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LIMITED LIABILITY PARTNERSHIP. Presented By:- Poonam Bansal Damanpreet Kaur Chandan Kumar Gupta Ranjeet Singh. Contents. Introduction Features Governance Incorporation Requirements Procedure Conversion from/to LLP Administration Accounts & Returns Relationship of Partners

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limited liability partnership
LIMITED LIABILITY PARTNERSHIP

Presented By:-

Poonam Bansal

Damanpreet Kaur

Chandan Kumar Gupta

Ranjeet Singh

slide2

Contents

  • Introduction
  • Features
  • Governance
  • Incorporation
    • Requirements
    • Procedure
  • Conversion from/to LLP
  • Administration
    • Accounts & Returns
    • Relationship of Partners
    • List of Forms & uses
    • Admission, Retirement & Death of Partner
  • Audit and Taxation
  • Comparison
  • Foreign LLP/FDI in LLP
  • Dissolution/Winding up
introduction

Limited Liability Partnership

Partnership Firm

Private Limited Companies

  • Limited Liability Partnership
  • Hybrid between private ltd. company & partnership firm
  • Indian government passed LLP Act on 09/01/2009
  • LLP Act,2008 gets notified w.e.f March 31st, 2009
  • The first LLP was registered on April 2,2009
  • Need for LLP:-Major causes for the advent of LLP are-
  • To enable the professionals to deal in international activities on the concept of Limited Liability which was earlier not possible due to various restrictions
  • To remove the restriction posed by Indian partnership Act, 1932 that professionals are not allowed to have more than 10 or 20 partners.
  • LLP Act removed the above obstacles.
Introduction
feature s
Features

Limited liability of partners.

Flexible form of organization.

Administration according to LLP agreement.

Required to register with ROC.

LLP agreement is the main incorporation document.

The economic rights of partners are freely transferrable.

Perpetual Succession.

Separate legal entity.

Every partner is an agent of the LLP but not liable for the wrongful acts of other partners.

In the absence of any provision for distribution of profits/ losses, partners are entitled to share profits and losses equally.

LLPs are not allowed to operate as Not for profit organization

governance
Governance
  • By Limited Liabilities Partnership Act 2008
  • By Limited Liabilities Partnership Rules 2008
  • By Registrar of Companies
  • By LLP Agreement between Partners
slide6

Incorporation

Requirements

  • Partners:- Minimum two designated partners are required and no
  • limit on maximum
  • Capital:- No limit on maximum and minimum capital contribution
  • Names:- At least two proposed names are required
  • Objects:- As per LLP Agreement
  • Documents:-1) ID, Address proof and photo of all Partner and DPs.
  • 2) LLP Agreement duly stamped as per relevant Stamp Act of the State.
  • 3) Subscriber Statements
  • 4) Consent Letter from all Partner and DPs as per form9
  • 5) Proof of Address of Registered Office
slide7

Procedure

File LLP Agreement in form 3

DP will apply for DIN

Once approved by ministry, LLP is registered

8

1

DSC to be applied by DP

7

Steps for Incorporation of LLP

2

File incorporation document & Subscriber’s Statement in form 2

6

Register DSC on MCA site

3

4

5

Apply for new user registration

File form 1 for name approval

conversion from to llp
Conversion from/to LLP
  • CONVERSION OF A PRIVATE / UNLISTED PUBLIC COMPANY INTO LLP
  • Application for conversion in Form 18 with the following attachments :
  • Statement of shareholders (may be attached in a tabular form)
  • Incorporation Document & Statement in Form 2 filed electronically.
  • Statement of Assets and Liabilities of the company duly certified as true and correct by the Chartered Accountant in practice.
  • List of all the creditors along with their consent to the conversion (may be given in the form of a tabular statement).
  • Copy of acknowledgement of latest income tax return.
  • Particulars of pending proceedings from any court/Tribunal etc.
  • Once converted into LLP, it can not be converted back to private/unlisted public company
administration
Administration
  • ACCOUNTS
  • Accounts must be prepared for a financial year.
  • Methods of Accounting – Cash or Accrual
  • Books of Accounts shall include-

1) Details of all receipts and payments.

