CA Abhijit Sa
warkar
The LLP structure is available in most of the developed countries like United Kingdom, United States of America, Gulf countries, Australia and Singapore. Indian Limited Liability Partnership Act, 2008 was enacted on January 7, 2009. Indian LLP Act is broadly based on UK LLP Act 2000 and Singapore LLP Act 2005. According to both of these Acts, LLPs allow creation in a body corporate form as a separate legal entity i.e. separate from its partners/members.
LLP is an alternative corporate business form that gives the benefits of limited liability of a company and the flexibility of a partnership. LLP contains elements of both ‘a corporate’ as well as ‘a partnership firm’ LLP is therefore called a hybrid combination of a company and a partnership. Rights and duties of the partners within a LLP are controlled & governed by mutual agreement between the partners of the LLP.
Interestingly, LLP is a separate legal entity, is liable to the full extent of its assets, but liability of the partners is limited to their agreed contribution in the LLP.
With this background, Limited Liability Partnership Act, 2008 was enacted on January 7, 2009.
| Particulars | Dates |
| Government notified various provisions of LLP Act | 31st March 2009 |
| Limited Liability Partnership Rules, 2009 | April 1st, 2009 |
Lots of entrepreneurs have welcomed government move as structure is having benefits of company with lesser compliance requirement
Conversion of Existing form of Business into LLP or vice a versa:
The LLP Act contains enabling provisions pursuant to which a firm (under Indian Partnership Act, 1932) and private company or unlisted public company (incorporated under Companies Act) would be able to convert themselves into LLPs. Provisions of clause 58 and Schedule II to Schedule IV to the Act provide procedure in this regard.
However, LLP would not be able to convert itself into company under the Companies Act, 1956 as enabling provisions would be required in the Companies Act for such conversion. According to various FAQ’s address by Ministry of Corporate affair (MCA) government will take necessary action in this regard would be taken when Companies Act would be revised.
Summary:
| Particulars | LLP Act | Compliance
Form |
| Partnership Firm to LLP | clause 58 and Schedule II of the LLP Act | Form 17
Form 2 |
| private company or existing unlisted public company to LLP* | clause 58 and Schedule III and IV | Form 18
Form 2 |
| Foreign LLP to Indian LLP with place of business | Form 27 | |
| Listed Company to LLP | No conversion Possible | – |
| LLP to private company or unlisted public company | No conversion Possible | – |
* Any private company or unlisted public company can be converted into LLP but with same name as that of the company at the time of conversion.
Refer attached instruction Kit for details regarding filing of these forms.
Steps for conversion:
|
Conversion into LLP |
|
Company /Partnership to LLP |
|
Deciding Partner for forming LLP |
|
Obtain Director Identification No (DIN ) & Digital Signature |
|
Check availability of name (Not Applicable for Company) |
|
Draft LLP Agreement |
|
Filing Incorporation Documents |
|
Get Certificate of registration |
Conversion application (Form 17 or 18) can be rejected by the registrar after due verification, if not found appropriate along with e-Form 2. The applicant has option to go for appeal against the application rejected within 90 days and inform the registrar about the action undertaken.
LLPs will be registered with the Registrar of Companies (ROC) (Under the Companies Act, 1956) after following the provisions specified in the LLP Act. Every LLP will have a registered office.
An Incorporation Document subscribed by at least two partners shall have to be filed with the Registrar in a prescribed form. Contents of LLP Agreement shall also be required to be filed with Registrar, online. Contents of LLP Agreement or any changes made therein.
List of various other forms for LLP:
| Particulars | Form No |
| Application for reservation or change of name | Form 1 |
| Incorporation document and subscriber’s statement | Form 2 |
| Details in respect of designated partners and partners of Limited Liability Partnership | Form 2A |
| Information with regard to limited liability partnership agreement and changes, if any, made therein | Form 3 |
| Notice of appointment, cessation, change in name/ address/designation of a designated partner or partner. and consent to become a partner/designated partner | Form 4 |
| Notice of appointment, cessation, change in particulars of a partners | Form 4A |
| Notice for change of name | Form 5 |
| Statement of Account & Solvency | Form 8 |
| Annual Return of Limited Liability Partnership (LLP) | Form 11 |
| Form for intimating other address for service of documents | Form 12 |
| Notice for change of place of registered office | Form 15 |
| Application and statement for conversion of a firm into Limited Liability Partnership (LLP) | Form 17 |
| Application and Statement for conversion of a private company/ unlisted public company into limited liability partnership (LLP) | Form 18 |
| Notice of intimation of Order of Court/ Tribunal/CLB/ Central Government to the Registrar | Form 22 |
| Application for direction to Limited Liability Partnership (LLP) to change its name to the Registrar | Form 23 |
| Application to the Registrar for striking off name | Form 24 |
| Application for reservation/ renewal of name by a Foreign Limited Liability Partnership (FLLP) or Foreign Company | Form 25 |
| Form for registration of particulars by Foreign Limited Liability Partnership (FLLP) | Form 27 |
| Return of ALTERATION in the incorporation document or other instrument constituting or defining the constitution; or the registered or principal office; or the partner or designated partner of limited liability partnership incorporated or registered outside India. | Form 28 |
| Notice of (A) alteration in the certificate of incorporation or registration; (B) alteration in names and addresses of any of the persons authorized to accept service on behalf of a foreign limited liability partnership (FLLP) (C) alteration in the principal place of business in India of FLLP (D) cessation to have a place of business in India | Form 29 |
| Application for compounding of an offence under the Act | Form 31 |
| Form for filing addendum for rectification of defects or incompleteness | Form 32 |
| Application for allotment of Director Identification Number | Form DIN-1 |
| Intimation of change in particulars of Director to be given to the Central Government | Form DIN-4 |
LLP form is a form of business model which is organized and operates on the basis of an agreement. Provides more flexibility without imposing detailed legal and procedural requirement & compliances, it will also enables professional or technical expertise and initiative to combine with financial risk taking capacity in an innovative and efficient way.
