Chapter 4

Limited Liability Partnership Act, 2008

INTRODUCTION

An LLP is a new form of legal business entity with limited liability. It is an alternative corporate business
vehicle that not only gives the benefits of limited liability at low compliance cost but allows its partners
the flexibility of organizing their internal structure as a traditional partnership. The LLP is a separate
legal entity and, while the LLP itself will be liable for the full extent of its assets, the liability of the
partners will be limited.

LLP is an alternative corporate business form that gives the benefits of limited liability of a company
and the flexibility of a 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.

The LLP Act, 2008 has 81 sections and 4 schedules.

The Ministry of Corporate Affairs and the Registrar of Companies (ROC) are entrusted with the task of
administrating the LLP Act, 2008.

It is also to be noted that the Indian Partnership Act, 1932 is not applicable to LLPs.

DIFFERENCES WITH OTHER FORMS OF ORGANISATION

Basis LLP Partnership firm

1. Regulating Act The Limited Liability Partnership Act, The Indian Partnership Act, 1932.
2008.
2. Body corporate It is a body corporate. It is not a body corporate,
3. Separate legal It is a legal entity separate from its It is a group of persons with no
entity members. separate legal entity.
4. Creation It is created by a legal process called It is created by an agreement
registration under the LLP Act, 2008. between the partners.
5. Registration Registration is mandatory. LLP can Registration is voluntary. Only the
sue and be sued in its own name. registered partnership firm can sue
the third parties.
6. Perpetual The death, insanity, retirement or The death, insanity, retirement or
succession insolvency of the partner(s) does insolvency of the partner(s) may
not affect its existence of LLP. affect its existence. It has no
Members may join or leave but its perpetual succession.
existence continues forever.
7. Name Name of the LLP to contain the No guidelines. The partners can have
word limited liability partners (LLP) any name as per their choice.
as suffix.
 8. Liability Liability of each partner limited to Liability of each partner is unlimited.
the extent to agreed contribution It can be extended upto the personal
except in case of willful fraud. assets of the partners.
9. Mutual agency Each partner can bind the LLP by his Each partner can bind the firm as well
acts but not the other partners. as other partners by his own acts.
10. Designated At least 2 designated partners and There is no provision for such
partners atleast one of them shall be partners under the Partnership Act,
resident in India. 1932.
11. Common seal It may have its common seal as its There is no such concept in
official signatures. partnership
12. Legal compliances Only designated partners are All partners are responsible for all
responsible for all the compliances the compliances and penalties under
and penalties under this Act. the Act.
13. Annual filing of LLP is required to file: Partnership firm is not required to file
documents (i) Annual statement of accounts any annual document with the
(ii) Statement of solvency registrar of firms.
(iii) Annual return with the
registration of LLP every year.
14. Foreign Foreign nationals can become a Foreign nationals cannot become a
partnership partner in a LLP. partner in a partnership firm.
17. Minor as partner Minor cannot be admitted to the Minor can be admitted to the
benefits of LLP. benefits of the partnership with the
prior consent of the existing partners.

DISTINCTION BETWEEN LLP AND LIMITED LIABILITY COMPANY

Basis LLP Limited Liability Company

1. Regulating Act The LLP Act, 2008. The Companies Act, 2013.
2. Members/Partners The persons who contribute to The persons who invest the money in
LLP are known as partners of the shares are known as members of
the LLP. the company.
3. Internal The internal governance The internal governance structure of
governance structure of a LLP is governed a company is regulated by statute
structure by contract agreement (i.e., Companies Act, 2013).
between the partners.
4. Name Name of the LLP to contain theName of the public company to
word “Limited Liability
contain the word “limited” and Pvt.
partnership” or “LLP” as suffix.
Co. to contain the word “Private
limited”
5. No. of Minimum – 2 members Private company: Minimum – 2
members/partners Maximum – No such limit on members Maximum 200 members
the members in the Act. The Public company: Minimum – 7
members of the LLP can be members
individuals/or body corporate
through the nominees.
 Maximum – No such limit on the
members.
Members can be organizations, trusts,
another business form or
individuals.
6. Liability of Liability of a partners is limited Liability of a member is limited to the
members/partners to the extent of agreed amount Unpaid on the shares held by
contribution in case of intention them.
is fraud.
7. Management The business of the company The affairs of the company are
managed by the partners managed by board of directors
including the designated elected by the shareholders.
partners authorized in
the agreement.
8. Minimum number Minimum 2designated partners. Pvt. Co. – 2 directors Public co. – 3
of directors/ directors
designated
partners

