LIMITED LIABILITY

PARTNERSHIP, 2008
INTRODUCTION
LLP
 Combines the advantages of a corporate
structure and traditional Partnership structure.

 Major drawbacks of the traditional partnership

such as mutual agency among partners,
unlimited liability and uncertainty of life have
been overcome by LLP.

 It is a hybrid between a Company and a

Traditional Partnership.

 It is much closer to private company form.

LIMITED LIABILITY PARTNERSHIP ACT, 2008
 Several expert committees recommended
legislation of LLP
 LLP Act Came into force on 31st March, 2009

 Act :
 XIV chapters
 80 sections (after llp amendment act 2021)
 4 schedules
 I- model set of terms
 II- conversion of firm into LLP

 III- conversion of private co into LLP

 IV- conversion of unlisted public co into LLP

 Extends to whole of India

REGULATORY FRAMEWORK
 Legal – LLP Act, 2008

 Administrative- Ministry of Corporate Affairs

 Taxation- IT Act, 1961

 Winding Up- NCLT

DEFINITION
Sec2(1)(n):
LLP as “means a partnership formed and registered under the LLP
act 2008”.

• Sec 2 (1) (ta), small llp means means a limited liability partnership:

1) The contribution of which, does not exceed twenty-five lakh rupees or such higher
amount, not exceeding five core rupees

2) The turnover of which, as per the Statement of Accounts and Solvency for the
immediately preceding financial year, does not exceed forty lakh rupees or such
higher amount, not exceeding fifty core rupees which meets such other
requirements as may be prescribed, and fulfills such terms and conditions
SALIENT FEATURES OF LLP
 Body Corporate
 Separate Legal Entity

 Artificial Legal Person

 Perpetual succession

 Common Seal

 Limited Liability

 No mutual Agency
 Minimum and maximum number of partners
 Management of Business
 Business for profit only
 LLP agreement
 Annual Return (in webform 11)
 Conversion of LLP
 Winding up of LLP
 Applicability of Companies Act, 2013
 Taxation of LLP
 E- filling of documents
 Foreign LLPs
 Investigation
 Mergers and amalgamations
 Non applicability of partnership act, 1932
 Foreign Investment in LLP
DIFFERENCE BETWEEN PARTNERSHIP
AND LLP
Partnership Basis LLP
Indian Partnership Regulating Act Limited Liability
Act, 1932 Partnership Act,2008
No Body Corporate Yes
No distinct separate Separate legal Legal entity separate
legal entity Entity from its members
Agreement Creation Registration
Voluntary Registration Mandatory
No Perpetual Yes
succession
Name as per the choice Name Suffix LLP
of the partners
50 Maximum partners silent
Unlimited Liability Limited
DIFFERENCE BETWEEN PARTNERSHIP
AND LLP
Partnership Basis LLP
Each partners can bind Mutual Agency Each partner can bind
the firm as well as the LLP by his own
other partners by his acts but not the other
own acts partners
No such concept Designated Partners Two DP
No such concept Common seal May have common seal
All partners are Legal Compliances Only DPs are
responsible responsible
Not required Annual filing of Required to file
documents
Cannot become Foreign Nationals Can become partners
partners
Minor can be admitted Minor as partner No specific provision
DIFFERENCE BETWEEN LLC AND LLP
LLC Basis LLP
Companies Act,2013 Regulating Act Limited Liability
Partnership Act,2008
Members Members/ Partners Partners
Governed by Statute Internal Governance Governed by
structure contractual agreement
between partners
Private- 2 Minimum number 2
Public- 7
Private- 200 Maximum number silent
Public- no limit
BoD Management Partners and DPs
Suffix Pvt Ltd. Or Name Suffix LLP
Public Ltd
Created for profit or Motive Cannot be formed for
charitable purpose charitable purpose
INCORPORATION OF LLP (PRE-REQUISITES)
 Two or more persons associated for carrying on a lawful business
 with a view to making profit
 shall subscribe their names to an incorporation document.
 Digital signature certificate
 LLP Name
 LLP Agreement
Major highlights of amendments:
 RUN-LLP (Reserve Unique Name-Limited Liability Partnership)
 Form FiLLip (Form for Incorporation of LLP)
REGISTRATION PROCESS

Select minimum number of partners and DP

Get DPIN (Designated Partner Identification Number) and Digital Signature Certificate

Check availability of name

Reserve the name – 3 months through RUN-LLP

Prepare incorporation document; LLP Agreement; consent letter; proof of address of RO

Registrar of Companies to scrutinise, Electronic filling of documents

Certificate of Incorporation and LLPIN (LLP identification number)

