LLP Flashcards
When was LLP act introduced
2008
What do all the schedules deal with
First schedule - mutual rights and duties of the partners of the LLP
Second schedule - conversion of firm to LLP
Third schedule- conversion of private co. to LLP
Fourth schedule- conversion from public unlisted co to LLP.
Administrative Machinery of LLP
Ministry of Corporate Affairs and Registrar of Companies is responsible for registration of LLP.
ROC appointed by CG. ROC registers and controls LLP.
Why LLP
hybrid btw partnership and corp business
limited liability and allows the members the flexibility to organize the internal structure by agreement.
Meaning of LLP
It is a business organization that gives the benefits of limited liability and provides the partners the flexibility like a partnership.
Proposals for boosting LLP
main recommendations of Committee formed to amend LLP Act
1. To develop entrepreneurial spirit, it was proposed to decriminalize compoundable offences under the LLP act 2008.
To remove the fear of penalty for non-compliance of legal provisions.
2. New concepts to be introduced
Small LLP, NCD, reduction in additional fees
Small LLP
A small llp is a llp which has contribution by the partners not exceeding 25lakh rupees and turnover not exceeding 40 lakh rupees
Body Corporate
Body Corporate refers to an organization with separate legal identity. (salomon vs salomon)
Includes any organization registered under companies act, LLP act, llp/company incorporated outside india.
What does a Body corporate not include
Corporation sole
Cooperative society
Any other organization specified by CG.
Financial year of LLP
1st April to 31st march BUT where the LLP is incorporated after 30th sept then it may end first financial year on 31st march of next period.
Foreign LLP
LLP incorporated outside India but which has a place of business inside India
LLP agreement
It is an agreement between the partners of the LLP specifying the mutual rights and duties of the partners and the rights and duties of the partners in relation with the LLP itself. (In case of its absence or silence 1st schedule is followed)
Qualifications to be a partner of the LLP
Any individual or body corporate. A person cannot be a partner of the LLP if
-he is a man of unsound mind
-he is insolvent but undischarged
-he has applied to be adjudicated as insolvent but his application is pending
Maximum and Minimum no of partners
2 minimum.
If at a time the number of partners is reduced from 2 to 1 and the business carries on for more than 6 months in that state, then the person who carries on the LLP by himself with the knowledge of only 1 partner carrying on the business, will be personally liable for all transactions entered into by the LLP during that 6 month period
Designated Partner
A LLP must have at-least 2 designated individual partners.
In a LLP with partners as body corporates, a nominee who is an individual can be appointed as designated partner. Out of the two designated partners, one must be a resident of India i.e. he has stayed in India for at-least 120 days in the previous financial year.
Eligibility conditions to be a designated partner (cllg)
- He has not been adjudicated as insolvent in last 5 years
- He has not been convicted of any offence against good morals and imprisoned for more than 6 months
- He has not been convicted of any fraudulent acts in a LLP
- He has not suspended any payment to creditor in last 5 years
Mutual Agency in a LLP
In a LLP, the partners are not bound by the unauthorized and independent acts of other partners. All partners are agents of the LLP but not of the other partners
Common Seal
Since LLP is an artificial person therefore it authorizes its documents with the help of a common seal i.e. the official signature of LLP. (Optional)
Must be affixed in presence of at-least 2 designated partners.
Management of LLP
All partners are responsible for the management of the LLP and designated partners are only required for legal compliances
Incorporation of LLP
An incorporation document has to be filed with the registrar in the manner prescribed which has to be subscribed by at-least 2 people who were engaged in the formation of the LLP.
Statement to be filed
Statement to be filed
as per manner prescribed
as made by CA,CS,CMA who is engaged in formation
and a person who has subscribed name to incorp doc
stating that info and docs filed are true to best of their knowledge
in matters relating to incorporation
Penalty for statement
If the person who has filed the statement on incorporation knows it to be false or believes it to be not true then he may be penalized by imprisonment of upto 2 years and fine of upto 5 lakhs.
Contents of incorporation document
Some contents of the incorporation document include
1. Name of LLP
2. Name and particulars of designated partners
3. Name and particulars of partners
4. Location of business
Registration of LLP
The registrar of companies, if he is satisfied by the documents will register the LLP within 14 days of the date of presentation.
Certificate of incorporation issued and the name of the LLP is added to the register of the companies.
