CS S. Dhanapal

INTRODUCTION

The concept of Limited Liability Partnerships (LLPs) in India was introduced in the year 2009 with the enactment of the “Limited Liability Partnership Act, 2008 (6 of 2009) which was notified on 31.03.2009. The first LLP was formed on the 02nd Day of April 2009 and since then almost 10,000 LLPs have been formed so far as per the records of the Ministry of Corporate Affairs.

LLP in India is viewed as an alternative corporate business vehicle that provides the benefits of limited liability and also allows its members the flexibility of organizing their internal structure as a partnership based on a mutually arrived agreement.

PROMINENT FEATURES

Some of the main highlights of LLP are:

ADVANTAGES AND SHORTCOMINGS OF LLP

Some of the main advantages and disadvantages of LLP at a glance are:

ADVANTAGES

DISADVANTAGES

No major Investment

Mandatory Disclosure of financial information

Limited Liability

Cannot raise public money

Commercially efficient vehicle

Loss of secrecy of information

No personal liability

Untried structure

Internal flexibility

More legal documentation

Less statutory compliances

Stringent rules on FDI

Lesser paper work and formalities

Practical issues in formation

Perpetual succession

Lack of awareness among general public

Secure and financial less risky

 

Scope for expansion and growth

 

RECENT CHANGES

One of the major changes which has taken place in LLP is the integration of LLP site with MCA site w.e.f 11th June 2012. The erstwhile LLP website (www.llp.gov.in) has been merged with the MCA site (www.mca.gov.in) and all filing pertaining to LLPs has to be done on the MCA portal only.

MCA has issued detailed guidelines on how to login and access records of existing LLPs on the MCA website and what all updations need to be done by designated partners and LLps in order to be able to do filing on MCA site.

The Procedure for formation of LLP is almost same. For the erstwhile forms on LLP website, corresponding forms have been made available on MCA website and the names of forms have remained same in most of the cases. One practical difference is that Residential status of each designated partner needs to be updated by filing form DIN 4.

A look at the recent Circulars and Notifications issued by MCA pertaining to LLPs:

REFERENCE NO.

DATE

DESCRIPTION

No. 22 02.06.2012 Notice under Rule 37(3) of LLP Rule, 2009
G.S.R. (E) 05.06.2012 The Limited Liability Partnership (Amendment) Rules, 2012
General Circular No. 13/2012 06.06.2012 Extension of time in Filing Annual Return by Limited Liability Partnerships
G.S.R. (E) 21.06.2012 Corrigendum to LLP notification dated 05.06.2012
General Circular No. 15/2012 29.06.2012 Extension of time in Filing of annual return by Limited Liability Partnerships(LLPs)
G.S.R. (E) 10.07.2012 Sections 51, 63-65 of LLP Act, 2008 notified.
G.S.R. (E) 10.07.2012 Limited Liability Partnership (Winding up and Dissolution) Rules, 2012

Synopsis of the above circulars and notifications:

  • Notifications No. 22 –  Notice Under Rule 37(3) Of LLP Rule, 2009

  • G.S.R. (E) – The Limited Liability Partnership (Amendment) Rules, 2012

  • General Circular No. 13/2012 – Extension of time in Filing Annual Return by Limited Liability Partnerships

 

  • G.S.R. (E) – Corrigendum to LLP notification dated 05.06.2012

 

 General Circular No. 15/2012 – Extension of time in Filing Annual Return by Limited Liability Partnerships

 

 

  • G.S.R. (E) – Sections 51, 63-65 of LLP Act,2008 notified

 

  •  G.S.R. (E) – Limited Liability Partnership (Winding up and Dissolution) Rules, 2012

Þ     Ministry has notified the new Limited Liability Partnership (Winding up and Dissolution) Rules, 2012 which will be effective from 10th July 2012.

Þ     The Following modes of winding up have been notified:

 

CIRCUMSTANCES FOR WINDING UP

VOLUNTARY WINDING UP

Þ Resolution with approval of 3/4th majority of partners

Þ Approval of secured / unsecured creditors

 

WINDING UP BY TRIBUNAL

Inability to pay debts, i.e. to a creditor exceeding one lakh rupees / Execution in favour of Creditor returned unsatisfied / Tribunal is satisfied that LLP is unable to pay debts.

 

Wrapping Up

Limited Liability Partnership though came very late to India, has finally found its space. LLP is best suited to small and medium business enterprises by offering a good mix of company and partnership form of organization. The Ministry of Corporate Affairs is continuously striving to bring about improvements in the field of regulations governing LLP and their formation. Integration of LLP and MCA site has further simplified the procedure for formation of a LLP and other filings related thereto.

(Written by S.Dhanapal, Senior Partner, S Dhanapal & Associates, A firm of Practising Company Secretaries, Chennai.)

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0 responses to “Limited Liability Partnership (LLP) – Recent changes”

  1. Raj Manchanda says:

    Sir,
    One of my ordinary partner (not a designated partner) has given a letter to the bank for the sizer of the account on false grounds.
    the point is:-
    1) He is an ordinary Partner.
    2) He is not the signing authority in the bank records.

    Can the bank seize the account on his letter ?

    Regards,

    Raj Manchanda.

  2. Vaibhav says:

    Thanks for a brief intro

  3. Atul gupta says:

    Good one Sir !!

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