LIMITED LIABILITY PARTNERSHIP

Report
LIMITED LIABILITY
PARTNERSHIP
Presented By:Poonam Bansal
Damanpreet Kaur
Chandan Kumar Gupta
Ranjeet Singh
Contents
1.
2.
3.
4.
Introduction
Features
Governance
Incorporation
a. Requirements
b. Procedure
5. Conversion from/to LLP
6. Administration
a. Accounts & Returns
b. Relationship of Partners
c. List of Forms & uses
d. Admission, Retirement & Death of Partner
7. Audit and Taxation
8. Comparison
9. Foreign LLP/FDI in LLP
10. Dissolution/Winding up
2
Introduction
 Limited Liability Partnership
 Hybrid between private ltd. company & partnership firm
Partnership
Firm
Private Limited
Companies
Limited
Liability
Partnership
 Indian government passed LLP Act on 09/01/2009
 LLP Act,2008 gets notified w.e.f March 31st, 2009
 The first LLP was registered on April 2,2009
Need for LLP:- Major causes for the advent of LLP are To enable the professionals to deal in international activities on the
concept of Limited Liability which was earlier not possible due to
various restrictions
 To remove the restriction posed by Indian partnership Act, 1932 that
professionals are not allowed to have more than 10 or 20 partners.
LLP Act removed the above obstacles.
3
Features
 Limited liability of partners.
Flexible form of organization.
Administration according to LLP agreement.
Required to register with ROC.
LLP agreement is the main incorporation document.
The economic rights of partners are freely transferrable.
Perpetual Succession.
Separate legal entity.
Every partner is an agent of the LLP but not liable for the wrongful acts
of other partners.
 In the absence of any provision for distribution of profits/ losses, partners
are entitled to share profits and losses equally.
LLPs are not allowed to operate as Not for profit organization
4
Governance
By Limited Liabilities Partnership Act 2008
 By Limited Liabilities Partnership Rules 2008
 By Registrar of Companies
By LLP Agreement between Partners
5
Incorporation
Requirements
Partners:- Minimum two designated partners are required and no
limit on maximum
Capital:- No limit on maximum and minimum capital contribution
Names:- At least two proposed names are required
Objects:- As per LLP Agreement
Documents:-1) ID, Address proof and photo of all Partner and DPs.
2) LLP Agreement duly stamped as per relevant Stamp Act
of the State.
3) Subscriber Statements
4) Consent Letter from all Partner and DPs as per form9
5) Proof of Address of Registered Office
6
Procedure
Once approved
by ministry,
LLP is
registered
File
incorporation
document &
Subscriber’s
Statement in
form 2
File LLP
Agreement in
form 3
8
DP will apply
for DIN
1
7
2
Steps for
Incorporation
of LLP
6
3
5
File form 1
for name
approval
4
DSC to be
applied by
DP
Register DSC
on MCA site
Apply for new
user registration
7
Conversion from/to LLP
CONVERSION OF A PRIVATE / UNLISTED PUBLIC
COMPANY INTO LLP
Application for conversion in Form 18 with the
following attachments :
Statement of shareholders (may be attached in a tabular form)
Incorporation Document & Statement in Form 2 filed electronically.
Statement of Assets and Liabilities of the company duly certified as true
and correct by the Chartered Accountant in practice.
List of all the creditors along with their consent to the conversion (may be
given in the form of a tabular statement).
Copy of acknowledgement of latest income tax return.
Particulars of pending proceedings from any court/Tribunal etc.
Once converted into LLP, it can not be converted
back to private/unlisted public company
8
Administration
ACCOUNTS
Accounts must be prepared for a financial year.
Methods of Accounting – Cash or Accrual
Books of Accounts shall include-
1) Details of all receipts and payments.
2) Records of assets and liabilities.
3) Statements of stock.
4) Any other records which the partners decide.
 Records to be preserved- For 3 years from the date they were first made.
RETURNS
 Statement of account & solvency to be filed with ROC within 6 months of
close of financial year in form 8.
 Must file an annual return with registrar within 60 days from the end of
financial year in form 11.
 Must be accompanied by certificate issued by CS confirming veracity of
particulars / statements in return, if turnover exceeds Rs. 5 crores or
contribution by all the partners exceeds Rs. 50 Lacs, else certificate must
be issued by DP.
9
Relationship of Partners
Governed by LLP Agreement
In absence of any agreement, principles set out in First Schedule
will apply
Registration of changes in partners / details of partners to be
filed in ‘Form-6’
Schedule I
• Equal Share in capital & profits / losses
• Partners not entitled to any remuneration for acting in
business or management of LLP
• No admission of partner without consent of all other
partners
• Any ordinary matter regarding LLP may be decided by
resolution passed by majority of partners
10
List of Forms & their uses
Form DIN 1
Application for allotment of Director Identification Number
Form DIN 4
Intimation of change in particulars of Director to be given to the
Central Government
Form 1
Application for reservation or change of name
Form 2
Incorporation document and subscriber’s statement
Form 2A
Details in respect of designated partners and partners of Limited
Liability Partnership
Form 3
Information with regard to limited liability partnership agreement
and changes, if any, made therein
Form 4
Notice of appointment, cessation, change in name/
address/designation of a designated partner or partner. and consent
to become a partner/designated partner
Form 4A
Notice of appointment, cessation, change in particulars of a partners
Form 5
Notice for change of name
11
Form 8
Statement of Account & Solvency
Form 11
Annual Return of Limited Liability Partnership (LLP)
Form 12
Form for intimating other address for service of documents
Form 15
Notice for change of place of registered office
Form 17
Application and statement for conversion of a firm into Limited
Liability Partnership (LLP)
Form 18
Application and Statement for conversion of a private company/
unlisted public company into limited liability partnership (LLP)
Form 22
Notice of intimation of Order of Court/ Tribunal/CLB/ Central
Government to the Registrar
Form 23
Application for direction to Limited Liability Partnership (LLP) to
change its name to the Registrar
Form 24
Application to the Registrar for striking off name
Form 25
Application for reservation/ renewal of name by a Foreign Limited
Liability Partnership (FLLP) or Foreign Company
12
Form 27
Form for registration of particulars by Foreign Limited Liability
Partnership (FLLP)
Form 28
Return of alteration in the incorporation document or other
instrument constituting or defining the constitution; or the
registered or principal office; or the partner or designated partner of
limited liability partnership incorporated or registered outside India.
