Everything you need to understand about Limited Liability Partnership (LLP)

• LLP
• October 2, 2019

Everything you need to understand about Limited Liability Partnership (LLP)

• LLP Act, 2008 and same is applicable to whole of India.
• Nature of LLP– Body Corporate, Legal Entity, separate from its partners, perpetual  succession, change in partners does not affect existence, rights & liabilities. 
• Partnership act will not apply to LLP
• Address of Partner- Individual – Residential Address, Body Corporate – Registered Address
• Body Corporate – Company, LLP registered under this act, LLP incorporated outside India, Company incorporated outside India
• Business includes every trade, profession, service, occupation.
• Contribution – Tangible, Intangible, Movable, immovable, other benefits, money, promissory notes, Agreement to contribute cash or property, contracts for services performed or to be performed.  obligation to perform (Form of contribution ) shall be according to LLP Agreement.
• Creditors of LLP – Acts in reliance of an obligation described in LLP agreement, without notice of any compromise between partners may enforce original obligation against such partners.
• Monetary vale of contribution of each partner shall be account and disclosed in the accounts of the LLP in prescribed manner
• Entity
• Financial Year 1 April to 31st March ( If incorporated after 30th Sept may end on 31st march of next year.)
• Foreign LLP– Formed and incorporated outside India which establishes place of business in India. 
• LLP Agreement – Written Agreement between – Partners of LLP, LLP and Its Partners, which determines the mutual rights and duties of partners, rights and duties in relation to LLP
• Name – Partner – Individual- First, middle, last. Body Corporate- Registered name.  
• Partners- Minimum 2, Maximum – no limit prescribed in Act.
• There is no disqualification that body corporate can not become partner but there is disqualification for individual. 
• How can become a partner of LLP– Individual and Body Corporate in accordance with the LLP agreement. They have to make Contribution.
• Designated Partner- If incorporation document specifies who are designated partners they shall be,  Each of partner than all.   Minimum 2 Partners required, responsible for the compliance of all the acts applicable to LLP. LKiable for all the penalties imposed under this act.  Can become DP in accordance with the LLP agreement, Prior approval to act as DP is must before, Should have DPIN (DIN), Conditions- Insolvent – 5 years, Suspended payment to creditors, done offence convicted by court, done offence of fraud. LLP shall file particulars of every individual who has given consent to act as DP in prescribed form to ROC.
• Change in designated partner- Designate new partner within 30 days of vacancy, if no partner is appointed all the partners will be designated partners ( this applicable if reduced below two) 
• Cessation from partnership by partner- 30 days notice to be given to other partner of his intention to resign.   Notice of Resignation – to the person who is dealing with LLP or ROC otherwise he will be liable.
• Partner of LLP is a agent of LLP but not of other partners
• If the partner do not have authority to do some act, LLP is not bound for the act of partner.
• LLP liable- If the partner is liable to any person for wrong act or omission on his part in the course of business of LLP.
• Liabilities of LLP shall be met out of property of LLP.
• Solely by reason of being partner, partner is not personally liable.
• Partner is not liable for personal act, omission of any other partner.
• Not Partner in real but holding out so- Liable to the extent of credit received by him.
• Unlimited liability in case of fraud.   
• Whistle Blowing- Court or tribunal can waive the penalty, if satisfied – partners provided useful information during investigation.
• Financial Disclosures- Accounts to be kept as par double entry system, Prepare statement of Accounts and solvency for the financial year and shall be signed by the Designated Partners of the LLP within 6 months form the end of the financial year and File with ROC,
• Audit
• Annual Return – To be filed to ROC within 60 days of closure of Financial year.
• Compounding of offences- Only offences punishable with fine. By collecting a sum which may extent to the amount of maximum fine prescribed for the offence.
• Assignment and transfer of Partnership Right – Right of a partner to share of the profit or loss of the LLP, and to receive distribution in accordance with LLP agreement are transferable either wholly or partly.
• Transfer of right does not by itself cause disassociation of partner.
• Transfer of right pursuant to this section does not itself, entitle the transfer or assign to participate in the management.  
• Conversion of LLP – Firm to LLP– IInd Sechedule, Pvt Company To LLP– IIIrd Sechedule , Unlisted Public Company to LLP– IVth Sechedule. 
• Partner may land money to LLP

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