CHAPTER - 12 LIMITED LIABILITY PARTNERSHIP ACT 2008

1. INTRODUCTION 1. Body Corporate: LLP is a body corporate

 LLP to be a body corporate: (Section: 3) formed and incorporate under this Act, LLP is a
 LLP is a Body Corporate formed and incorporate Legal entity having separate Legal entity from its
cinder this Act. partner & have perpetual succession.
 Body corporate means Company define u/s 2. Perpetual Successions: Member may come
2(20): member go, but LLP will continue of exit in the
1. LLP register under this Act. future.
2. LLP incorporate outside India 3. Separate Legal Entity: In the eyes of Law LLP
3. Company incorporate outside India. and its partner are distinct & separate from its
 It is Legal Entity separate from its partner. each other.
 Provision of the Indian Partnership Act 1932 not 4. Mutual Agency: No other partner is Liable for
apply. unauthorized action of another partner.
 Application of the provision of the companies 5. Artificial person: LLP is artificial person
Act: because created by legal process and is clothed,
Central Gout by notification in OG, direct that any will all rights of an Individual.
of provision of Companies Act. 6. Limited Liability: In LLP, every partner is
 Shall apply to any LLP having Limited Liability for their agreed
 Shall apply to any LLP with such exception, contribution in LLP.
modification and, adaptation, as may be 3. ADVANTAGE OF LLP:
specified. 1. Easy to Form.
 Partners: Section 5 2. Easy to Dissolve.
 Any Individual / Body Corporate may be a 3. All partner enjoys Limited Liability.
partner in a LLP. 4. Flexible capital Structure.
 An Individual shall not be capable of 4. Designated partner: {Section 7}
becoming a partner of LLP - if: 1. Every LLP shall have at least 2 designated
 Unsound mind person partners, and at least a one of them resident of
 Undischarged insolvent India. {120 days}
 Adjudicated as an insolvent  If LLP, having all the partner are body
 Every LLP shall have at least 2 partners corporate or in which one of more partners
 Foreign LLP: are individual and body Corporate, atleast 2
Provision in relation to establishment of place of individual who are partner of nominee of
business by foreign LLPs within India and such body Corporate Shall act as designated
carrying on their business therein by applying or partner of LLP.
incorporating with such or modification the 2. If incorporation document specifies that who
provision of Companies Act. shall be designate partner, then that person shall
 Small LLP: Small LLP means, be designated partner of LLP.
 Contribution of which, does not Exceeds ₹  Any partner become default by LIP agreement
25,00,000 or such higher amount not & partner may cease to be a designated
exceeding ₹ 5,00,00,000. partner in accordance with LLP agreement.
 Turnover for immediately preceding financial 3. Individual shall not be designated partner in any
year = 40,100,000 OR such higher amount not LIP, unless giver prior consent to LLP in
exceeding 250, 00,00,000. prescribe manner.
 Meets such other requirement. As may be 4. LLP to fill with Register particular of every
prescribe & fulfils such term & Condition as individual who has given his consent to act as DP
may be prescribed. in forma prescribe manner with 30 days of
2. CHARACTERISTIC OF LLP: Appointment.
5. Individual will be designated partner only when
the satisfy all the Conditions &, Requirement.

