RECENT CHANGES / LATEST PROVISIONS / COMPLIANCE / FAQ LIMITED LIABILITY PARTNERSHIP (LLP)
A Limited Liability Partnership (LLP) : means a business where minimum two partners are required and there is no limit on the maximum number of partners. The liabilities of the partners are limited up to the extent of Capital contribution done by each partner in LLP.
LLP is an alternative corporate business form which is simple combination of Company and Partnership firm limiting the liability of partners to the capital contributed and governed by LLP Agreement. LLP gives the benefits of limited liability of a company and the flexibility of a partnership. The LLP can continue its existence irrespective of changes in partners. It is capable of entering into contracts and holding property in its own name. The LLP is a separate legal entity, liable to the full extent of its assets but liability of the partners is limited to their agreed contribution to the LLP.
Limited liability partnership has only 2 annual compliance requirement and any other change in objects, change in partners & their capital and address of the LLP, etc are usually reported to Registrar of Companies by filing e-forms. The initial and annual forms to be filed by an LLP are :-
| S.No | Name of the form / Compliance | Purpose | Timelines
|
| 1 | RUN – LLPFIN | Incorporation | XX |
| 2 | Form 3 | Registration of LLP Agreement
The Partners of an LLP are required to execute an LLP Agreement and a copy has to be filed with the Registrar or Companies in LLP Form 3 with in 30 days of incorporation of LLP |
Within 30 days of incorporation |
| 3 | Form 11 | Annual Return of capital | 30th May |
| 4 | Form 8 | Statement of Account & Solvency | 30th October |
| 5 | Annual KYC | Designated partners KYC/any individual holding DIN | Between 1st April to 30th September |
| 6 | Income Tax Return | Every LLP has to file Income Tax Returns every year. | The last date of filing of return for LLP is 31st July every year. However, any LLP under tax audit is required to file its Income tax return by 30th September. |
| 7 | Audit | It may be noted that only those LLP whose annual turnover exceeds Rs. 40 lakhs or whose contribution exceeds Rs. 25 lakhs are required to get their accounts audited | — |
Privileges for LLP in comparison to a company:-
1. Exemptions from maintenance of Minutes book, Statutory Registers, and flexible tax rates etc.
2. No, AGM is not required for an LLP. AGM is a once in a year meeting for Shareholders of the Company. As there is no concept of shareholding in an LLP, no AGM is to be held.
3. Board meeting is generally associated with a Board of Directors meeting. There are no directors involved in an LLP, instead designated Partners run the business and are held responsible for compliances. Hence, Meeting of Designated is suggested in case of an LLP firm.
4. There is no limit on maximum number of partners.
5. An existing partnership firm can be converted into LLP by complying with the Provisions of clause 58 and Schedule II of the LLP Act. Form 17 needs to be filed along with Form 2 for such conversion and incorporation of LLP.
6. Any existing private company or existing unlisted public company can be converted into LLP by complying with the Provisions of clause 58 and Schedule III and IV of the LLP Act. Form 18 needs to be filed with the registrar along with Form 2 for such conversion.
7. It is not mandatory to file the charge details with the office of Registrar but the stakeholders can voluntarily file the same. The charge details i.e. creation, modification or satisfaction of charge, can be filed through Annexure/Appendix to e-Form 8.
Recent changes introduced in LLP Act & Rules
MCA vide notification dated 11.02.2022 have notified that provisions of Sections 1 to 29 of the LLP Amendment Act 2021 shall be applicable from 1ST April 2022, i.e. commencement date for all the provisions of the said Act.
The Ministry of Corporate Affairs has also notified “Limited Liability Partnership (Second Amendment) Rules, 2022” vide its Notification dated 4th March 2022. Also, there are a few more important changes have been made through LLP (Second Amendment) Rule, 2022. Summary of such changes/amendment is stated briefly hereinbelow:
- There can be 5 instead of 2 Designated Partners (without having DIN) at the time of Incorporation.
- All the forms of LLP have now become web-based.
- LLPs shall be allotted their PAN and TAN along with the Certificate of Incorporation itself.
- For filing Consent of Partners, a web-based Form 9 shall be made available. As a result of which the Digital Signature of all the Designated Partners instead of 1 as the earlier case, shall be required at the time of Incorporation of an LLP.
- The amended rules also cover the requirement of filing a Certificate of Truthfulness and Correctness of Annual Returns of LLPs with the sales of up to INR 5 Crore or Partner’s Contribution up to INR 50 Lakhs.
- Form 8 (Statement of Solvency and Annual Return) to include Contingent Liability reporting specifically.
- Form 28 and Form 29 have been merged. As a result of which form 28 shall require to be filed for the Notice of
- Alteration in the COI (Certificate of Incorporation or Registration)
- Alteration in Names and Addresses of any of the person authorized to accept the service on behalf of foreign LLP.
- Alteration in the principal place of business in India.
- Cessation to have a place of business in India.
- The earlier provision required every LLP to have at least one designated partner who is a ‘resident in India’ and to meet this requirement, such designated partner had to stay in India for a period of not less than 182 days during the immediately preceding one year. This tenure has been relaxed and the resident designated partner is now required to stay not less than 120 days during the financial year.
- Concept of “Small Limited Liability Partnership” introduced. “Small Limited Liability Partnership” means a limited liability partnership:-
- the contribution of which, does not exceed twenty-five lakh rupees (Rs. 25,00,000/-) or such higher amount, not exceeding five crore rupees, as may be prescribed; and
- the turnover of which, as per the Statement of Accounts and Solvency for the immediately preceding financial year, does not exceed forty lakh rupees (Rs. 40,00,000/-) or such higher amount, not exceeding fifty crore rupees, as may be prescribed; or
- which meets such other requirements as may be prescribed, and fulfils such terms and conditions as may be prescribed;
- Change of name of limited liability partnership:-
- (Section 17)- This section fully substituted and Section 18 fully omitted.
- In case of same Name Central Govt may direct to change the name within 3 months.
- Trademark owner can make application within 3 month from the date of Incorporation
- The Limited Liability Partnership (Amendment) Rules, 2022 added new Rules 37A, 37B, 37C and 37D that provide regarding the adjudication of penalties of an LLP.
- The Limited Liability Partnership (Amendment) Rules, 2022 revised the LLP fee norms by substituting the Annexure A of the LLP Rules, 2009.
DISCLAIMER: This Article is designed to provide information of a general nature and is not intended as a substitute for professional consultation and advice in a particular matter. The opinions and interpretations expressed within are those of the author only and may not reflect those of other identified parties. The results & interpretation have been done on the basis of relevant provisions and as per the information existing at the time of the preparation of this Article. The Author explicitly disclaim any financial or other liability of any kind arising on account of any action taken pursuant to the results or interpretation of this Article and accepts no responsibility whatsoever and will not be liable for any losses, claims or damages which may arise because of the contents of this write up.
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