INCORPORATION DOCUMENT
 Public document and open to inspection in the
office of registrar on payment of prescribed fees
 Contents:
 Name of the LLP
 Proposed business
 Address of registered office
 Name and address of each of the persons who are to
be partners
 Name and address of each of the persons who are to
be designated partners
 Document to be signed either by advocate, CS or
CA or CWA
 False information- fine: 10000- 500000+ 2years
LLP AGREEMENT
 Written agreement between the partners of LLP
which determines the mutual rights and duties of the
partners and their rights and duties in relation to
LLP.
 Contents:
 Name of LLP
 Name and address of partners and DPs
 Form of contribution and interest on contributions
 Profit sharing ratio
 Remuneration of partners
 Rights and duties in case of admission, resignation, etc.
 Proposed business
 LLP agreement must be duly stamped
 Schedule I shall be applicable if no agreement is
framed
NAME OF LLP
 Suffix- Limited liability partnership or LLP
 Central Government shall not allow name if:
 Identical/ similar
 Emblems and names(prevention of improper use) Act,
1950
 When uses approval based words
 Name is reserved

 Publication of name (invoices, official

correspondence and publications)

 Penalty for improper use of wordLLP:50k – 5lac.

CHANGE OF NAME
 Voluntarily:
 Procedure in llp agreement or consent of all partners
 Notice to registrar-30 days
 Direction of CG
 Complied within 3 months
 Penalty
 Direction of CG
REGISTERED OFFICE
 To which all communications and notices are
addressed and received
 Change in RO:

 File notice to registrar; manner prescribed

 If manner not prescribed; consent of all partners

required
 Change from one state to another; consent of
secured creditors
 Before filing document to registrar; notice in
daily newspaper(english and vernacular
language) 21 days prior
EFFECT OF REGISTRATION(SEC 14)
 Enjoy the status of body corporate
 Sue and sued in its own name
 Acquire and hold property etc
LLP
PARTNERS AND THEIR RELATIONS
NEED FOR PARTNERS
 LLP artificial.
 Need for natural persons to govern.
ELIGIBILITY/ WHO CAN BECOME A
PARTNER IN LLP

Persons subscribed their names to incorporation document

Any other person in pursuant to LLP agreement

An individual

An Indian Company (private and public)

A LLP registered in/outside india

A foreign company.
DISQUALIFICATIONS OF BECOMING A
PARTNER
 Unsound mind
 An undischarged insolvent

 Applied to be Adjudicated as an insolvent and his

application is pending in the court.
DESIGNATED PARTNERS
 Number of DPs = 2
 Out of 2, one has to be resident

 In case of body corporate partners, their

Nominees can act as designated partner.
WHO CAN BE DESIGNATED PARTNERS?
 Specified in Incorporation document
 Specified in LLP Agreement
ELIGIBILITY FOR DPS
 Person not capable of being appointed as a DP if:
 Adjudged insolvent: preceding 5 years
 Suspends or suspended payment to creditors:
preceding 5 years
 Convicted for an offence involving moral turpitude
and sentenced for not less than 6 months
 Convicted for an offence involving sec 30 of the
act(fraud)
 Consent to be obtained
 Obtaining DPIN
PARTNERS AND THEIR RELATIONS
 Determined by LLP Agreement
 In the absence of an agreement by first schedule of the act
 Equal share in profits, losses and capital
 LLP to indemnify partners (conduct and preservation of business)
 Each partner to indemnify LLP
 Partner may take part in management
 No remuneration
 No new partner without consent
 Matter by resolution passed by majority
 Each partner = one vote
 No change in nature of business without the consent of all the
partners
 Decision taken to be recorded in minutes of meeting
 True accounts and full information
 Partner shall account for all benefit derived from transaction without
LLP approval
 No majority to expel partners, unless express agreement between the
partners
 Disputes= under arbitration and conciliation act, 1996
CESSATION OF PARTNERS(SEC 24)

Agreement

Adjudged / declared Absence of agreement:

insolvent Notice= 30 days

Declared of unsound
Death
mind

Dissolution of LLP
CONSEQUENCES OF CESSATION
 Continues to be partner unless:

Person
Notice delivered
has
to the Registrar
Notice

o Liable for obligations before cessation

o Rights of former partners
o Receive Amount equal to contribution + accumulated
profits
o Not to interfere in the management
REGISTRATION OF CHANGES IN PARTNERS
 Inform LLP about change in name /address
within 15 days in form 6
 LLP to file notice to registrar in 30 days
EXTENT OF LIABILITY
LLP Partners

 Partners agent of LLP and  Agency relationship

not partners  No personal liability of
 Liable of its assets and LLP obligations
liabilities  Personal liability(omission,
beyond authority, no. falls
 Not bound by act of below)
partner(having no
 Liability in case of holding
authority)
out
 Liable for act of partner(  Liability for compensation
Having authority)
 No liability after death
 Liabilities to met out of  Unlimited liability(fraud)
property
CONTRIBUTION

 Similar to share capital of a co.