IMPORTANT DEFINITIONS

1) Body Corporate [(Section 2(d)]: It means a company as defined in section 3 of the Companies
Act, 1956 (now Companies Act, 2013) and includes—

(i) an LLP registered under this Act;

(ii) an LLP incorporated outside India; and
(iii) a company incorporated outside India,

but does not include—

(i) a corporation sole;

(ii) a co-operative society registered under any law for the time being in force; and
(iii) any other body corporate (not being a company as defined in section 3 of the Companies Act, 1956
clause (20) of section 2 of the Companies Act, 2013 or a limited liability partnership as defined in this
Act), which the Central Government may, by notification in the Official Gazette, specify in this behalf.

#Amended Dec 2022

2) DESIGNATED PARTNER - Section 7

a) Every LLP shall HAVE AT LEAST 2 DESIGNATED PARTNERS who are individuals and at LEAST
ONE OF THEM SHALL BE A RESIDENT IN INDIA.
b) For the purposes of this section, the term “resident in India” means a person who has stayed
in India for a period of not less than 182 days during the immediately preceding one year.
c) At least two individuals who are partners of such LLP or nominees of such bodies corporate
shall act as designated partners.
Example: An LLP by the name SMY LLP has three partners namely 1. SI Limited, 2. MIS Limited,
3. YI Private Limited. This will not be considered for registration because the requirement for
LLP is to have 2 individual members as partners apart from the body corporates. Accordingly,
the said SMY LLP must consist of at least five partners, namely the three body corporates and 2
individual members to constitute the LLP and the two individuals need to be treated as
designated partners.

(1) Every LLP shall have at least two designated partners who are individuals and at least one
of them shall be a resident in India:

Provided that in case of a limited liability partnership in which all the partners are bodies
corporate or in which one or more partners are individuals and bodies corporate, at least two
individuals who are partners of such limited liability partnership or nominees of such body
corporate shall act as designated partners.

Explanation: For the purposes of this section, the term resident in India means a person who
has stayed in India for a period of not less than 120 days during the financial year.

(2) Subject to the provisions of sub-section (1),

(i) if the incorporation document

(a) specifies who are to be designated partners, such persons shall be designated partners
on incorporation; or

(b) states that each of the partners from time to time of limited liability partnership is to be
designated partner, every partner shall be a designated partner;

(ii) any partner may become a designated partner by and in accordance with the limited liability
partnership agreement and a partner may cease to be a designated partner in accordance with
limited liability partnership agreement.

(3) An individual shall not become a designated partner in any limited liability partnership unless
he has given his prior consent to act as such to the limited liability partnership in such form and
manner as may be prescribed.

(4) Every LLP shall file with the Registrar the particulars of every individual who has given his
consent to act as designated partner in such form and manner as may be prescribed within 30
days of his appointment.

(5) An individual eligible to be a designated partner shall satisfy such conditions and
requirements as may be prescribed.

(6) Every designated partner of a limited liability partnership shall obtain a Designated Partners
Identification Number (DPIN) from the Central Government and the provisions of sections 153
to 159 (both inclusive) of the Companies Act, 2013 shall apply mutatis mutandis for the said
purpose.
3) Minimum number of partners (Section 6):

(i) Every LLP shall HAVE AT LEAST 2 PARTNERS.

(ii) If at any time the number of partners of a LLP is reduced below two and the LLP carries on
business for more than six months while the number is so reduced, the person, who is the only
partner of the LLP during the time that it so carries on business after those 6 months and has the
knowledge of the fact that it is carrying on business with him alone, SHALL BE LIABLE PERSONALLY
FOR THE OBLIGATIONS OF THE LLP incurred during that period.

