Investment Valuation in India

The Ministry of Corporate Affairs (MCA) has clarified (General circular no. 13/2013) that a Hindu Undivided Family (HUF) cannot be a partner in an Limited Liability Partnership (LLP).  This is consistent with Sec 5 of LLP Act 2008 which states that only an Individual or a Body Corporate can become a partner in 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 p...