 No minimum requirement

 Forms: Tangible Property

Intangible Property (certified by CA etc)

Money/Promissory Notes
Cash
Services
LIMITED LIABILITY
PARTNERSHIP
CONVERSION
WHO CAN CONVERT?
 Partnership firm
 Private company

 Unlisted public company

HOW ?
 By following provisions (Schedule II to IV)
 Permit / license issued.
BASIS Firm to LLP Private Co. to Unlisted
LLP Public Co. to
LLP
Interpretation Firm – defined Company – Company –
in section 4 IPA, private company public company
1932. defined in co’s defined in co’s
act act

Convert – transfer of property , assets, interests,

rights, privileges, liabilities, obligations and the
undertaking of the firm to LLP/ Private/ public co.

Conversion Requirements in Requirements in Requirements in

schedule II schedule III schedule IV
BASIS Firm to LLP Private Co. to Unlisted Public
LLP Co. to LLP

Eligibility Partners of firm •Consent of the •Consent of the

become partners secured creditors secured creditors
in LLP •Shareholders of •Shareholders of
the co become the co become
partners in LLP partners in LLP

Statements to be •Document •Document •Document

filed containing name containing name containing name
and registration and registration and registration
number of the number of the number of the
firm +date of company +date company +date
registration of registration of registration
•Incorporation •Incorporation •Incorporation
document document document

Registration of •Certificate of Certificate of Certificate of

conversion registration registration registration
BASIS Firm to LLP Private Co. to Unlisted Public
LLP Co. to LLP

Registrar can •Verified, satisfied •Verified, satisfied •Verified, satisfied

refuse to register •Appeal can be •Appeal can be •Appeal can be
filed. filed. filed.

Effects of •LLP come into •LLP come into •LLP come into
registration existence existence existence
•All property •All property •All property
transferred transferred transferred
•Firm taken to be •Co. taken to be •Co. taken to be
dissolved and dissolved and dissolved and
name removed name removed name removed

Pending Continues/ Continues/ Continues/

proceedings/ completed/ completed/ completed/
conviction, ruling, enforced after enforced after enforced after
order conversion too conversion too conversion too
Existing Continues Continues Continues
agreements
Existing Continue to be Continue to be Continue to be
Contracts in force in force in force
Enforceable Enforceable Enforceable

Continuance of Continue to be Continue to be Continue to be

employment in force in force in force

Existing Take effect and Take effect and Take effect and
appointment, operate from the operate from the operate from the
authority or date of date of date of
power registration registration registration

Notice of Period of 12 months/1 year (in all official

conversion in correspondence) ,not later than 15 days (registrar of
correspondence companies )shall bear:
•Statement of conversion
•Name and registration number
Partners •Personally Liability remains limited in both
liability in liable the cases.
relation to •LLP to
contracts before indemnify
conversion
WHISTLE BLOWER
 Persons making a public interest disclosure
related to an act of corruption, misuse of power,
or criminal offense by a public servant.
 Internal whistle blower: report misconduct on a
fellow employee or superior within their
company.
 External whistle blower: report misconduct to
lawyers/media/ law enforcement agencies.
WHISTLE BLOWERS PROTECTION ACT,
2011
 Provides mechanism to investigate alleged
corruption and misuse of power by public
servants .
 Protect anyone who exposes alleged wrongdoing
in government bodies, projects and offices.
 Ensure punishment for false or frivolous
complaints.
FEATURES
 Protect whistle blowers
 Disclosure to the Central or State Vigilance
Commission.
 Every complaint has to include the identity of the
complainant.
 Vigilance Commission shall not disclose the
identity of the complainant except to the head of
the department if he deems it necessary.
 Prescribes penalties for knowingly making false
complaints.
PROTECTION OF PARTNERS/EMPLOYEES
 Tribunal to waive or reduce penalty if satisfied
that partner contributed to investigation.
 No discharge, demotion, suspension, threatening,
harassment ,discrimination to the partner.
CASES
 Ranbaxy-Dinesh Thakur
 NHAI - Satyendra Dubey