4) “Small limited liability partnership [Section 2(ta)]: It means a limited liability partnership—
(i) the contribution of which, does not exceed 25 lakh rupees or such higher amount, not
exceeding 5 crore rupees, as may be prescribed; and
(ii) the turnover of which, as per the Statement of Accounts and Solvency for the immediately
preceding financial year, does not exceed 40 lakh rupees or such higher amount, not exceeding
fifty crore rupees, as may be prescribed; or
(iii) which meets such other requirements as may be prescribed, and fulfils such terms and
conditions as may be prescribed;

SALIENT FEATURES OF LLP

i. LLP is a body corporate: LLP is a body corporate formed and incorporated under this Act and is a
legal entity separate from that of its partners.
ii. Perpetual Succession: The LLP can continue its existence irrespective of changes in partners.
Death, insanity, retirement or insolvency of partners has no impact on the existence of LLP.
iii. Separate Legal Entity: The LLP is a separate legal entity; it is liable to the full extent of its assets
but liability of the partners is limited to their agreed contribution in the LLP.
iv. Mutual Agency: Further, no partner is liable on account of the independent or un-authorized
actions of other partners, thus individual partners are shielded from joint liability created by
another partner’s wrongful business decisions or misconduct. In other words, all partners will be
the agents of the LLP alone. No one partner can bind the other partner by his acts.
v. LLP Agreement: Mutual rights and duties of the partners within an LLP are governed by an
agreement between the partners.
In the absence of any such agreement, the mutual rights and duties shall be governed by the
provisions of the LLP Act, 2008.
vi. Artificial Legal Person: A LLP is an artificial legal person because it is created by a legal process
and is clothed with all rights of an individual. It can do everything which any natural person can
do
vii. Common Seal: A LLP being an artificial person can act through its partners and designated
partners. LLP may have a common seal, if it decides to have one [Section 14(c)]. Thus, it is not
mandatory for a LLP to have a common seal.
viii. Limited Liability: The liability of the partners will be limited to their agreed contribution in the
LLP.
 ix. Conversion into LLP: A firm, private company or an unlisted public company would be allowed to
be converted into LLP in accordance with the provisions of LLP Act, 2008.
x. Business for Profit Only: The essential requirement for forming LLP is carrying on a lawful
business with a view to earn profit. Thus LLP cannot be formed for charitable or non- economic
purpose.
xi. Management of Business: The partners in the LLP are entitled to manage the business of LLP. But
only the designated partners are responsible for legal compliances.
xii. Investigation: The Central Government shall have powers to investigate the affairs of an LLP.
xiii. E-Filling of Documents: Every form or application of document shall be authenticated by a
partner or designated partner of LLP, filed on its website www.mca.gov.in .
xiv. Foreign LLPs: Section 2(1)(m) defines foreign limited liability partnership “as a limited liability
partnership formed, incorporated, or registered outside India which established as place of
business within India”. Foreign LLP can become a partner in an Indian LLP.

INCORPORATION OF LLP

1. NAME OF LLP (section 15)

(1) Every limited liability partnership shall have either the words “limited liability partnership” or the
acronym “LLP” as the last words of its name.
(2) No LLP shall be registered by a name which, in the opinion of the Central Government is—
a. undesirable; or
b. identical or too nearly resembles to that of any other partnership firm LLP or body
corporate or (added) Company or a registered trade mark, or a trade mark which is the
subject matter of an application for registration of any other person under the Trade Marks
Act, 1999.

