% Trading Real Estate & Renting Manufacturing Construction Community, personal & social services Transport, storage and communication Agriculture & Allied activities Finance Mining & Quarrying Electricity, Gas & Water companies Insurance As on 31st December, 2016, 79,586 LLPs were registered. Of which 77,895 LLPs were active with the major distribution of 39% under business services.
SALIENT FEATURES OF LLP Body corporate with a separate legal entity. Limited liability of the partners. Every Limited Liability Partnership shall have atleast two partners. The Indian Partnership Act, 1932 shall not be applicable to LLPs. Every Limited Liability Partnership shall have at least two designated partners who are individuals and atleast one of them shall be a resident of India. The mutual rights and duties of the partners of limited liability partnership, and the mutual rights and duties of a limited liability partnership and its partners, shall be governed by the limited liability partnership agreement between the partners, or between the liability partnership and its partners. A LLP shall maintain annual accounts reflecting true and fair view of its state of affairs. A statement of accounts and solvency shall be filed by every LLP with the Registrar every year. The accounts of LLPs shall also be audited, subject to any class of LLPs being exempted from this requirement by the Central Government;
SALIENT FEATURES OF LLP Every limited liability partnership shall file the Statement of Account and Solvency in Form # 8 with the Registrar, within a period of thirty days from the end of six months of the financial year to which the Statement of Account and Solvency relates. A limited liability partnership s Statement of Account and Solvency shall be signed on behalf of the limited liability partnership by its designated partners. A limited liability partnership whose turnover exceed forty lakh rupees, in any financial year or whose contribution exceed twenty-five lakh rupees shall be required to get its accounts audited. Every limited liability partnership shall file an annual return with the Registrar in Form # 11. The Central Government may appoint one or more competent persons as inspectors to investigate the affairs of a limited liability partnership and to report on them in such manner as it may direct. The winding up of a limited liability partnership may be either voluntary or by the Tribunal.
Thank you
Key Benefits of LLP Structure
KEY BENEITS OF LLP STRCUTURE The major advantages of LLP form of business is that LLP is an organized form of business and operates on the basis of an agreement. It provides greater operational flexibility without much statutory requirements. Following benefits encourage one to go for an LLP: Renowned form of business: Though the concept of Limited Liability Partnership has been recently introduced in India but it is very known concept in other countries of the world especially in service sector. Easy to Form: It is very easy to form LLP, as the process is very simple as compared to Companies and does not involve much formality. Moreover, in terms of cost the minimum fees of incorporation is as low as Rs 800 and maximum is Rs 5600. Body Corporate: Just like a Company, LLP is also body corporate, which means it has its own existence as compared to partnership. LLP and its Partners are distinct entity in the eyes of law. LLP will know by its own name and not the name of its partners.
KEY BENEITS OF LLP STRCUTURE Liability: A LLP exists as a separate legal entity from your personal life. Both LLP and person, who own it, are separate entities and both functions separately. Liability for repayment of debts and lawsuits incurred by the LLP lies on it and not the owner. Any business with potential for lawsuits should consider incorporation; it will offer an added layer of protection. Perpetual Succession: An incorporated LLP has perpetual succession. Notwithstanding any changes in the partners of the LLP, the LLP will be a same entity with the same privileges, immunities, estates and possessions. The LLP shall continue to exist till its wound up in accordance with the provisions of the relevant law. Flexible to Manage: LLP Act 2008 gives LLP the at most freedom to manage its own affairs. Partner can decide the way they want to run and manage the LLP, in form of LLP Agreement. The LLP Act does not regulate the LLP to large extent rather than allows partners the liberty to manage it as per their will and fancies. Easy Transferable Ownership: It is easy to become a Partner or leave the LLP or otherwise it is easier to transfer the ownership in accordance with the terms of the LLP Agreement.
KEY BENEITS OF LLP STRCUTURE Separate Property: A LLP as legal entity is capable of owning its funds and other properties. The LLP is the real person in which all the property is vested and by which it is controlled, managed and disposed off. The property of LLP is not the property of its partners. Therefore partners cannot make any claim on the property in case of any dispute among themselves. Taxation: Another main benefit of incorporation is the taxation of a LLP. LLP are taxed at a lower rate as compared to Company. Moreover, LLP are also not subject to Dividend Distribution Tax as compared to company, so there will not be any tax while you distribute profit to your partners. Raising Money: Financing a small business like sole proprietorship or partnership can be difficult at times. A LLP being a regulated entity like company can attract finance from PE Investors, financial institutions etc. Capacity to sue: As a juristic legal person, a LLP can sue in its name and be sued by others. The partners are not liable to be sued for dues against the LLP.
