10th June, LIMITED LIABILITY PARTNERSHIPS PRESENTED BY : Group-9 MUKESH GOYAL NEHA BABLANI RICHA SHARMA ROSY JAISWAL RIDDHI MADAN

10th June, WHAT IS LLP ?  Governed by the Limited Liability Partnership Act,  An LLP is a body corporate.  Minimum two partners and two Designated Partners (Individuals & one of them must be resident in India).  Every Designated Partner must obtain DPIN form the Central Government.  The name of the LLP must end with either the words Limited Liability Partnerships or LLP.  LLP can carry business with profit motive only.

10th June, CONCEPT OF LLP  LLP is an alternative corporate business form that gives the benefit of limited liability of a company and the flexibility of a partnership.  An LLP can continue its existence irrespective of change in partners.  No partner is liable on account of the independent actions of other partners.  Mutual rights and duties of the partners within an LLP are governed by an agreement.

10th June, LLP-GENESIS Other Countries where this form is available:-  UK, USA, various other Gulf countries, Australia and Singapore.  LLP Act is broadly based on UK LLP 2000 and Singapore LLP Act  Both these Acts allow creation of LLPs in a body corporate form.  Apr. 2, 2009 –First LLP was registered.  June 6,2011-Number of LLPs Registered 5052

10th June, COMPARISON Partnership FirmLimited Liability Partnership Private CompanyPublic Company Registration- Optional Registration - Mandatory Registering Authority- Registrar of Firms Registering Authority- Registrar of Companies Partnership Firm is not a Body Corporate LLP is a Body Corporate Private Company is a Body Corporate Public Company is a Body Corporate Not Independent legal entity Is an Independent legal entity distinct from partners Is an Independent legal entity distinct from shareholders

10th June, COMPARISON CONTD… Partnership FirmLimited Liability Partnership Private CompanyPublic Company Partnership firm can commence Business immediately on implied or written agreement between partners LLP can commence Business immediately after issue of Certificate of Incorporation by the Registrar Private Company can commence Business immediately after issue of Certificate of Incorporation by the Registrar Public Company should obtain Certificate of Commencement of Business before commencement of Business There is no concept of issue of ownership Certificate for capital contribution There is no concept of issue of ownership Certificate for Contribution Share Certificate will have to issued within 3 months of issue/allotment of shares There is no concept of capital contribution at premium There is no concept of contribution at premium Shares can be issued at a premium

10th June, COMPARISON CONTD… Partnership FirmLimited Liability Partnership Private CompanyPublic Company An Unregistered Partnership Firm can be sued by third party but it cannot sue third parties LLP can sue and be sued in its name Private Company can sue and be sued in its name Public Company can sue and be sued in its name Existence of Partnership Firm is determined by Facts Existence is determined by Registration Certificate Partnership Firm has no perpetual succession LLP has perpetual succession Private Company has perpetual succession Public Company has perpetual succession Min. no. of partners - 2 Min. no. of Shareholders - 2 Min. no. of Shareholders - 7

10th June, COMPARISON CONTD… Partnership FirmLimited Liability Partnership Private CompanyPublic Company Max. no. of Partners: Banking - 10 Non-Banking - 20 Max. no. of Partners - No Limit Max. no. of Shareholders - 50 Max. no. of Shareholders - No Limit Partnership in writing is evidenced by Partnership Deed Limited Liability Partnership Agreement Memorandum and Articles of Association Voting Rights not applicable One vote per Partner One vote per member on show of hands

10th June, COMPARISON CONTD… Partnership FirmLimited Liability Partnership Private CompanyPublic Company Liability of Partners is unlimited - joint and several Liability of Partners is limited to the extent of Contribution made except under certain circumstances Liability of shareholders is limited to the extent of shares held A guarantee given by a Partnership Firm to a third party in the absence of agreement to the contrary stands revoked in respect of future transactions A guarantee given by a LLP to third party shall continue and be binding on the LLP for future transactions even after the death of a partner A guarantee given by a private company to third party shall continue and be binding on the company for future transactions even after the death of a shareholder A guarantee given by a public company to third party shall continue and be binding on the company for future transactions even after the death of a shareholder