CHANGE OF NAME OF LLP (Section 17): #Amended Dec 2022

Where the Central Government is satisfied that a LLP has been registered under a name which —
a. is a name referred to in sub-section (2) of section 15; or
b. is identical with or too nearly resembles the name of any other LLP or body corporate or other
name as to be likely to be mistaken for it,
the Central Government may direct such LLP to change its name, and the LLP shall comply with the
said direction within 3 months after the date of the direction
(1) Notwithstanding anything contained in sections 15 and 16, if through inadvertence or otherwise,
a limited liability partnership, on its first registration or on its registration by a new body corporate,
its registered name;">name, is registered by a name which is identical with or too nearly resembles
to—
(a) that of any other limited liability partnership or a company; or
(b) a registered trade mark of a proprietor under the Trade Marks Act, 1999, as is likely to be mistaken
for it, then on an application of such limited liability partnership or proprietor referred to in clauses
(a) and (b) respectively or a company, the Central Government may direct that such limited liability
partnership to change its name or new name within a period of three months from the date of issue
of such direction:
Provided that an application of the proprietor of the registered trade marks shall be maintainable
within a period of three years from the date of incorporation or registration or change of name of the
limited liability partnership under this Act.
(2) Where a LLP changes its name or obtains a new name under sub-section (1), it shall within 15
days from the date of such change, give notice of the change to Registrar along with the order of the
Central Government, who shall carry out necessary changes in the certificate of incorporation and
within 30 days of such change in the certificate of incorporation, such LLP shall change its name in
the limited liability partnership agreement.
(3) If the LLP is in default in complying with any direction given under sub-section (1), the Central
Government shall allot a new name to the limited liability partnership in such manner as may be
prescribed and the Registrar shall enter the new name in the register of limited liability partnerships
in place of the old name and issue a fresh certificate of incorporation with new name, which the
limited liability partnership shall use thereafter:
Provided that nothing contained in this sub-section shall prevent a limited liability partnership from
subsequently changing its name in accordance with the provisions of section 16.

2. INCORPORATION DOCUMENT

a. The 1st step to incorporation of LLP shall be that two or more persons associated for carrying on
a lawful business with a view to profit shall subscribe their names to incorporation document;
b. the incorporation document shall be filed with the Registrar of the State in which the registered
office of the LLP is to be situated
c. The incorporation document shall
• be in a form as may be prescribed;
• state the name of the LLP;
• state the proposed business of the LLP;
• state the address of the registered office of the LLP;
• state the name and address of each of the persons who are to be partners of
the LLP on incorporation;
• state the name and address of the persons who are to be designated partners of
the LLP on incorporation;
• other information as may be prescribed.

3. STATEMENT
a. there shall be filed along with the incorporation document, a statement in the prescribed form,
b. made by either an advocate, or a Company Secretary or a Chartered Accountant or a Cost
Accountant, who is engaged in the formation of the LLP and
c. by anyone who subscribed his name to the incorporation document, that all the requirements
of this Act and the rules made thereunder have been complied with
4. CERTIFICATE OF INCORPORATION
When the above two points are complied with, the Registrar shall retain the incorporation document
and within a period of 14 days-
• register the incorporation document; and
• give a certificate that the LLP is incorporated by the name specified therein.
The certificate issued shall be signed by the Registrar and authenticated by his official seal and it
shall be conclusive evidence that the LLP is incorporated by the name specified therein.

Registered office of LLP and change therein (Section 13):

(1) Every limited liability partnership shall have a registered office to which all communications and
notices may be addressed and where they shall be received.
(2) A document may be served on a limited liability partnership or a partner or designated partner
thereof by sending it by post under a certificate of posting or by registered post or by any other
manner, as may be prescribed, at the registered office and any other address specifically
declared by the limited liability partnership for the purpose in such form and manner as may be
prescribed.
(3) A LLP may change the place of its registered office and file the notice of such change with the
Registrar in such form and manner and subject to such conditions as may be prescribed and any
such change shall take effect only upon such filing.
(4) If any default is made in complying with the requirements of this section, the limited liability
partnership and its every partner shall be liable to a penalty of 500 rupees for each day during
which the default continues, subject to a maximum of fifty thousand rupees for the limited
liability partnership and its every partner.

EFFECT OF REGISTRATION (Section 14)

PARTNERS AND THEIR RELATIONS

Eligibility to be partners (Section 22): On the incorporation of a LLP, the persons who subscribed
their names to the incorporation document shall be its partners and any other person may become
a partner of the LLP by and in accordance with the LLP agreement.

RELATIONSHIP OF PARTNERS (Section 23)

(1) Save as otherwise provided by this Act, the mutual rights and duties of the partners of a LLP, and
the mutual rights and duties of a LLP and its partners, shall be governed by the LLP agreement
between the partners, or between the LLP and its partners.
(2) The LLP agreement and any changes, if any, made therein shall be filed with the Registrar
(3) An agreement in writing made before the incorporation of a LLP between the persons who
subscribe their names to the incorporation document may impose obligations on the LLP, provided
such agreement is ratified by all the partners after the incorporation of the LLP.