KEY BENEITS OF LLP STRCUTURE No Mandatory Audit Requirement: Under LLP, only in case of business, where the annual turnover/contribution exceeds Rs 40 Lacs/Rs 25 Lacs are required to get their account audited annually by a chartered accountant. This provides great relief to small businessmen. Partners are not agent of other Partners: In LLP, Partners unlike partnership are not agents of the partners and therefore they are not liable for the individual act of other partners in LLP, which protects the interest of individual partners. Compliances: As compared to a private company, the number of compliances are on lesser side in case of LLP.
Thank you
Incorporation formalities for LLP
INCORPORATION OF AN LLP BASIC REQUIREMENTS For an LLP to be incorporated, two or more persons, who have associated for carrying on a lawful business with a view to profit, shall subscribe their names to an incorporation document.[section 11(1)(a)] From the above, it can be observed that to incorporate an LLP, there have to be two or more persons: who have associated to carry on a lawful business; with a view to profit; and who have subscribed their names to an incorporation document. To incorporate an LLP, the business has to be lawful. In other words, the proposed business of an LLP should not be prohibited under any law for the time being in force.
INCORPORATION / FORMATION OF LLP THE PROCESS The process of incorporating an LLP is simple. The following are the steps involved in the formation of an LLP:- A. Compliances for incorporation:- 1) Deciding on the partners and the Designated partners 2) Obtaining Designated Partners Identification Number (DPIN) in Form No. # 7 and a Digital Signature Certificate (DSC) 3) Deciding on the name of the LLP and applying for reservation of name in Form No.# 1 4) Filing of Incorporation documents in Form No. # 2 5) Obtaining of the Certificate of Incorporation B. Compliances after incorporation:- 6) Drafting and Filing of the LLP agreement in Form No.# 3 7) Filing of the consent of partners/designated partners in Form No.# 4
INCORPORATION / FORMATION OF LLP THE PROCESS LLPs can be registered with the registrar of Companies (ROC) (appointed under the Companies Act, 1956) after following the provisions specified in the LLP Act. Broadly, for registration of a LLP, following forms are required to be filed with the office of registrar of Companies along with prescribed filing fee: Reservation of name (Form #1). Filling of Incorporation Document and consent of partners (Forms #2). Filling of LLP Agreement (Form #3) may, however, be done within 30-days of Incorporation.
BOARD PROVISIONS OF THE ACT IN RESPECT OF NAMES OF LLPs Every LLP shall have either the word Limited Liability Partnership or acronym LLP as the last words of its name. LLP would not be given names, which in the opinion of the Central Government, are undesirable. Registrar would be under obligation to follow such rules which would be framed by the Central Government in connection with allotting names to LLPs. Also, there are provisions in respect of rectification of name in case two LLPs have been registered with the same name, inadvertently.
INCORPORATION / FORMATION OF LLP THE PROCESS The Incorporation document (Form #2) shall, inter alia, state the following information: The name of the LLP; The State in which the registered office of the LLP is to be situated; The address of the registered office of the LLP; The business to be carried on by the LLP; Summary of partners/designated partners (i.e., number of partners, number of designated partners, number of designated partners and their details; Number of individuals as partners and their details; Number of bodies corporate as partners and their details; Total monetary value of contribution by partners in the LLP etc.
FORM OF CONTRIBUTION The contribution of each partner shall be accounted for and disclosed in the Accounts of the LLP along with nature of contribution and amount. The contribution of a partner consisting of tangible, movable or immovable or intangible property or other benefits brought or contribution by way of an agreement or contract for services shall be valued by a practicing Chartered Accountant or by a practicing Cost Accountant or by approved valuer from the panel maintained by the Central Government.
Thank you
Major compliance requirements of LLP
MAJOR COMPLIANCES DESIGNATED PARTNER S.No Description Section Provision 1. Minimum number of designated partners 7(1) Every limited liability partnership shall have at least two designated partners who are individuals and at least one of them shall be a resident in India. Provided that in case of a Limited Liability Partnership 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 limited liability partnership or nominees of such bodies corporate shall act as designated partners. Explanation: For the purposes of this section, the term resident in India means a person who has stayed in India for a period of not less than 182-days during the immediately preceding one year. Penalty for Non-compliance The limited liability partnership and its every partner shall be punishable with fine, which shall not be less than Rs.10,000/-(Rupees ten thousand) but which may extend to Rs. 5,00,000/-(Rupees five lakh).