CA Rachna Parakh Dubey

 6. Designated partner to obtain Designated Partner  By anyone who subscribe his name to
Identification Number from provision of section incorporate document.
153-159 shall apply mutatis mutandis.  All rules & requirement of Act are
5. LIABILITIES OF DESIGNATED PARTNER: complied, in respect of Incorporation &
(SECTION: 8} matters precedent & incidental thereto.
 Responsible for all acts, matters and things as 2. Incorporate document shall:
are required to be done by LLP in respect of  Form as may be prescribed.
compliance of Act, inducing Document filing,  Name of LLP.
return, etc.  Business of LLP.
 Liable for all penalties imposed on the LLP for  Address of Registrar office of LLP,
any contravention.  Name & Address of each person who are
6. CHANGES IN DP: {SECTION 9} going to become partner of LLP.
LLP to appoint designated partner within 30 days of  Name & Address of designated partner of LLP.
vacancy, & Section 7 apply to new designate partner. 3. If persons make a statement as discuss
 Provide if no designate partner is appointed or if above:
that time there is only one designate partner,  Knows to be false
then each partner shall be designate partner.  Does not believe to be True,
7. SECTION 10 {CONTRAVENTION OF SECTION 7 Shall punishable:
& 9}  Imprisonment: 2 years
 LLP and its partners shall be punishable with:  Fine: ₹10,000 - ₹5,00,000
Penalty of ₹ 10,000 & in cased continuing per day
 Incorporation by Registrations {Section 12}
Subject ₹ 100 to Maximum.
1. When the requirement-imposed U/s 11 have
LLP: ₹ 100,000
been complied with Registrar, shall retain &
For every partner: ₹ 50,000
register the Incorporation Document within 14
 Section 7(4):
Penalty of ₹ 5,000 and in case of continuing ₹ 100 per days.
day, maximums. 2. He shall give certificate that lip incorporated by
LLP: ₹ 50,000 name specified.
Partner: ₹ 25,000 3. Registrar may accept Statement delivered v/s 11
 Section 7 & (9)(5): as sufficient evidence that the requirement as to
Penalty of ₹ 10,000, Continuing fart ₹ 100 per day, subscription of name has been complied with.
maximum: 4. Certificate issued shall be Signed by Registrar &
LLP: ₹ 100,000 authenticated by official seal.
Partners: ₹ 50,000 5. Certificate shall be conclusive evidence.
8. INCORPORATION OF LLP: 6. Certificate of incorporation of LLP, issued by
 Incorporation Document & Sec 113 Registrar in Form 16, shall mention PAN Number
1. LLP to be incorporate & Tax Deduction A/c issued by II Department.
 Two more person carrying on a lawful 9. REGISTERED OFFICE: SECTION 13
business with a view to earn profit shall 1. LLP shall have registered office to which all
subscribe their name toon incorporate communication and notices may be addressed.
document. 2. Document may be served to LLP partner,
 Document to be failed with Registrar along designated partner, by bending it by Post under
with fees, in which Register of LLP is to be a certificate of Post, register post or by prescribe
situated. mode u/s 15 such as electronic, courier at
{Incorporation Document now processed registered office or any other address specified
electronically since 2nd Oct 2018} in Form.
 Statement to be filed by Advocate, CA, CS, Cost 3. Registered office of LLP may be change by Notice
Accountant. to Registrar.

CA Rachna Parakh Dubey

 4. Contravention of section 13, LLF and every allot a new name to LLP in Such prescribe
partner, manner and the Registrar shall enter new name
Fine of ₹500 per each day, in register of LLP in place of old Nam & Fresh
Maximum ₹50,000 for LLP & Partners. Certificate of Incorporation will be issued.
10. NAME OF LLP: SECTION 15: 4. Notice of Change: In Case of change of Name of
 Every LLP shall have either the words “Limited LLP or obtaining of new name, new the LLP shall
Liability Partnership” or the acronym LLP as within 15 days from the date of such change
the Last word of its name. give, Notice of change to registrant along with
 No LLP shall be registered by a name which, in the order of central government.
the opinion of central government: 5. Changes in Certificate of Incorporation:
 Undesirable Registrar on receipt of the Notice shall carry out
 Identical or too nearly resembles to that of necessary change in certificate.
any or other LLP or company or Registered 6. Changes in LLP Agreement: Within 30 days of
Trademark of any other person under such changes in Certificate of Incorporation LLP
Trademark Act 1999. shall change its Name in LLP Agreement.
11. RESERVATION OF NAME: {SECTION 16} 13. ELIGIBILITY TO BE PARTNER: {SECTION 12}
 Person may apply in such form & manner &  On the Incorporation of LLP, the person who
accompanied by such fee to Registrar for subscribed their name to the Incorporation
reservation of a name. Document shall be its partners.
 Name of proposed LLP.  Any other person become a partner of the LLP by
 Name to which LLP proposes to Change its and in accordance with the LLP Agreement.
name. 14. RELATIONSHIP OF PARTNER: {SECTION 23}
 Upon receipt of application & payment to  Mutual Rights governed by LLP Agreement
registrar, he may satisfy rule prescribe by central between LLP and its partner.
government that the name to be reserved is not  Any change must be made in LLP agreement shall
one which may be rejected on any ground be filed with ROC in prescribed form along with
referred. prescribed fees.
 Name should be reserved fora period of 3  Any Agreement in writing made before
months from date of intimation to Registrars. incorporating of LLP among partner may impose
12. RECTIFICATION OF NAMES LLP: {SECTION its obligation on LLP provides such agreement is
17} ratified by all partner after incorporation of LLP.
1. Direction by Central government: Central  In absence of agreement, the mutual right &
government may direct LLP to change its name duties of LLP & its partners shall be determined
or new name, where It is satisfy that registered by provision relating to that matter are set out in
whether through inadvertence or otherwise or First Schedule.
whether on its first registration or its registrant 15. CESSATION OF PARTNERSHIP INTEREST
by anew corporate with a name which is {SECTION 24}
identical.  30-day notice to be given by such partner to
 Name of any other LLP/ company all other partner; also, same to be given to
 Registered trademark of proprietor under ROC.
Trademark Act:  If any ineligibility attracted.
2. LLP shall comply with the said direction within 3  If death take place:
months after the date of the direction or Such  Representative to receive capital
Longer period as the Central Government may contribution.
allow.  Net profit share of such partner.
3. Action by Central Government: 16. REGISTRATION OF CHANGES IN PARTNERS
If LLP is in default in complying with any {SECTION 25}
direction given, then Central Government shall

