Manufacturing & allied activities were restricted in LLPs vide OM No. CRC/LLP/e-Forms dated 06.03.2019. This OM invoking the restriction regarding manufacturing & allied activities has been withdrawn with immediate effect.
In its OM MCA has earlier said that incorporation of LLPs and conversion into LLPs with the proposed business activity(ies) including manufacturing & allied activities are not to be allowed.
When It comes to Notice of ICSI it has objected to such restriction and made a representation on 08th April 2018. In its representation ICSI said that “it has been noticed that in recent times the manufacturing businesses are being restricted from incorporating as LLP on the ground that manufacturing activities does not fall under the definition of `Business’ as per the Limited Liability Partnership Act, 2008. Similarly the conversion of private and unlisted companies into LLP has been restricted now on the same grounds.”
ICSI further submitted that ” position of Manufacturing Sector needs clarification and allowed to register as a Limited Liability Partnership under the Limited Liability Partnership Act, 2008. Further, in case there is an apprehension that manufacturing businesses incorporated as LLPs would become very large and therefore not suitable as an LLP entity, a threshold limit on share capital or turnover may be considered as in the case of One Person Companies and small companies.”
Considering the Strong Criticism of MCA move in Media and representation of ICSI, MCA invoked the OM restriction formation of LLP for manufacturing & allied activities.