MAJOR COMPLIANCES DESIGNATED PARTNER S.No Description Section Provision 1. Filing of particulars of every individual who has consented to act as designated partners(form#4) 7(4) Every limited liability partnership shall file with the Registrar the particulars of every individual who has given his consent to act as designated partner in such form and manner as may be prescribed within 30- days of his appointment. Penalty for Non-compliance The limited liability partnership and its every partner shall be punishable with fine which shall not be less than Rs.10,000/-(Rupees ten thousand) but which may extend to Rs. 1,00,000/-(Rupees one lakh).
MAJOR COMPLIANCES DESIGNATED PARTNER S.No Description Section Provision 1. Designated partner not to suffer from disqualifications [Rule 9] 7(5) An individual eligible to be a designated partner shall satisfy such conditions and requirements as may be prescribed. Penalty for Non-compliance The limited liability partnership and its every partner shall be punishable with fine which shall not be less than Rs.10,000/-(Rupees ten thousand ) but which may extend to Rs.1,00,000/-(Rupees one lakh)
MAJOR COMPLIANCES DESIGNATED PARTNER S.No Description Section Provision 1. General liability of designated partners 8 Unless expressly provided otherwise in this Act, a designated partner shall be- (a) responsible for the doing of all acts, matters and things as are required to be done by the limited liability partnership in respect of compliance of the provisions of this Act including filing of any document, return, statement and the like report pursuant to the provisions of this Act and as may be specified in the limited liability partnership agreement; and (b) liable to all penalties imposed on the limited liability partnership for any contravention of those provisions. Penalty for Non-compliance The limited liability partnership and its every partner shall be punishable with fine which shall not be less than Rs.10,000/-(Rupees ten thousand) but which may extend to Rs. 1,00,000/-(Rupees one lakh)
MAJOR COMPLIANCES DESIGNATED PARTNER S.No Description Section Provision 1. Non-appointment of designated partner within prescribed time 9 A limited liability partnership may appoint a designated partner within 30-days of a vacancy arising for any reason and provisions of sub-section (4) and sub-section (5) of section 7 shall apply in respect of such new designated partner. Provided that if no designated partner is appointed, or if at any time there is only one designated partner, each partner shall be deemed to be a designated partner. Penalty for Non-compliance The limited liability partnership and its every partner shall be punishable with fine which shall not be less than Rs.10,000/-(Rupees ten thousand) but which may extend to Rs. 1,00,000/-(Rupees one lakh).
MAJOR COMPLIANCES S.No Description Section Provision 1. Statement by professional engaged in formation of the LLP and by a subscriber to the incorporation documentregarding compliance of all the requirements of the LLP Act and the rules made there under in respect of incorporation and matters precedent and incidental thereto. 11(1)(c) For a limited liability partnership to be incorporated, (c) there shall be filed along with the incorporation document, a statement in the prescribed form, made by either an advocate, or a Company Secretary or a Chartered Accountant or a Cost Accountant, who is engaged in the formation of the limited liability partnership and by anyone who subscribed his name to the incorporation document, that all the requirements of this Act and the rules made there under have been complied with, in respect of incorporation and matters precedent and incidental thereto. Penalty for Non-compliance If a person makes a statement which he knows to be false, or does not believe to be true; such person shall be punishable with imprisonment for a term, which may extend to 2-years and fine which shall not be less than Rs.10,000/-(Rupees ten thousand) but which may extend to Rs.5,00,000/-(Rupees five lakh.)