CESSATION OF PARTNERSHIP INTEREST (Section 24)

(1) A person may cease to be a partner of a LLP in accordance with an agreement with the other
partners or, in the absence of agreement, by giving a notice in writing of not less than 30 days to
the other partners of his intention to resign as partner.

(2) A person shall cease to be a partner of a LLP—

(a) on his death or dissolution of the LLP; 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.

CONSEQUENCE OF CESSATION OF A PARTNER

(3) Where a person has ceased to be a partner of a LLP (hereinafter referred to as “former partner”),
the former partner is to be regarded (in relation to any person dealing with the LLP) as still being a
partner of the LLP unless—
(a) the person has notice that the former partner has ceased to be a partner of the LLP; or
(b) notice that the former partner has ceased to be a partner of the LLP has been delivered to the
Registrar.
(4) The cessation of a partner does not discharge the partner from any obligation to the LLP or to
the other partners or to any other person which he incurred while being a partner.
(5) Where a partner of a LLP ceases to be a partner, the former partner or a person entitled to his
share in consequence of the death or insolvency of the former partner, shall be entitled to receive
from the LLP—
(a) an amount equal to the capital contribution of the former partner actually made to the LLP; &
(b) his right to share in the accumulated profits of the LLP, after the deduction of accumulated
losses of the LLP, determined as at the date the former partner ceased to be a partner.
(6) A former partner or a person entitled to his share in consequence of the death or insolvency of
the former partner shall not have any right to interfere in the management of the LLP.

REGISTRATION OF CHANGES IN PARTNERS (Section 25)

(1) Every partner shall INFORM THE LLP of any change in his name or address within a period of 15
days of such change.
(2) A LLP shall—
(a) where a PERSON BECOMES (admission) or CEASES to be a partner, file a notice with the
Registrar within 30 days from the date he becomes or ceases to be a partner; and; and
(b) where there is any CHANGE IN THE NAME OR ADDRESS of a partner, file a notice with the
Registrar within 30 days of such change.

(4) If the LLP contravenes the provisions of sub-section (2), the LLP and every designated partner
of the LLP shall be punishable with fine which shall not be less than ` 2,000 but which may extend
to ` 25,000.
(5) If any partner contravenes the provisions of sub-section (1), such partner shall be punishable
with fine which shall not be less than ` 2,000 but which may extend to ` 25,000.
#Amended Dec 2022
(4) If the limited liability partnership contravenes the provisions of sub- section (2), the limited
liability partnership and its every designated partner shall be liable to a penalty of ten thousand
rupees.
(5) If the contravention referred to in sub- section (1) is made by any partner of the limited liability
partnership, such partner shall be liable to a penalty of ten thousand rupees.

(6) Any person who ceases to be a partner of a LLP MAY HIMSELF FILE WITH THE REGISTRAR THE
NOTICE referred to in sub-section (3) if he has reasonable cause to believe that the LLP may not
file the notice with the Registrar and in case of any such notice filed by a partner, the Registrar
shall obtain a confirmation to this effect from the LLP unless the LLP has also filed such notice.
However, where no confirmation is given by the LLP within 15 days, the registrar shall register the
notice made by a person ceasing to be a partner under this section.

EXTENT AND LIMITATION OF LIABILITY OF LLP AND PARTNER

1) PARTNER AS AGENT (SECTION 26): Every partner of a LLP is, THE AGENT OF THE LLP, BUT NOT
OF OTHER PARTNERS. (No Mutual Agency concept)
2) EXTENT OF LIABILITY OF LLP (SECTION 27):
(1) A LLP is not bound by anything done by a partner in dealing with a person if—
(a) the partner in fact has no authority to act for the LLP in doing a particular act; AND
(b) the person knows that he has no authority or does not know or believe him to be a
partner of the LLP.
(2) The LLP is liable if a partner of an LLP is liable to any person as a result of a wrongful act or
omission on his part in the course of the business of the LLP or with its authority.
Example: P wants to purchase a car from XYZ LLP, which can have a mileage of 20 km/litre. Q the
partner of LLP, pointing at a particular vehicle says “This car will suit you.” Later P buys the car but
finds out later on that this car only has a top mileage of 15 km/ litre. This amounts to a breach of
condition because the seller made the stipulation which forms the essence of the contract. In this
case the LLP shall also be held liable for the wrongful act of the Partner.
(3) An obligation of the LLP whether arising in contract or otherwise, shall be solely the obligation
of the LLP.
(4) The liabilities of the LLP shall be met out of the property of the LLP.

