Skip to main content

Limited Liability Partnership (LLP)


The Limited Liability Partnership (LLP) Bill 2008 was passed by the Parliament on December 12, 2008 and legislated vide notification of the Act in the Gazette of India on January 7, 2009.
Subsequently ‘The Limited Liability Partnership Rules, 2009’ were notified by the Central Government on April 01, 2009.

Key features of the LLP Act are as below:
– An LLP Is a separate legal entity under the Limited Liability Partnership Act, 2008 and can sue and be sued.
– An LLP has a perpetual succession and partners may come and go
- The LLP Agreement is a charter of the LLP which denotes its scope of operation and rights and duties of the partners vis-à-vis LLP.
– Foreign Nationals can be a Partner in an LLP.
– The liability of partners is limited to the extent of their contribution, except in case of intentional fraud or wrongful act of omission or commission by the partner.

In essence LLP combines the advantages of both the Company and Partnership into a single form of organization. While one partner is not responsible or liable for another partner’s misconduct or negligence, in an LLP, all partners have a form of limited liability for each individual’s protection within the partnership, similar to that of the shareholders of a corporation. However, unlike corporate shareholders, the partners have the right to manage the business directly.

A “designated partner” is responsible for all acts, matters and things to be done by the LLP including compliances, report filing etc. and shall be liable for all penalties imposed on the LLP for violation of provisions of law.

- Minimum 2 designated partners (individuals, with at least 1 being resident in India) with the option of having Corporate as partners.
- An existing Firm, private company and unlisted public company can be formed into an LLP.
- A partner may give loan to the LLP and be treated as a creditor in respect of such loan
- Every partner may take part in the management of the LLP
- In the absence of any agreement, no partner shall be entitled to remuneration for acting in the business/management of the LLP
- In the absence of any agreement, no person may be introduced as a partner without the consent of all other partners.
- No majority of partners can expel any partner unless the power to do so has been conferred by express agreement between the partners

Internationally, LLPs are allowed to act as auditors. However, it is yet to be seen if they are allowed in India as the Chartered Accountants Act and the Institute of Chartered Accountants of India (ICAI) explicitly mentions that only individuals and firms are allowed to act as auditors. Since companies cannot act as auditors and companies can become members of LLPs, the ICAI will have to allow LLPs to function as auditors.

Taxation: The Finance Bill 2009 provided that LLPs will treated at par with Partnership firms in respect of taxation. LLP will be taxed at entity level and income of partners of LLP will be exempt from tax.

Click to download: LIMITED LIABILITY PARTNERSHIP ACT, 2008 (INDIA)

Comments

Popular posts from this blog

CA Info - industrial training

Hi Friends, Here is the list of approved insitutions eligible for imparting Industrial training Approved Organisations - Eastern Region SIEMENS LIMITED 43 SHANTI PALLY E.M.BY PASS CALCUTTA 700042 CITI BANK N.A. TATA CENTRE 41,CHOWRINGHEE ROAD CALCUTTA 700071 RECKITT & COLMAN OF INDIA LTD 41,CHOWRINGHEE ROAD CALCUTTA 700071 BRITANIA INDUSTRIES LTD . 14, TARATALA ROAD CALCUTTA 700088 ICI INDIA LTD 34, CHOWRINGHEE ROAD CALCUTTA 700071 GRASIM INDUSTRIES LTD. INDUSTRY HOUSE 14TH FLOOR, 10, CAMAC STREET KOLKATA 700017 AMERICAN EXPRESS BANK 21, OLD COURT HOUSE STREET CALCUTTA 700001 BALMER LAWRIE CO. LTD 21, NETAJI SUBHAS ROAD CALCUTTA 700001 INDIAN OIL CORPORATION LIMITED 2,GARIAHAT ROAD(S) DHAKURIA CALCUTTA 700068 SRF LIMITED EXPRESS BUILDING 1ST FLOOR BAHADUR SHAH ZAFAR MARG NEW DELHI 110002 INDIAN RAYON AND INDUSTRIES LTD RISHRA HOOGHLY 712249 PEPSI-COLA INDIA MARKETING COMPANY SREE MANJURI BLDG. SUITE NO.6 , 1ST FLOOR 8/1, MIDDLETON ROW CALCUTT

ECB vs FCCB

This is in response to the queries I received on whether ECB or FCCB is more convenient/liberal/less regulated. For guidelines on each of them, please refer to the links attached in the respective articles. FCCB http://www.icai.org/icairoot/publications/complimentary/cajournal_nov05/703-708.pdf . ECB http://www.icai.org/icairoot/publications/complimentary/cajournal_may04/p1216-19.pdf As regards which is more convenient, it always depends on the company raising funds. Historically, companies prefer ECBs over FCCBs . The RBI data for the month of December 2007 showed only 7 of 44 companies raising funds through FCCBs automatic route and all 7 companies preferring the ECB over FCCB through approval route. http://rbidocs.rbi.org.in/rdocs/ECB/pdfs/83662.pdf Government has said that it is contemplating relaxing norms governing external commercial borrowings (ECBs) to enable Indian corporates access higher foreign capital at low cost. Besides, a review is underway to remove restrictions on fo

Reverse Mortgage in India

Imagine a situation where you grow old and have managed to buy a house. However, you could not save enough for your retirement. You certainly need money to manage your day to day finances since you are retired and have no fixed source of income or your income is not enough to meet your finances. Reverse Mortgage is the answer for you. Reverse Mortgage is a type of mortgage available to senior citizens in which a home-owner can borrow money against the value of his/her home. No repayment of the mortgage (principal or interest) is required until the borrower dies or the home is sold. After accounting for the initial mortgage amount, the rate at which interest accrues, the length of the loan and rate of home price appreciation, the transaction is structured so that the loan amount will not exceed the value of the home over the life of the loan. [1] How does it work? Reverse Mortgage in India Realising the potential benefits of Reverse Mortgage, the Union Budget 2007-