LIMITED LIABILITY PARTNERSHIP ACT, 2008

Presented by PRASENJIT MANDAL Email: pmandal@ymail.com

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

Features:Features: Limited liability of partners. Body corporate with perpetual succession. Minimum 2 partners without any ceiling on maximum number. Very simple registration formalities Detailed LLP Agreement is not mandatory but if not done, certain inherent provisions will apply viz. equal share in profit/loss, no remuneration can be paid to partners.

Features
Acts of one partner will not be binding on other partners. They bind only to the LLP. Liability of LLP must be met out of property of LLP only. The LLP Act 2008 is to come into force from 1-4-2009. This date is not 1notified yet.

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

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

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

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

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

Conversion:Conversion:Conversion of present partnership or company into LLP is possible after satisfying formalities with registrar. However, listed public companies cant be converted into LLP. Company can be converted into LLP only after satisfying any charge on the assets of the company. However, the said rule doesnt apply for the Partnership conversion. The main condition of the conversion is that the same partners or members of the converting entity will remain as partners in the resulting entity. Once the conversion into LLP is finished, it cant be re-converted into its original entity. re-

Taxation:Taxation:The LLP act is silent about tax treatment, but its characteristics are of a firm. Hence, All provisions of taxation of firms will apply to LLP. Taxation on Transfer applies only when there is some consideration received on transfer. However, on Conversion there is nothing received and hence Capital Gain doesnt arise

Pending Issues:Issues: Certain uncertainties need to be addressed urgently to make this Act really functional. E.g. Amendments in different acts so as to have partnership with different professionals. CA Regulation Act and Bar Council Act needs to be amended accordingly still. Attracting foreign Investment in LLP Whether minor can be taken as partner in LLP or not? Compulsory insurance.

THE END.