CA Rachna Parakh Dubey

 1. Communication of changes to LLP: Every o Person knows that he has no authority or does
partner shall inform the LLP of any changes in not know or believe him to be a partner of LLP.
name/address within a period of 15 days of such  LLP is liable if its partner is Liable to any person as
change. omission of on his part in the Course of part in the
2. Communication of change to Registrar: business of LLP or within his authority.
(A) BY LLP: Where person become/Ceases to be  Obligation of the LLP whether arising in contract
partner, file a notice with registrar within or otherwise shall solely the obligation of the LLP.
30 days from the date he becomes cases to  LLP Liabilities will meet out from its properties.
be partner. 19. EXTENT OF LIABILITY OF PARTNER:
• Where there any change in name of {SECTION 28}
Address, file notice with Registrar within  Partner not personally liable, directly or indirectly
30 days of such change. for an obligation solely by reason of being a
(B) By Person ceases to be partners partner of LLP, unless it was as a result of his own
• Any person who ceases to be a partner of wrongful act/ omission.
LLP may himself fill with the registrar  Partner shall not be personally Liable for wrongful
the notice, if he has reasonable cause to act or omission any other partner.
believe that the LLP may not file notice 20. HOLDING OUT PARTNER & (SECTION 29}
to registrar. (a) Meaning: person who by words Spoken or
• Notice filed by partner Registrar shall written or by conduct represent himself or know
obtain a confirmation form LLP, unless lying permit himself to be represent partner of
the LLP also filed such notice. LLP.
• No confirmation given by LLP within 15 (b) Liability: Liable to any person who has faith of
days, the Registrar shall register notice any representation given credit to LLP, whether
made by person. person represent himself represented to be a
3. Requisite of Notice: partner does or does not know that the
1. Such from accompanied by such fees as may representation has reached the person so giving
be prescribed. credit.
2. Shall signed by designated partner of LLP & (c) LLP liable for benefit enjoyed: When any credit
authenticated in manner as may be prescribe. received by LLP because of such representation,
3. If relates of incoming partner, shall contain the LLP shall, without prejudice to the Liability of
statement by such partner that he consents to person so giving credit.
becoming as partner, signed by him & (d) Death of partner: After partner death, the
authenticate in manner may prescribe. business continues, the Legal representative of
4. Contravention, {Section 25 (4) & (5)} deceased Liable for act done before death.
• Default in relation to (a):
21. UNLIMITED LIABILITY IN CASE OF FRAUD:
Defaulting partner liable to a penalty ₹
{SECTION 30}
10,000.
 In case of LLP or Partner with intend of fraud, the
• Default in relation to (b):
Liability of LLP and partner who acting with
Defaulting partner (DP) and LLP liable to a
fraudulent, Liability shall be unlimited.
penalty of ₹ 10,000.
1. Imprisonment for 5 years.
17. PARTNER AS AGENT: {SECTION 26}
2. Fine not less than ₹ 50,000 & may extend to ₹
Every partner of a LLP for the purpose of its business
Act as agent by LLP, but not the other farmer. 5, 00,000.
18. EXTENT OF LIABILITY OF LLP {SECTION 27} 22. WHISTLE BLOWING: {SECTION 31}
 LLP is not bound anything done by a partner  Court / Tribunal may reduce or waive any against
dealing with person: any penalty/enviable partner / Employee of a LLP:
o Partner has no authority to act for the LLP.  Information provided by Partner/ Employee
was useful diving investigation.