Form 29
Notice of (A) alteration in the certificate of incorporation or
registration; (B) alteration in names and addresses of any of the
persons authorised to accept service on behalf of a foreign limited
liability partnership (FLLP) (C) alteration in the principal place of
business in India of FLLP (D) cessation to have a place of business in
India
Form 31
Application for compounding of an offence under the Act
Form 32
Form for filing addendum for rectification of defects or
incompleteness
13
Admission, Retirement & Death of Partner(s)
Unless the LLP agreement says otherwise, the
admission of a new member requires the unanimous
consent of the existing members
An LLP agreement can provide mandatory
retirement but it needs to be objectively justified
Existence of LLP is not affected by admission,
retirement or death of partner(s) provided minimum
no. of partners are maintained
14
Audit & Taxation
Requirement of Audit
Statutory audit is mandatory if annual turnover is more than
`40 lacs or contribution exceeds ` 25 lacs
Tax audit is mandatory if turnover exceeds ` 60 lacs
Taxation on LLP
LLP’s will be treated as Partnership Firms for the purpose of
Income Tax w.e.f assessment year 2010-11
No surcharge will be levied on income tax.
Profit will be taxed in the hands of the LLP and not in the
hands of the partners.
Minimum Alternate Tax and Dividend Distribution Tax will
not be applicable for LLP instead AMT has been introduced
alike to MAT.
15
Remuneration to partners will be taxed as “Income from
Business & Profession”
No capital gain on conversion of partnership firms/company
into LLP.
Designated Partners will be liable to sign and file the Income
Tax return.
LLP shall not be eligible for presumptive taxation.
Capital Gain on conversion of Company into LLP will be
exempt from tax, if prescribed conditions are complied with.
On conversion, the successor LLP , will be allowed to carry
forward and set off of accumulated loss and unabsorbed
depreciation allowance
On conversion, the successor LLP will be allowed to amortize
the expenditure incurred under voluntary retirement scheme
on conversion, the successor LLP will not be allowed to take
the credit of MAT paid by the predecessor company.
16
Comparison between firm and LLP
Basis
Partnership Firms
Governing Law Partnership Act, 1932
Registration
LLP
Limited Liability Partnership Act,
2008
is Compulsory
Not Compulsory; but
preferred
Creation
By partnership Agreement
Legal Status
Partners collectively known as
‘Firm’; no separate legal status
Succession
Firm would cease to exist on
change in partnership, unless
otherwise
provided
in
agreement
Ownership of Partnership cannot own assets
Assets
in its name; assets must be in
name of Partners
Liability of
Unlimited
Partners
Minor’s
Minor can be admitted to
Position
benefits of Partnership
By Law
LLP has separate legal status
apart from partners
LLP would not be affected on
change in partnership (Perpetual
Succession)
LLP can own assets in its own
name
Limited
Law silent on position of Minors
17
Comparison between Pvt. Ltd. Co. and LLP
Basis
Company
LLP
Governing Law
Companies Act, 1956
Limited Liability Partnership Act,
2008
Name
Must contain suffix ‘Ltd’ or Must contain suffix ‘LLP’
‘Pvt Ltd’
Common Seal
Common Seal is compulsory
Organizational
Structure
Rigid
&
governed
Companies Act
Common Seal is optional
by Flexible & governed by LLP
Agreement
Appointment of Specific Resolution required Auditors shall be deemed to be
Auditors
for appointment of auditors re-appointed in case no specific
at every AGM
appointment is made (unless
otherwise decided)
Audit
All companies are subject to Only LLPs having turnover of
audit of accounts
more than Rs. 40 Lacs or
contribution of more than Rs.
25 Lacs are subject to audit of
accounts
18
Foreign LLP/ FDI in LLP
Foreign LLP
 Means a LLP which is formed, registered or incorporated outside India and which
establishes a place of business in India
 FLLP is required to file form 25 for approval of name
 If FLLP has been incorporated in language other than English then it has to be
certified by a notary public of their respective country in English language
 If translation has been made in India then such translation is required to be
certified by CA/CS/CWA/Advocate
 Foreign LLP shall, within 30 days of establishment in India required to file form 27
within 30 days from its establishment
 FDI
 LLPs with FDI will be allowed, through the Government approval route, in those
sectors/activities where 100% FDI is allowed, through the automatic route and
there are no FDI-linked performance related conditions.
 LLPs with FDI will not be allowed to operate in agricultural/plantation activity,
print media or real estate business.
 LLPs with FDI will not be eligible to make any downstream investments
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DISSOLUTION/WINDING UP
Compulsory
Voluntary
By Tribunal
Conditions:-
Where the Partners of LLP
themselves mutually decides
If the LLP decides that it to be dissolved by Tribunal
If no. of partners falls below 2 for more than 6
months
If LLP is unable to pay its debts.
If LLP has acted against interest of the sovereignty
and integrity of India, security of state or Public
order
Tribunal is of opinion that it is just and equitable
On declaration of LLP as defunct(Suomoto by LLP or
if it is not carrying business for 1 year or more)
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