2) Records of assets and liabilities.

3) Statements of stock.

4) Any other recordswhich the partners decide.

  • Records to be preserved- For 3 years from the date they were first made.
  • RETURNS
  • Statement of account & solvencyto be filed with ROC within 6months of close of financial year in form 8.
  • Must file an annual return with registrar within 60 days from the end of financial year in form11.
  • Must be accompanied by certificate issued by CS confirming veracity of particulars / statements in return, if turnover exceeds Rs. 5 croresor contribution by all the partners exceeds Rs. 50 Lacs, else certificate must be issued by DP.
slide10

Relationship of Partners

    • Governed by LLP Agreement
    • In absence of any agreement, principles set out in First Schedule will apply
  • Registration of changes in partners / details of partners to be filed in ‘Form-6’
  • Schedule I
  • Equal Share in capital & profits / losses
  • Partners not entitled to any remuneration for acting in business or management of LLP
  • No admission of partner without consent of all other partners
  • Any ordinary matter regarding LLP may be decided by resolution passed by majority of partners
slide14

Admission, Retirement & Death of Partner(s)

  • Unless the LLP agreement says otherwise, the admission of a new member requires the unanimous consent of the existing members
  • An LLP agreement can provide mandatory retirement but it needs to be objectively justified
  • Existence of LLP is not affected by admission, retirement or death of partner(s) provided minimum no. of partners are maintained
slide15

Audit & Taxation

  • Requirement of Audit
  • Statutory audit is mandatory if annual turnover is more than `40 lacs or contribution exceeds ` 25 lacs
  • Tax audit is mandatory if turnover exceeds ` 60 lacs
  • Taxation on LLP
  • LLP’s will be treated as Partnership Firms for the purpose of Income Tax w.e.f assessment year 2010-11
  • No surcharge will be levied on income tax.
  • Profit will be taxed in the hands of the LLP and not in the hands of the partners.
  • Minimum Alternate Tax and Dividend Distribution Tax will not be applicable for LLP instead AMT has been introduced alike to MAT.
slide16

Remuneration to partners will be taxed as “Income from Business & Profession”

  • No capital gain on conversion of partnership firms/company into LLP.
  • Designated Partners will be liable to sign and file the Income Tax return.
  • LLP shall not be eligible for presumptive taxation.
  • Capital Gain on conversion of Company into LLP will be exempt from tax, if prescribed conditions are complied with.
  • On conversion, the successor LLP , will be allowed to carry forward and set off of accumulated loss and unabsorbed depreciation allowance
  • On conversion, the successor LLP will be allowed to amortize the expenditure incurred under voluntary retirement scheme on conversion, the successor LLP will not be allowed to take the credit of MAT paid by the predecessor company.
slide19

Foreign LLP/ FDI in LLP

  • Foreign LLP
  • Means a LLP which is formed, registered or incorporated outside India and which establishes a place of business in India
  • FLLP is required to file form 25 for approval of name
  • If FLLP has been incorporated in language other than English then it has to be certified by a notary public of their respective country in English language
  • If translation has been made in India then such translation is required to be certified by CA/CS/CWA/Advocate
  • Foreign LLP shall, within 30 days of establishment in India required to file form 27 within 30 days from its establishment
  • FDI
  • LLPs with FDI will be allowed, through the Government approval route, in those sectors/activities where 100% FDI is allowed, through the automatic route and there are no FDI-linked performance related conditions.
  • LLPs with FDI will not be allowed to operate in agricultural/plantation activity, print media or real estate business.
  • LLPs with FDI will not be eligible to make any downstream investments
dissolution winding up
DISSOLUTION/WINDING UP

Compulsory

Voluntary

By Tribunal

  • Conditions:-
  • If the LLP decides that it to be dissolved by Tribunal
  • If no. of partners falls below 2 for more than 6 months
  • If LLP is unable to pay its debts.
  • If LLP has acted against interest of the sovereignty and integrity of India, security of state or Public order
  • Tribunal is of opinion that it is just and equitable
  • On declaration of LLP as defunct(Suomoto by LLP or if it is not carrying business for 1 year or more)
  • Where the Partners of LLP themselves mutually decides