3) EXTENT OF LIABILITY OF PARTNER (Section 28):

(1) A PARTNER IS NOT PERSONALLY LIABLE, directly or indirectly for an obligation referred to in
sub-section (3) of section 27 solely by reason of being a partner of the LLP.
(2) These sections shall not affect the personal liability of a partner for his own wrongful act or
omission, but a partner shall not be personally liable for the wrongful act or omission of any other
partner of the LLP.

4) HOLDING OUT (Section 29):

(1) Any person,
• who by words spoken or written or by conduct,
• represents himself, or knowingly permits himself to be a partner in a LLP
• is liable to any person
• who has on the faith of any such representation
• given credit to the LLP
However,
• where any credit is received by the LLP as a result of such representation,
• the LLP shall,
• be liable to the extent of credit received by it or any financial benefit derived thereon.

(2) Where after a partner’s death the business is continued in the same LLP name, the continued
use of that name or of the deceased partner’s name as a part thereof shall not of itself make
his legal representative or his estate liable for any act of the LLP done after his death.
5) UNLIMITED LIABILITY IN CASE OF FRAUD (Section 30):
(1) In case of fraud:

• In the event of an act carried out by a LLP, or any of its partners,

• with intent to defraud creditors of the LLP or any other person, or for any fraudulent purpose,
• the liability of the LLP and partners who acted with intent to defraud creditors or for any
fraudulent purpose
• shall be unlimited for all or any of the debts or other liabilities of the LLP.

However, in case any such act is carried out by a partner, the LLP is liable to the same extent as the
partner unless it is established by the LLP that such act was without the knowledge or the authority
of the LLP.

(2) Where any business is carried on with such intent or for such purpose as mentioned in sub-
section (1), every person who was knowingly a party to the carrying on of the business in the
manner aforesaid shall be punishable with

• imprisonment for a term which may extend to 2 years 5 years and

• with fine which shall not be less than ` 50,000 but which may extend to ` 5 Lakhs.

(3) Where a LLP or any partner or designated partner or employee of such LLP has conducted the
affairs of the LLP in a fraudulent manner, the LLP and any such partner or designated partner
or employee shall be liable to pay compensation to any person who has suffered any loss or
damage by reason of such conduct.

However, such LLP shall not be liable if any such partner or designated partner or employee has
acted fraudulently without knowledge of the LLP.

6) WHISTLE BLOWING (SECTION 31):

(1) The Court or Tribunal MAY REDUCE OR WAIVE ANY PENALTY leviable against any partner or
employee of a LLP, if it is satisfied that—

• such partner or employee of a LLP has provided useful information during investigation of
such LLP; or

• when any information given by any partner or employee leads to LLP or any partner or
employee of such LLP being convicted under this Act or any other Act.

(2) No partner or employee of any LLP may be discharged, demoted, suspended, threatened,
harassed or in any other manner discriminated against the terms and conditions of his LLP or
employment merely because of his providing information or causing information to be
provided pursuant to sub-section (1)

FINANCIAL DISCLOSURES
(1) Proper Books of account: The LLP shall maintain such proper books of account, on cash basis
or accrual basis and according to double entry system of accounting and shall maintain the
same at its registered office.
(2) Statement of Account and Solvency: Every LLP shall, within a period of 30 days from the end
of 6 months of the financial year, prepare a Statement of Account and Solvency for the said
financial year as at the last day of the said financial year in such form as may be prescribed,
and such statement shall be signed by the designated partners of the LLP.

#Amended Dec 2022:

(3) Any LLP which fails to comply with the provisions of sub-section (3), such limited liability
partnership and its designated partners shall be liable to a penalty of one hundred rupees for each
day during which such failure continues, subject to a maximum of one lakh rupees for the LLP and
fifty thousand rupees for every designated partner.