10th June, COMPARISON CONTD… Partnership FirmLimited Liability Partnership Private CompanyPublic Company A Minor cannot become a Partner but can be admitted to the benefits of Partnership with the consent of all the partners as per Section 30 of the Partnership Act 1932 A Minor cannot become a Partner nor admitted to the benefits of LLP since there is no provision in the LLP Act 2008 to this effect A Minor can become a fully paid up shareholder. Share Certificate shall be issued in the Guardian’s name

10th June, INCORPORATION AND REGISTERATION

10th June, FORMATION OF LLP  Deciding the Partners & Designated Partners  Obtaining DPIN (Form-7) & Digital Signatures  Reservation of name of LLP (Form-1)  Filing of Incorporation documents (Form-2)  Filing of LLP Agreement (Form-3)  Filing of consent of Partners/ Designated Partners (Form-4)  Certificate of Incorporation

10th June, Step I: Deciding the Partners and Designated Partners Minimum of Two Partners (Individuals or Body Corporate through their nominees) At least two shall be Designated Partners, of which at least one must be an Indian Resident. PROCESS

10th June, Step II: Obtaining DPIN No. & Digital Signature Designated Partner Identification Number (DPIN): Section 7 (6) of LLP Act 2008, provides that every Designated Partner to obtain a DPIN from the Central Government. Digital Signature Certificate: As all the documents and forms required for incorporating an LLP in India to be filed electronically and under the signatures of Designated Partners, thus at least one Designated Partner to obtain the digital signature certificates from government recognized DSA’s. PROCESS

10th June, The name of the proposed LLP shall be evaluated under the prescribed parameters and make an application in Form 1 of Rule 18(5) of the Limited Liability Partnership Act 2008, for reservation of the desired name. The name of the limited liability partnership shall not be similar or identical with Company or LLP already registered in India and it should not contains words prohibited under the ‘Emblems and Names (Prevention of improper use) Act, 1950’or which are also not ‘Undesirable’ in the opinion of Central Government or which satisfies the conditions prescribed under rule 18(2). Step III: Checking the Name Availability PROCESS

10th June, Step IV: Drafting of LLP Agreement LLP Agreement governs the mutual rights and duties among the partners and among the LLP and its partners. The basic contents of Agreement are: 1. Name of LLP 2.Name of Partners & Designated Partners 3.Form of contribution 4.Profit Sharing ratio 5.Rights & Duties of Partners 6.Proposed Business 7.Rules for governing the LLP If, no agreement. Then Schedule I will be applicable. PROCESS

10th June, PROCESS Step V: Filing of Incorporation Documents eForm2: Incorporation Document eForm 3: Details of LLP Agreement eForm 4: Consent of Partners Consent of each partner to become a partner of Limited Liability Partnership along with their address and identity proof to be filed with the Registrar of Companies.

10th June, Step VI: Certificate of Incorporation After the Registrar is satisfied that all the formalities with respect to the incorporation has been complied, he will issue a Certificate of Incorporation as to formation of the LLP within maximum of 14 days from date of filing of documents. The Certificate of Incorporation issued shall be the conclusive evidence of formation of the LLP. PROCESS

10th June, Form-3, Form-4, Form-5, Form-15 Form-8 and Form-11 EVENT BASEDREGULAR COMPLIANCES

10th June, ANNUAL COMPLIANCES  Limited Liability Partnership shall with in a period of six months from the end of every financial year prepare and file a Statement of Account and Solvency with the Registrar in such form and manner and accompanied by such fee as may be prescribed.  Limited Liability Partnership to file an Annual Return to the Registrar of Companies with in sixty days of closure of the financial year in such form and manner and accompanied by such fee as may be prescribed. Statement of Accounts & Solvency Annual Return

10th June, EVENT BASED COMPLIANCES OF LLP ComplianceSectione-formTime Limit Filing of Consent of Designated Partners 7(3) Form 4Within 30 days of incorporation or subsequent appointments Filing of Change in Partners 25(2) Form 3 and Form 4 Within 30 days of Change LLP Agreement & Changes therein 23(2)Form 3 With in 30 days of incorporation or Changes in LLP Agreement Shifting of Registered Office 13(3)Form 15 Within 30 days of Compliance Change of Name 19Form 5Within 30 days of Compliance.