CA Rachna Parakh Dubey

  Any information given by Employee Partner,  Which is false in any material fact, knowing it
leads to lip or any partner or employee being to be false.
convicted under the Act.  Which omits any material fact to be material.
 Partner can't be removed Suspended  He shall punishable with imprisonment of 2 years,
discriminated against Term & Condition of LLP, fine may extend to ₹ 500,000, {Mini: ₹ 100,000}
because he brought fraud Forward. 27. POWER OF REGISTRAR TO OBTAIN
23. CONTRIBUTIONS: INFORMATION: {SECTION 38}
 Form of Contribution: {section: 32} 1. Call for Information: In order to obtain such
 Contribution may consist: information as the registrar may consider
 Tangible, intangible, movable, Immovable, necessary for, he may require any person
 Money, Pan Number, Other agreements to including any present/Former Partner Employee
contribute to contribute cash/property to answer any question or make any
 Contract/services performed/ to be declaration/Supply any details particular in
performed. writing within Period.
 Monetary value of contribution each partner shall 2. Summon the person-in charge: {Section 38}
be accounted for and disclose in the account of  In case any person does not answers such
LLP. question / particular ask by Registrar within a
 Obligations to contribution {section: 33} reasonable time.
 Obligation of partner to contribute money  When Registrar not Satisfy with the reply, he
other property or other benefit or to be as shall have power to summon that person he
perform services of LLP shall be as per LLP shall have power him inspector, to answer any
Agreement. such question.
 Creditor of LLP, which extends credit 3. Punishment: Registrar shall punishable with fine
/otherwise act in reliance on an obligation not Less than ₹ 2000 which may extend to ₹
describe in that Agreement without notice of 25,000.
any compromise between partners may 28. ASSIGNMENT/ TRANSFER OF PARTNERSHIP
enforce original obligation against partner. RIGHTS: {SECTION: 42}
24. FINANCIAL DISCLOSURE:  Right of partner to share Profit & Loss of LLP and
1. Maintain proper books of Accounts in prescribe to receive distributions in discordance with LLP
manner. agreement are Transferable either wholly or
2. File statement of Accounts and Solvency within 6 partly.
months from the end of each FY.  Transfer right does not by itself entitle the
3. Statement of Accounts & solvency shall be filed transfer /assignee participate in the
with registrar every Year in prescribe form & fee. management/ Conduct of the activities/access
4. Audit of Accounts, Central government may into Concerning Transaction of LLP.
exempt. {Further Detail refer Pg. 12.27} 29. CONVERSION INTO LLP:
25. INSPECTION OF DOCUMENT KEPT BY  On compliance of act, form, private company,
REGISTRAR: {SECTION: 36} unlisted public company can be converted in
 Incorporation Document LLP and ROC may issue COI.
 Named Partner & changes if any  LLP to inform concerned ROC within 15 days
 Statement of Accounts & Solvency of conversion.
 Annual Return  Partner of form- SH of company- to be
26. PENALTY FOR FALSE STATEMENTS: partner of LLP.
{SECTION 37}  All assets of firm, company become assets of
 Any return, Statement, other document required LLP.
to be purpose of any of the provision of this Act,  Converted form, company shall stand
any person makes a Statement: dissolved.

CA Rachna Parakh Dubey

 30. COMPROMISE, ARRANGEMENT OR 31. WINDING UP & DISSOLUTION:
RECONSTRUCT OF LLP:  Circumstance in which LLP may wound by
 Compromise or arrangement of LLP {Section Tribunal {Section 64}
60}  LLP unable to pay debt
1. There is a proposed Compromise or  Partner remains below 2 and 6 months Lapsed.
Arrangement between a LLP & its Creditor or  LLP decide to wand up by up by Tribunal & {Suo-
LLP & its partner. moto's}
2. Call for meeting: Tribunal may on  LLP act against India's Security & Integrity.
Application  Default in filling Document with registrar, Annual
 LLP Return, statement of Solvency’s 5 consecutive
 Any creditor / Partner of LLP year.
 In case, LLP being wound up, Liquidator,  Any other just & equitable ground.
order a meeting of creditor, be or of
partner, as may be case.
3. Consent of compromise or Arrangement:
Agreed greed by majority representing 3/4th
in the value of creditor/ Partner and in
sanctioned by Tribunal.
4. Effect of Compromise or Arrangement
order be binding on:
 LLP
 Creditor/Partner
 Liquidator/Contributor, in case of
winding up.
5. Prerequisite for grant of order of function:
 All material facts relating to LLP including
its latest financial position.
 Pendency of proceeding any investigation
Ling in Relation to the LLP.
6. Order to be filed with Registrar:
Order made by Tribunal shall be filed with
registrar within 30 days on default:
 LLP & every partner: ₹ 10,000,
continuing default ₹ 100 per day,
maximum:
 ₹ 100,000 for LLP.
 ₹ 50,000 for DP.
 Power of Tribunal: (Section 61)
A. Supervise the compromise/Arrangement:
Tribunal shall have power to supervise at
time of making such order oral time, giving
such direction in regard to any matter/
modification, as it may consider necessary for
its proper working.
B. Order for winding up: It Tribunal satisfy that
if can’t be worked satisfactory, it may either
own or on the application of other, maker
order for winding up LLP.

CA Rachna Parakh Dubey