(4) Any limited liability partnership which fails to comply with the provisions of sub-section (1),
sub-section (2) and sub-section (4), such LLP shall be punishable with fine which shall not be less
than twenty-five thousand rupees, but may extend to five lakh rupees and every designated
partner of such limited liability partnership shall be punishable with fine which shall not be less
than ten thousand rupees, but may extend to one lakh rupees

Example: Suppose, the financial year of a LLP closes on 31st March, 2021 then the LLP has to file
Statement of Account and Solvency with the Registrar latest by 30th October 2020.

#Amednment new insertion Section 34A Accounting and auditing standards.

The Central Government may, in consultation with the National Financial Reporting Authority
constituted under section 132 of the Companies Act, 2013,—

(a) prescribe the standards of accounting; and

(b) prescribe the standards of auditing, as recommended by the Institute of Chartered

Accountants of India constituted under section 3 of the Chartered Accountants Act, 1949, for
a class or classes of limited liability partnerships.]

(3) Annual return (Section 35): Every LLP shall file an annual return duly authenticated with the
Registrar within 60 days of closure of its financial year in such form and manner and
companied by such fee as may be prescribed.

Example: Suppose, the financial year of a LLP closes on 31st March, 2020 then the LLP has to file
an annual return with the Registrar latest by 30th May, 2020.

Penalty: If any limited liability partnership fails to file its annual return under sub- section (1) before
the expiry of the period specified therein, such limited liability partnership and its designated
partners shall be liable to a penalty of one hundred rupees for each day during which such failure
continues, subject to a maximum of one lakh rupees for the limited liability partnership and fifty
thousand rupees for designated partners.
 (2) Any LLP which fails to comply with the provisions of this section shall be punishable with fine
which shall not be less than ` 25,000 but which may extend to ` 5 Lakhs.

(3) If the LLP contravenes the provisions of this section, the designated partner of such LLP shall be
punishable with fine which shall not be less than ` 10,000 but which may extend to ` 1 Lakh.

CONVERSION INTO LLP

Conversion from firm into LLP (Section 55): Firm may convert into a LLP in accordance with the
provisions of this Chapter and the 2nd Schedule.

Conversion from private company into LLP (Section 56): A private company may convert into a LLP in
accordance with the provisions of this Chapter and the 3rd Schedule.

Conversion from unlisted public company into LLP (Section 57): An unlisted public company may
convert into a LLP in accordance with the provisions of this Chapter and the 4th Schedule.

REGISTRATION AND EFFECT OF CONVERSION (SECTION 58):

(i) The Registrar, on satisfying that a firm, private company or an unlisted public company has
complied with the provisions of schedules of the Act, will issue a certificate of registration
(ii) The LLP shall, within 15 days of the date of registration, inform the concerned Registrar of Firms
or Registrar of Companies, about the conversion.
(iii) Upon such conversion, they shall be bound by the provisions of the various Schedules, as the
case may be, applicable to them.
(iv) the firm or the company, as the case may be, shall be deemed to be dissolved and removed from
the records of the Registrar of Firms or Registrar of Companies, as the case may be.

FOREIGN LLP

Foreign limited liability partnerships (Section 59): The Central Government may make rules for
provisions in relation to establishment of place of business by foreign LLP within India and carrying
on their business therein by applying or incorporating, with such modifications, as appear appropriate

WINDING UP AND DISSOLUTION

1) A LLP may be wound up by the Tribunal:

a. if the LLP decides that LLP be wound up by the Tribunal;
b. if, for a period of more than 6 months, the number of partners of the LLP is reduced below 2;
c. if the LLP is unable to pay its debts;
d. if the LLP has acted against the interests of the sovereignty and integrity of India, the security
of the State or public order;
e. if the LLP has made a default in filing with the Registrar the Statement of Account and Solvency
or annual return for any 5 consecutive financial years; or
f. if the Tribunal is of the opinion that it is just and equitable that the LLP be wound up.
2) The winding up may also be voluntary.