10th June, Additional Fees for delay filing of Form - Rs.100 per day up to 300 days. Delay Filing of the Form beyond 300 days will attract additional fees and action against LLP and Designated Partners under the Act. EVENT BASED COMPLIANCES OF LLP Cont…

10th June, Books of Accounts Particulars of all sums of money received & expended A record of assets & liabilities Statements of cost of goods purchased Any other particulars as may be decided EVENT BASED COMPLIANCES OF LLP Cont…

10th June, Audit Retiring auditor deemed to be reappointed if appointment not made unless otherwise provided in LLPA Auditor may resign by giving notice to LLP not less than 14 days from before end of time to appoint auditor Auditor can be removed when all partners consent or as otherwise provided in LLPA EVENT BASED COMPLIANCES OF LLP Cont…

10th June, Who Can Convert?  Partnership Firm,  Private Company,  Unlisted Public Company. CONVERSION

10th June, FROM PARTNERSHIP TO LLP STEPS:-  Deciding the partners and designated partners,  Obtaining the DPIN and Digital Signatures,  Checking Name Availability of LLP,  Drafting of Incorporation documents,  Filing Conversion Application,  Certificate of Registration,  Information for conversion to Registrar of Firms.

10th June, FROM PVT. LTD. TO LLP STEPS:  Partners and Designated partners,  Obtaining the DPIN and Digital Signatures,  Checking Name Availability of LLP,  Drafting of Incorporation documents,  Filing Conversion Application,  Certificate of Registration,  Certificate of Registration.

10th June, FROM UNLISTED PUBLIC LTD. TO LLP STEPS:  Partners and Designated partners,  Obtaining the DPIN and Digital Signatures,  Checking Name Availability of LLP,  Drafting of Incorporation documents,  Filing Conversion Application,  Certificate of Registration,  Information for conversion to Registrar of Firms.

10th June, WINDING UP Two Ways of Winding Up: a) Voluntary b) By the tribunal :- 1. decided by the LLP 2. No. of designated partners below two, >6 months, 3. Unable to pay debts, 4. Acted against the interest sovereignty and integrity of India 5. Failed to file for 5 years consecutively, statement of account and solvency and annual return 6. Tribunal thinks, it is just and equitable to do so. NOTE: here tribunal is established still powers are given to High Court.

10th June, ROLE OF COMPANY SECRETARY Certification of Annual Return by Company Secretaries -Rule 25(2) of the LLP Rules LLP with a turnover of over Rs.5 Crore; or LLP with a contribution of over Rs.50 Lacs Annual Return to be accompanied by a certificate from a Company Secretary in practice to the effect that he has verified the particulars from the books and records of the LLP and found them to be true and correct.

10th June, ROLE OF COMPANY SECRETARY SEIZE THE OPPORTUNITIES  Formation of LLPs/ Drafting of LLP Agreements  Advisory Services –Foreign Clients–Entry options  Advisory Services –Indian Clients–Corporate Restructuring tool  Conversion of existing private companies into LLP  Conversion of existing partnership firms into LLP  Good tool for large size NBFCs  Advising the SME Sector –to forge alliances with their foreign/ Indian counterparts  Advising the upcoming entrepreneur class –to graduate them to a body corporate status

10th June, Two Fold Opportunities  EXPLORE FOR YOUR OWN BUSINESS/ PROFESSION  ADVISE YOUR CLIENTS/ ORGANISATIONS ROLE OF COMPANY SECRETARY

10th June,  Separate legal entity & body corporate.  Low compliance burden & cost.  Limited Liability of partners.  LLP is liable to the extent of its assets.  More flexibility than company.  Right of partners can be assigned to third party.  Availability of solvency position in public domain increases the credit worthiness.  Allows Multi-disciplinary professionals combination which provides level playing field against their international professional firm.  Easy to exit/ winding up.  Venture capital funds can combined with knowledge and expertise.  Taxation benefits as compare to company. Merits of LLP (as business model for SMEs and service providers)

10th June,