MAJOR COMPLIANCES S.No Description Section Provision 1. Compliance of directions of Central Government with respect to change of name of a limited liability partnership 17 Notwithstanding anything contained in sections 15 (Name) and 16 (Reservation of Name), where the Central Government is satisfied that a limited liability partnership has been registered (whether through inadvertence or otherwise and whether originally or by a change of name) under a name whicha) is a name referred to in sub-section(2) of section 15 (identical or too nearly resembles to that of any other partnership firm or limited liability partnership or body corporate or a registered trade mark, or a trade mark which is subject of an application for registration, of any other person under the Trade Marks Act,1999 (47 of 1999); or b) is identical with or too nearly resembles the name of any other limited liability partnership or body corporate or other name as to be likely to be mistaken for it, the Central Government may direct such limited liability partnership shall comply with the said direction within three months after the date of the direction or such longer period as the Central Government may allow. Penalty for Non-compliance The limited liability partnership and its every partner shall be punishable with fine which shall not be less than Rs.10,000/-(Rupees ten thousand) but which may extend to Rs. 5,00,,000/-(Rupees five lakh) and every designated partner of such limited liability partnership shall be punishable with fine which shall not be less than R.10,000/-(Rupees ten thousand) but which may extend to Rs. 1,00,,000/-(Rupees one lakh)
MAJOR COMPLIANCES S.No Description Section Provision 1. Improper unlawful use of words LLP and Limited Liability Partnership as last words in the business name 20 No person or persons shall carry on business under any name or title of which the words Limited Liability Partnership or LLP or any contraction or limitation thereof is or are the last word or words unless duly incorporated a limited liability partnership. Penalty for Non-compliance Such person shall be punishable with fine, which shall not be less than Rs.50,000/-(Rupees fifty thousand only) but may extend to Rs. 5,00,000-(Rupees five lakh).
MAJOR COMPLIANCES S.No Description Section Provision 1. Statement of Affairs to be made to the LLP Liquidator. 454 (i) Every limited liability partnership shall file with the Tribunal a statement of its affairs in such form as may be prescribed along with the petition for winding up.; (ii) where a limited liability partnership opposes a petition for its winding up, it shall file with the tribunal a statement of its affairs in such form as may be prescribed within such time as may be specified by the tribunal; (iii) Where the tribunal has made a winding up order or appointed the liquidator as provisional liquidator, unless the tribunal in its discretion otherwise order, there shall be made out and submitted to the liquidator a statement as to the affairs of the limited liability partnership in such form and containing such particulars as may be prescribed;
MAJOR COMPLIANCES S.No Description Section Provision 1. Statement of Affairs to be made to the LLP Liquidator. 454 (iv) The designated partners and other officers of the limited liability partnership in respect of which a petition for winding up is made, shall ensure that the accounts of the limited liability partnership are completed and audited in accordance with Limited Liability Partnership Rules, 2009 up to the date of the order and submitted to the tribunal at the cost of the limited liability partnership within 60 days of the winding up order or within such period as may be allowed by the tribunal. (2) The Statement under clause (iii) of sub-section (I) shall be submitted twenty one days from relevant date or within such extended time not exceeding two months (including the period of 21-days) from the date as the liquidator or provisional liquidator or the tribunal may, for special reasons appoint. Penalty for Non-compliance Any person, who without reasonable excuse, makes default in complying with any of the requirement of this section, shall be punished with an imprisonment for a term which may extend to 2 (two) years, or with fine which may extend to Rs. 1,000 (Rupees one thousand for every day during which the default continues, or with both.
MAJOR COMPLIANCES S.No Description Section Provision 1. Final meeting and dissolution 497 As soon as the affairs of a limited liability partnership are fully wound up, the LLP liquidator shall prepare final winding up accounts, explanations and a report on the conduct of affairs of the limited liability partnership during winding up in such form and manner as may be prescribed, showing how the property and assets of the limited liability partnership have been disposed of and its debt fully discharged or discharged to the satisfaction of the creditors and thereafter seek approval of the partners or the creditors of the limited liability partnership, as the case may be, on the said report and the final winding up accounts and explanation in the meeting of partners or creditors: Providing that no such meeting of creditors is required if there were no creditors before commencement of voluntary winding up or creditors are paid their dues in such manner as may be prescribed. Penalty for Non-compliance If the liquidator fails to call a meeting as required by this section, he shall be punishable with a fine which may extend to Rs. 5,000 (Rupees five thousand).
MAJOR COMPLIANCES S.No Description Section Provision 1. Report to be sent to the Registrar 497 (3) Within two weeks after the meeting of partners and of creditors, if required the LLP liquidator shalla) send to the Registrar a copy of the final winding up accounts, explanations and report; and b) file an application with the Tribunal alongwith a copy of the final winding up accounts, explanations and report, for dissolution of the limited liability partnership. Penalty for Non-compliance If the copy is not sent the LLP liquidator shall be punished with fine which may extend to Rs. 500 (Rupees five hundred) for every day during which the default continues.
