All about partner’s contribution under Limited Liability Partnership Act, 2008
Limited Liability Partnership (LLP) is a new concept. It is combined feature of a partnership and a Company. LLP must be register with the Registrar of Companies. To run LLP business all partners entered into an agreement called LLP Agreement and made contribution as per the agreement. Let discuss the law regarding the contribution made by the partners of LLP.
Section 32 of the Limited Liability Partnership Act, 2008 state about forms of Contribution i.e.,
(1) A contribution of a partner may consist of tangible, movable or immovable or intangible property or other benefit to the limited liability partnership, including money, promissory notes, other agreements to contribute cash or property, and contracts for services performed or to be performed.
(2) The monetary value of contribution of each partner shall be accounted for and disclosed in the accounts of the limited liability partnership in the manner as may be prescribed.
Further rule 23 of Limited Liability Partnership Rules 2009 states that
(1) The contribution of each partner shall be accounted for and disclosed in the Accounts of the LLP along with nature of contribution and amount.
(2) The contribution of a partner consisting of tangible, movable or immovable or intangible property or other benefits brought or contribution by way of an agreement or contract for services shall be valued by a practicing Chartered Accountant or by a practicing Cost Accountant or by approved valuer from the panel maintained by the Central Government.
Crux: That partner of the LLP make contribution in LLP through money or other property or other benefit or to perform services for a limited liability partnership and such contribution must be disclosed in the accounts of the LLP. Further in case of contribution made by the partner is by way of other than cash then it should be valued by practicing Chartered Accountant or by a practicing Cost Accountant or by approved valuer from the panel maintained by the Central Government.
Section 33 of the Limited Liability Partnership Act, 2008 state about Obligation to Contribution i.e.,
(1) The obligation of a partner to contribute money or other property or other benefit or to perform services for a limited liability partnership shall be as per the limited liability partnership agreement.
(2) A creditor of a limited liability partnership, which extends credit or otherwise acts in reliance on an obligation described in that agreement, without notice of any compromise between partners, may enforce the original obligation against such partner.
Crux: That the LLP Act, 2008 does not provide the minimum or maximum time limit with in which the contribution is made by the partners of the LLP. Obligation to contribution is governed by the LLP agreement executed between the partners of the LLP.
It is suggested to mention the time limit in the LLP Agreement within which the partner must pay the contribution amount for better compliance.
Further the LLP Agreement must filed with the ROC within 30 days from the incorporation of the LLP.
Author Bio
