1. MCA Issued Circular bearing Vide OM No. CRC/LLP/e-Forms Dated 06.03.2019 directing that incorporation of LLPs and conversion into LLPs with the proposed business activity(ies) including manufacturing & allied activities are not to be allowed.
It stated that the LLPs as body corporate has been set up for the purposes of carrying out business activities related to the service sector. And it should not include manufacturing activities. It further stated that Conversions of Company doing manufacturing activity into LLP should not be allowed.
So after this OM Circular, it was not possible to Form the LLP carrying Manufacturing and Allied activities.
2. Representation by “The Institute of Company Secretaries of India” on 8thApril 2019. It is represented by ICSI how LLP is the Integral Part of Corporate growth and how it is accelerating the ease of Doing Business and Corporatization of un-incorporated entities in India. And how it is becoming easy for a small group of people or professionals to kick start his business by forming Limited Liability Partnership.
And further ICSI also represented the Definition of word “Business” as per Section 2(1)(e) of the LLP Act, 2008 which includes every trade, profession, service, and occupation.
Stated further that when the Definition is exhaustive as well as inclusive and it is not restricting the manufacturing & allied activities than why we should restrict its scope by interpreting it narrowly.
And also some of the case laws were cited in which words “means and include” were interpreted. And through Clause 19 of the Constitution of India ICSI tried to clarify more the term “Business” and “Occupation”.
And finally through the LLP rules, 2009 with the International perspective of the LLPs which showed the intention of the legislature for forming the LLP.
3. Finally removal of Restrictions on LLP for Manufacturing and Allied activities with immediate effect vide posting a message in this regard on MCA website by MCA on 16th April 2019.
Considering the Strong Arguments against MCA move in Media and representation of ICSI, MCA invoked the OM restriction formation of LLP for manufacturing & allied activities with immediate effect.
Conclusion:- After the above mentioned circular with immediate effect i.e 17.04.2019 you can freely form LLP with manufacturing and allied activities. And there are no further any restrictions regarding it.
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