MAJOR COMPLIANCES S.No Description Section Provision 1. Corrupt inducement affecting appointment as liquidator 514 Any person who gives or agrees or offers to give, to any partner or creditor of a limited liability partnership any gratification whatever with a view to a) securing his own appointment or nomination as the limited liability partnership s liquidator: or b) securing or preventing the appointment or nomination of some person other than himself, as the limited liability partnership s liquidator Penalty for Non-compliance Such a person may be punished with a fine which may extend to Rs. 10,000
MAJOR COMPLIANCES S.No Description Section Provision 1. Offences by officers of limited liability partnership in liquidation 538 (1) if any person, being a past or present officer of a limited liability partnership which, at the time of the commission of the alleged offence, is being wound up whether by the Tribunal or voluntarily or which is subsequently ordered to be wound up by the Tribunal or which subsequently for voluntary winding upa) does not to the best of his knowledge and belief fully and truly discover to the liquidator all the property movable and immovable, of the limited liability partnership and for what consideration and when the Limited Liability Partnership disposed of any part thereof except such part as has been disposed of in the ordinary course of the business of the Limited liability partnership; b) does not deliver up to the liquidator or as he directs all such parts of the movable and immovable property of the Limited liability partnership as is in his custody or under his control and which he is required by law to deliver up; c) does not deliver up to the liquidator or as he directs all such books and paper of the Limited liability partnership as are in his custody or under his control and which he is required by law to deliver up:
MAJOR COMPLIANCES S.No Description Section Provision 1. Offences by officers of limited liability partnership in liquidation 538 d) within the twelve months next before the commencement of the winding up or at any time thereafter conceals any part of the property of the Limited liability partnership to the value of one hundred rupees or upwards, or conceals any debt due to or from the Limited liability partnership: e) within the twelve months next before the commencement of the winding up or at any time thereafter fraudulently removes any part of the Limited liability partnership to the value of one hundred rupees or upwards: f) makes any material omission in any statement relating to the affairs of the Limited liability partnership: g) knowing or believing that a false debt has been proved by any person under the winding up fails for a period of one month to inform the liquidator thereof: h) after the commencement of the winding up prevents the production of any book or paper affecting or relating to the property or affairs of the Limited liability partnership: i) within the twelve months next before the commencement of the winding up or at any time thereafter conceals destroys, mutilates or falsifies or is privy to the concealment destruction, mutilation or falsification of any book or paper affecting or relating to the property or affairs of the Limited liabilities partnership:
MAJOR COMPLIANCES S.No Description Section Provision 1. Offences by officers of limited liability partnership in liquidation 538 j) within the twelve months next before the commencement of the winding up or at any times thereafter makes, or is privy to the making of any false entry in any book or paper affecting or relating to the property or affairs of the Limited liability partnership: k) within the twelve months next before the commencement of the winding up or at any time thereafter, fraudulently parts with alters or makes any omission in or is privy to the fraudulently parting with altering or making of any omission in any book or paper affecting or relating to the property or affairs of the Limited liability partnership: l) after the commencement of the winding up or at any meeting of the creditors of the Limited liability partnership within the twelve months next before the commencement of the winding up attempts to account for any part of the property of the Limited liability partnership by fictitious losses or expenses; m) within the twelve months next before the commencement of the winding up or at any time thereafter by any false representation or other fraud obtains on credit for or on behalf of the Limited liability partnership any property Which the Limited liability partnership does not subsequently pay for:
MAJOR COMPLIANCES DESIGNATED PARTNER S.No Description Section Provision 1. Offences by officers of limited liability partnership in liquidation 538 n) within the twelve months next before the commencement of the winding up or at any time thereafter under the false pretence that the Limited liability partnership is carrying on its business obtains on credit for or behalf of the Limited liability partnership any property which the Limited liability partnership does not subsequently pay for: o) within the twelve months next before the commencement of the winding up or at any time thereafter pawns pledge or disposes of any property of the limited liability partnership which has been obtained on credit and has not been paid for, unless such pawning pledging or disposing is in the ordinary course of the business of the limited liability partnership: or p) is guilty of any false representation or other fraud for the purpose of obtaining the consent of the creditors of the limited liability partnership or any of them to an agreement with reference to the affairs of the limited liability partnership or to the winding up
MAJOR COMPLIANCES Penalty for Non-compliance Such person shall be punished with: a) In case the offence committed is that mentioned in clauses (m), (n) and (o) then with an imprisonment for a terms which may extend to 5 years or with fine or with both provided. Where the person pawns pledge or disposes of any property in circumstance which amount to an offence under clause (o) every person who takes in pawn or pledge or otherwise receives the property knowing it to be pawned, pledge or disposed of in such circumstances as aforesaid shall be punishable with imprisonment for 3 years or with fine or with both b) In any other case with imprisonment for a term which may extend to 2 years or with fine.
