Detailed information on LLP For Business Environment & Law – Part 2

Limited Liability Partnership (LLP) – The Limited Liability Partnership Act 2008. In this article, we will discuss specific partner topics, LLP formation, partners and relationships, and their level of responsibility and partner contribution. Financial Audit / Disclosure, LLP Foreign, from Legal Element relating to Partnerships and LLP from CSEET Legal and Business Environment Subject. Also read:  Limited Liability Partnership Act 2008 (LLP) for Business & Legal Environment – Part 1

ESTABLISHED PARTNERS [PART 7]

The LLP must have at least two “Named Partners” who are natural persons, and at least one of them must be “Indian Residents.” If one or more of the LLP partners is a legal entity, at least two persons who are partners in the LLP or have been appointed to the agency must act as “named partners.”

• “Resident in India” is a person who has lived in India for 182 days or more in the previous year.
• Nominated partners are responsible for complying with the provisions of the LLP Act.
• Nominated partners must obtain a Nominating Partner Identification Number [DPIN] from the central government.
• The DPIN assignment application must be submitted online on the LLP website together with the necessary supporting evidence, which is properly certified and certified as required.

LLP STORAGE [SECTION 11 TO 21]

The process of entering an LLP is similar to entering a company under the Companies Act 1956. Applicants must first register with the Registrar of Companies [ROC] to maintain the name. After the ROC has approved, LLP inclusion documents must be submitted.

• The name of each curriculum must end with the words “Limited Liability Partnership” or “Lifelong Learning.”
• Names that are unwanted or closely resemble partnerships or other LLP companies or brands are not permitted.
• Any legal entity (legal entity/registered partner company) whose name is similar to the name of the LLP, which was subsequently established, can apply for changes to the LLP’s name within 24 months from the registration date LLP through the ROC.
• No person may run a company with a name/title that includes the words “Limited Liability Partnership” or “Lifelong Learning” without correctly identifying it as LLP under the LLP Act.
• LLPs must submit LLP agreements ratified by all partners to the ROC within 30 days of commencement of the LLP.

PARTNERS AND RELATIONSHIPS AND THEIR RESPONSIBILITIES [SEC 22 TO 31]

The joint rights and obligations of the inter-LLP and LLP partners and their partners are governed by an agreement between the partners or an agreement between the LLP and its partners. If the agreement does not exist, collective rights and obligations are governed by the Lifetime Learning Law.

1. For LLP business purposes, each LLP partner represents the LLP but not of the other partners.

2. As an independent legal entity, LLP is responsible for all of its assets, while the liability of LLP partners is limited to their agreed participation in the LLP.

LLP is not tied to anything a partner does when communicating with someone if –

• The partners are not authorized to act for LLP in carrying out certain actions
• The person knows they have no authority, or they don’t know or believe they are LLP partners
• LLP is responsible for the LLP partner responsible for illegal acts/omissions during LLP business activities / with his / her authority.
• LLP’s obligations, whether contractual or otherwise, are LLP’s only obligations. The LLP characteristics must cover LLP obligations.
• Partner is not personally responsible for LLP obligations simply because he is an LLP partner.

Neither partner is responsible for the illegal acts or omissions of another LLP partner, but the partner is personally liable for his illegal acts or negligence.

The liability of LLP and affiliates found to have acted intending to defraud creditors or for fraudulent purposes is limited to all or part of LLP’s debt or other liabilities. Termination of employment for reasons such as resignation, death, dissolution of the LLP, assertion that someone is unreasonable, filing for bankruptcy, etc. is only effective if –

The man notices that his partner has stopped acting this way; or

Notification of termination has been sent to

The resigning partner may send a termination notice if he or she has reason to believe that LLP has not sent this termination notice.

PARTNER CONTRIBUTIONS [PART 32 AND 33]

Partner contributions to LLP capital may include:

• Tangible, movable, or immovable property
• Intangible assets
• Other benefits for LLP include cash, promissory notes, executed or pending service contracts.

The partner’s obligation to contribute in accordance with the agreement on lifelong learning.

Creditors who make loans or act on the obligations described in the Lifetime Learning Agreement without regard to compromise between partners can impose initial obligations on that partner.

AUDITS / FINANCIAL DISCLOSURES [SECTIONS 34 AND 35]:

The LLP maintains a mandatory ledger in relation to its affairs in cash or accrual form and is subject to a multiple entry system.

Every LLP account must be audited, except in the following situations:

• When the conversion does not exceed Rs. 40.00,000 / – in each financial year; or
• If the dues do not exceed Rs. 25.00 000 / –

The central government has the power to exclude some LLP classes from mandatory auditing. LLPs are required to submit the following documents to the ROC:

• Accounts and solvency statements within 30 days from the end of 6 months of the financial year;
• Annual returns within sixty days of end of financial statements

ACCESS AND TRANSFER OF PARTNERSHIP RIGHTS [SEC.42]

The rights of partners to receive a portion of LLP profits and losses and to receive distributions under the LLP Agreement are transferable in whole or in part. Such transfer of rights does not lead to separation of partners or termination and termination of the LLP. Such assignment does not by itself entitle the recipient or successor to participate in the administration or conduct of LLP activities or to have access to information about LLP transactions.

FOREIGN LLP [PART 59 AND RULES 34]

When setting up a place of business in India, an overseas LLP must submit the required ROC registration documents within 30 days of incorporation in India.

Any changes to the constitutional documents, address of the head office abroad, and foreign curriculum partners must be submitted to the ROC in the prescribed form within 60 days from the end of the fiscal year.

Any changes to the LLP overseas registration certificate, agency in India, and main office in India must be submitted to the ROC in the prescribed form within 30 days of the change.

Foreign LLPs who no longer have a place of business in India must notify the ROC in a prescribed form within 30 days of their intention to close the place of business and from the date of notification of the overseas LLP’s obligation to apply for a place of business documents in the ROC, notification will be granted unless there is another place of business in India and all documents must be filed at the time the notification has been submitted.

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