#Amendment (Insertion) Dec 2022

Establishment of Special Courts - Section 67A

(1) The Central Government may, for the purpose of providing speedy trial of offences under this Act,
by notification, establish or designate as many Special Courts as may be necessary for such area or
areas, as may be specified in the notification.
(2) The Special Court shall consist of—
(a) a single Judge holding office as Sessions Judge or Additional Sessions Judge, in case of offences
punishable under this Act with imprisonment of 3 years or more; and
(b) a Metropolitan Magistrate or a Judicial Magistrate of the first class, in the case of other offences,
who shall be appointed by the Central Government with the concurrence of the Chief Justice of the
High Court:
Provided that until Special Courts are designated or established under sub- section (1), the Courts
designated as Special Courts in terms of section 435 of the Companies Act, 2013 shall be deemed to
be Special Courts for the purpose of trial of offences punishable under this Act:
Provided further that notwithstanding anything contained in the Code of Criminal Procedure, 1973,
any offence committed under this Act, which is triable by a Special Court shall, until a Special Court is
established under this Act or the Companies Act, 2013, be tried by a Court of Sessions or the Court
of Metropolitan Magistrate or a Judicial Magistrate of the first class, as the case may be, exercising
jurisdiction over the area.]

Procedure and powers of Special Court – Section 67B.

(1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973, all offences specified
under sub- section (1) of section 67A shall be triable only by the Special Court established or
designated for the area in which the registered office of the limited liability partnership is situated
in relation to which the offence is committed or where there are more than one Special Courts for
such area, by such one of them as may be specified in this behalf by the High Court concerned.
(2) While trying an offence under this Act, a Special Court may also try an offence other than an
offence under this Act with which the accused may, under the Code of Criminal Procedure, 1973 be
charged at the same trial.
(3) Notwithstanding anything contained in the Code of Criminal Procedure, 1973, the Special Court
may, if it thinks fit, try in a summary way any offence under this Act which is punishable with
imprisonment for a term not exceeding 3 years:
Provided that in the case of any conviction in a summary trial, no sentence of imprisonment for a
term exceeding one year shall be passed:
Provided further that, when at the commencement of or in the course of a summary trial, it appears
to the Special Court that the nature of the case is such that the sentence of imprisonment for a term
exceeding one year may have to be passed or that it is, for any other reason, undesirable to try the
case summarily, the Special Court shall, after hearing the parties, record an order to that effect and
thereafter recall any witnesses who may have been examined and proceed to hear or re- hear the
case in accordance with the procedure for the regular trial.

Appeal and revision - Section 67C

The High Court may exercise, so far as may be applicable, all the powers conferred by Chapters XXIX
and XXX of the Code of Criminal Procedure, 1973 on a High Court, as if a Special Court within the local
limits of the jurisdiction of the High Court were a Court of Sessions trying cases within the local limits
of the jurisdiction of the High Court.

Registration offices – Section 68A

(1) For the purpose of exercising such powers and discharging such functions as are conferred on the
Central Government by or under this Act or under rules made thereunder and for the purpose of
registration of limited liability partnerships under this Act, the Central Government shall, by
notification, establish such number of registration offices at such places as it thinks fit, specifying their
jurisdiction.
(2) The Central Government may appoint such Registrars, Additional Registrars, Joint Registrars,
Deputy Registrars and Assistant Registrars as it considers necessary, for the registration of limited
liability partnerships and discharge of various functions under this Act.
(3) The powers and duties of the Registrars referred to in sub-section (2) and the terms and conditions
of their service shall be such as may be prescribed.
(4) The Central Government may direct the Registrar to prepare a seal or seals for the authentication
of documents required for, or connected with the registration of limited liability partnerships.]

Payment of additional fee (Section 69):

Any document or return required to be registered or filed under this Act with Registrar, if, is not
registered or filed in time provided therein, may be registered or filed after that time, on payment of
such additional fee as may be prescribed in addition to any fee as is payable for filing of such
document or return:
Provided that such document or return shall be filed after the due date of filing, without prejudice to
any other action or liability under this Act:
Provided further that a different fee or additional fee may be prescribed for different classes of
limited liability partnerships or for different documents or returns required to be filed under this Act
or rules made thereunder.