Thank you
Winding up / Closure of LLP
WINDING UP / CLOSURE OF LLP A LLP winding up can be initiated voluntarily or by a Tribunal. If a LLP is to initiate winding up voluntarily, then the LLP must pass a resolution to wind up the LLP with approval of at least three-fourths of the total number of Partners. If the LLP has lenders, secured or unsecured, then the approval of the lenders would also be required for winding up of the LLP. Winding up of LLP by Tribunal Circumstances (Section - 64) Winding up of LLP can be initiated by a Tribunal for the following reasons: The LLP wants to be wound up. There are less than two Partners in the LLP for a period of more than 6 months. The LLP is not in a position to pay its debts. The LLP has acted against the interests of the sovereignty and integrity of India, the security of State or public order. The LLP has not filed with the Registrar Statement of Accounts and Solvency or LLP Annual Returns for any five consecutive financial years. The Tribunal is of the opinion that it is just and equitable that the LLP should be wound up.
WINDING UP / CLOSURE OF LLP Procedure To begin the process for winding up of LLP, a resolution for winding up of LLP must be passed and filed with the Registrar within 30 days of passing of the resolution. On the date of passing of resolution of winding up of LLP, the voluntary winding up shall be deemed to commence. Once, the resolution for winding up of LLP is filed with the Registrar, the majority of Partners (not less than two) shall make a declaration verified by an Affidavit to the effect that the LLP has no debt or that it will be in a position to pay its debts in full within a period, as mentioned in the declaration, but not exceeding one year from the date of commencement of winding up of LLP. Along with the Affidavit signed by the majority Partners, the following documents must be filed with the Registrar within 15 days of passing of the resolution for winding up of LLP: Statement of assets and liabilities for the period from last accounts closure to date of winding up of LLP attested by atleast two Partners Report of valuation of the assets of the LLP prepared by a valuer, if there are any assets in the LLP.
WINDING UP / CLOSURE OF LLP Procedure- Winding up of LLP with Creditors If a LLP under winding up has any secured or unsecured creditors, then before taking any action for winding up of LLP, the approval for winding up of LLP must be requested from the creditors. Creditors are required to provide their opinion on winding up of LLP within 30 days of receipt of request for approval for winding up. If it is in the interest of all partners and all creditors that the LLP be wound up, then the LLP can proceed with voluntary winding up procedure. Appointment of LLP Liquidator A LLP Liquidator must be appointed within thirty days of passing of resolution of voluntary winding up through a resolution. In case there are any creditors, then the appointment of LLP Liquidator shall be valid only if it is approved by two thirds of the creditors in value of the LLP. It is then the duty of the LLP Liquidator to perform the functions and duties for winding up of LLP. The LLP Liquidator would settle the creditors and adjust the rights of the partners, as the case may be. While discharging his duties, the LLP Liquidator is required to maintain proper books of accounts pertaining to the winding up of the LLP.
WINDING UP / CLOSURE OF LLP Filing of Winding Up Report by LLP Liquidator Once, the affairs of the LLP is fully wound up, the LLP Liquidator would prepare a report stating the manner in which the winding up of LLP has been conducted and property of the LLP has been disposed off. If two thirds of the number of Partners and Creditors in value are satisfied with the winding up report prepared by the LLP Liquidator, then a resolution for winding up of accounts and explanation for dissolution must be passed by the Partners. The LLP Liquidator must then send the LLP winding up report along with the resolution to the Registrar and file an application with the Tribunal. Dissolution of the LLP If the Tribunal is satisfied that procedures have been followed in winding up of the LLP, then the Tribunal would pass an order that the LLP shall stand dissolved. The LLP Liquidator is required to file the copy of the order from the Tribunal with the Registrar for winding up of LLP. The Registrar on receiving the copy of the order passed by the Tribunal for winding up of LLP would publish a notice in the Official Gazette that the LLP stands dissolved.
Thank you