What is Limited Liability Partnership(LLP):
Limited Liability Partnership entities, the world wide recognized form of business organization has been introduced in India by way of Limited Liability Partnership Act. A Limited Liability Partnership, popularly known as LLP combines the advantages of both the Company and Partnership into a single form of organization.
Advantages/ Benefits of LLP:
PREPARATION AND FILE LLP AGREEMENT WITH MCA:
After incorporation of a LLP, LLP Agreement must be filed with the Ministry of Corporate Affairs within 30 days.
PAN AND TAN APPLICATION:
Online PAN and TAN application of the newly incorporated LLP. The PAN/ TAN Department Send PAN/ TAN of the LLP to the registered office address of the LLP.
BANK ACCOUNT OPENING
Bank account for a LLP can be opened easily, as it is considered to be a corporate entity. The following documents of the LLP must be submitted for opening of LLP bank account:
APPOINTMENT OF AUDITOR:
No requirement of compulsory Auditor on LLP. Appointment of Auditor is only mandatory if turnover exceeds Rs.40 lakhs or capital contribution exceeds Rs.25 lakhs.
FILING LLP ANNUAL RETURN
File Annual Return within 60 days from the end of close of financial year and Statement of Account & Solvency within 30 days from end of six months of close of financial year. Unlike Companies, LLPs mandatorily have to maintain their financial year, as 1st April to 31st March. Therefore, LLP annual return is due on May 30th and the Statement of Account & Solvency is due on October 30th of each financial year.
Limited Liability Partnership (LLP) under the Limited Liability Partnership Act, are required to file the following Forms with the Registrar every year:
|S. No||Documents||e-Form||Due date|
|1||Annual Return||Form 11||30th May
|2||Statement of Account & Solvency||Form 8||30th October
OTHER EVENT BASE FORM:
Maximum form filing date – within 30 days from the date of event.
OTHER REQUIREMENT AS PER OTHER ACT:
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Concept of “limited liability partnership”
Since LLP contains elements of both ‘a corporate structure’ as well as ‘a partnership firm structure’ LLP is called a hybrid between a company and a partnership.
Structure of an LLP
LLP shall be a body corporate and a legal entity separate from its partners. It will have perpetual succession.
Advantages of LLP form
LLP form is a form of business model which:
(i) is organized and operates on the basis of an agreement.
(ii) provides flexibility without imposing detailed legal and procedural requirements
(iii) enables professional/technical expertise and initiative to combine with financial risk taking capacity in an innovative and efficient manner
Difference between LLP & “traditional partnership firm”
Difference between LLP & a Company
Whether every LLP would be required to maintain and file accounts?
An LLP shall be under obligation to maintain annual accounts reflecting true and fair view of its state of affairs. A “Statement of Accounts and Solvency” in prescribed form shall be filed by every LLP with the Registrar every year.
Whether audit of all LLPs would be mandatory?
The accounts of every LLP shall be audited in accordance with Rule 24 of LLP, Rules 2009.
Such rules, inter-alia, provides that any LLP, whose turnover does not exceed, in any financial year, forty lakh rupees, or whose contribution does not exceed twenty five lakh rupees, is not required to get its accounts audited. However, if the partners of such limited liability partnership decide to get the accounts of such LLP audited, the accounts shall be audited only in accordance with such rule.
Whether any Annual Return would be required to be filed by an LLP?
Every LLP would be required to file annual return in Form 11 with ROC within 60 days of closer of financial year. The annual return will be available for public inspection on payment of prescribed fees to Registrar.
Which documents will be available for public inspection in the office of Registrar?
The following documents/information will be available for inspection by any person:-
Whether other business entities like firm or company would be able to convert themselves into LLP?
The LLP Act contains enabling provisions pursuant to which a firm (set up under Indian Partnership Act, 1932) and private company or unlisted public company (incorporated under Companies Act) would be able to convert themselves into LLPs. Provisions of clause 58 and Schedule II to Schedule IV to the Act provide procedure in this regard.
Whether two LLPs would be allowed to merge?
Provisions of section 60 to 62 of the Act provide for the manner in which compromises or arrangements including mergers and amalgamations involving LLPs shall be allowed.
How can an existing partner cease to be a partner of an LLP?
A person may cease to be a partner in accordance with the agreement or in the absence of agreement, by giving 30 days Notice to the other partners.
A person shall also cease to be a partner of a limited liability partnership-
(a) on his death or dissolution of the limited liability partnership; or
(b) if he is declared to be of unsound mind by a competent court; or
(c) if he has applied to be adjudged as an insolvent or declared as an insolvent.
Notice is required to be given to ROC when a person becomes or ceases to be partner or for any change in partners.
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