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Thursday, May 14, 2009

A few points discussed on Limited Liability Partnership

1. Liability of partners can go up to the extent of Capital contributed by him.
2. There are few legal/procedural requirements in LLP in comparison of The Companies Act.
3. Board meetings are not required in case of LLPs.
4. Under LLP, the profit distribution is flexible, i.e. A partner can be given any %age of profit irrespective of the capital contributed by him.
5. LLP CAN NOT be formed for a charitable purpose.
6. Any body corporate or Foreign company can be a partner in LLP.
7. An LLP/Foreign LLP can also be a partner in LLP.
8. A partnership firm CAN NOT be a partner in LLP.
9. In LLP, individual partners are not mandatory. Any two companies or two LLPs can also form an LLP.
10. At least 2 designated partners require DPIN. Its not mandatory for all partners to obtain DPIN, like in case of a company where it is mandatory for all directors to obtain DPIN.
11. DPIN is required for the designated partner even if he is having a DIN also.
12. Minimum 2 persons are required to form an LLP, but there is no restriction on the maximum number of persons.
13. In case, an individual and a company are the partners in LLP, then it shall be required for the company to nominate a designated partner other then the individual.
14. One designated partner is required to be Resident of India, and the conditions given in LLP Act for residential status have to be checked on the DATE OF APPOINTMENT only. Later on if these conditions are not fulfilled, even then that person can remain as designated partner.
15. Vacancy of any designated partner has to be filled within 30 days. If this vacancy is not filled in 30 days, then all the partners of LLP shall be treated as designated partners.
16. Incorporation document – Declaration in Incorporation document has to be given by an advocate/CA/CS/ICWA AND ONE SUBSCRIBER ALSO.
17. LLP has to be incorporated by the Registrar within 14 days, provided the documents are complete. Period can not be extended.
18. In case of a LLP, if any application of change in registered office is filed with the department, shall take effect from the DATE OF FILING OF FORM only. Means, it can not be changed with retrospective effect.
19. It has to be noticed that all invoices, documents etc of LLP has to bear the name of LLP, Address, and REGISTRATION NUMBER of LLP.
20. Unlike in partnership firms, the partner in LLP shall be treated as agent of LLP only, and not of other partners.
21. Accounts of LLP can be made either on CASH BASIS OR MERCANTILE BASIS. Hybrid system is not allowed.
22. Statement of Account and Solvency has to be filed within 6 months from the end of the financial year, whereas Annual return has to be filed within 60 days only.
23. Audit of LLP is mandatory by virtue of the LLP Act itself.
24. Loan by the partner is allowed in LLP.
25. Partner of LLP can do business with the LLP itself and can earn profits from LLP.
26. ALL OFFENCES UNDER LLP ACT SHALL BE TREATED AS CRIMINAL OFFENCES UNDER INDIAN PENAL CODE.

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