Incorporation of a LLP or a company registration document of an LLP should fulfill the following criteria:
- Two or more persons for carrying on an authorized business shall give their names to a company registration document;
- The company registration document shall be settled in a prescribed manner with the Registrar in the jurisdiction of the registered office of the LLP .
- A statement in the prescribed form, along with a company registration document shall be filed by an advocate, or a Company secretary or a Chartered Accountant or a cost accountant, who is engaged in the formation of the company and by anyone whose name is subscribed to the incorporation/registration document, that all the requirements of this Act and the rules made there under have been compiled with respect of registration.
Incorporation of LLP
The company registration document shall
- be in a form as prescribed;
- state the name and proposed business of the LLP;
- state the address of the office of the LLP that is registered;
- state the name and address of every partner of the LLP on registration.
- state the name and address of every designated partners of the LLP on registration;
- If a person makes a statement which he knows to be false shall be punishable with imprisonment of two years and with a fine of twenty-five thousand rupees.
Incorporation by registration
1)When the requirements imposed by the law have been compiled with, the registrar shall retain the LLP company registration document and, unless the requirement imposed that
- register the registration document; and
- give a certificate that the LLP is registered by the name specified there in.
2)The certificate issued under clause (b) shall be signed by the registrar and authenticated by his official seal.
3)The certificate shall be conclusive evidence that the limited liability partnership is registered by the name specified there in.
Registered office of LLP and change therein
- The company registered office (ROC) of the LLP to which all communications and legal notices may be addressed and acknowledged.
- A document can be sent to the LLP or a partner through registered post or by any other means, as prescribed, at the registered office of the LLP.
- The LLP should notify the registrar in case of any change in address of the registered office as prescribed.
- In case of any negation of law, the LLP and its partners shall be punishable with a fine of twenty-five thousand rupees.
Effect of registration
On LLP company registration, the name of the LLP shall be capable of-
a)suing and being sued;
- b) securing, owning, holding and creating or discarding property, regardless of whether portable or resolute, substantial or immaterial;
c)having a common seal, if it decided.
Name
1)Every LLP shall have the words “Limited liability of partnership” or LLP at the end of the respective company’s registered name.
2)No LLP shall be registered by a name which in the eye of law is offensive and identical or too much of resemblance with any other existing firm that is registered.
Reservation of name
A person may apply for reservation of a name in a prescribed manner in the application as
a)the suggested name of the LLP or the name which will replace the existing name.
After receiving the application and the prescribed fee on name reservation, if the registrar approves , subject to the rules of the Central Government that the name may not be rejected at any circumstance according to sub-section(2) , can reserve the name for a time span of three months including the date of intimation by the registrar.
Change of name of LLP
1)The Central Government shall intimate the LLP to change its name in the following cases
a)if the name is offensive
b)if the name is found identical or possessing too much of resemblance with any other registered existing firms.
The LLP is liable to change its name after such intimation from the Government within three months after the date of direction.
2)Any LLP fails to adhere with the direction shall be punishable with a fine of five lakh rupees and the designated partner also shall be punishable with a fine of one lakh rupees.
Application for direction to change name in certain circumstances
1)Any company which already has a similar name of a LLP that has been registered subsequently may apply to the registrar to give a direction to the LLP to change its name.
2)The registrar shall not consider any application to give a direction if its not received within twenty four months of the company registration under that name.
Change of registered name
Any LLP shall change its registered name with the registrar with proper notice by filing the form and with the fee as prescribed.
Penalty for improper use of words “limited liability partnership” or “LLP”
If any person or company operating a business under the name of “Limited liability partnership” or “LLP” as imitation unless it is duly registered shall be punishable with a fine of five lakh rupees.
Publication of name and limited company
1)Every LLP shall ensure that its brochures, official paper works and publications bear the following
a)the name, contact number and address of the registered office of the LLP;
b)registered statement
2)Any LLP that negates this rule shall be punishable with a fine of twenty five thousand rupees maximum.
Eligibility to be partners
After the company registration the persons who has subscribed their name in the incorporation or registration document shall become the partners of the LLP. Any other person also can become a partner in accordance with the agreement of LLP.
Relationship of partners
1)The mutual rights and duties of the partners of the LLP shall be governed by the partnership agreement among the partners of the LLP.
2)Any changes in the LLP partnership agreement shall be notified and filed to the registrar with fees as prescribed.
3)Any written agreement made among the partners or persons who subscribed their names in the incorporation or registration document of the LLP shall establish obligation if and only if it is signed by all the partners after the registration of a company.
4)In absence of a partnership agreement to any matter, the mutual duties and privileges shall be determined by law.
Termination of partnership interest
1)A person may cease to be a partner of LLP in accordance with the partnership agreement or in case of absence of such agreement the person shall notify the rest of the partners in writing within a notice period of thirty days his intention to cease being a partner of the company.
2)A person shall cease to be a partner under the following cases
a)death or disunion of the LLP;
b)if the person is declared as a one with an unsound mind by court;
c)if he is declared as insolvent by the court.
3)A person ceased to be a partner of the LLP shall be considered to be an active partner unless
a)the person has a notice declaring that he has ceased to be a partner.
4)The discontinuation of a partner from the LLP does not free him from any obligations to the LLP or to other partners which was subjected while being a partner.
5)When a partner of the LLP ceases to be a partner according to the LLP partnership agreement, the former partner is still entitled to his shares on case of death or insolvency and shall also receive:
a)an amount equivalent to the capital contributed by him to the LLP,
b)his share in the aggregate share after respective loss deduction of the LLP at the date of termination as partner.
Registration of changes in partners
1)Every partner shall notify the LLP in case of any change in his name or address within a period of fifteen days of change.
2)When a person becomes or ceases to be partner, then he shall inform the registrar within thirty days from the event.
3) A notice filed with the registrar shall be in the appropriate form along with the prescribed fees and;
a)shall be ratified by the partner of the LLP and verified in a prescribed manner;
b)If there is an addition of a new partner to the LLP then he shall possess a statement regarding his consent of becoming a partner signed and verified in the prescribed manner.
4)In case of any negation of any provisions, the LLP and all its partners shall be punishable with a fine amount of twenty five thousand rupees to the maximum.
5)If any of the partner violates the provision then he shall be punishable with a fine of twenty five thousand rupees.
6)Any person terminating to be a partner shall file it to the registrar in case it is not done by the LLP within fifteen days of time. After the respective confirmation, the registrar shall acknowledge the request or notice filed by the person of terminating to be a partner.
Extent and limitation of liability of LLP partnership and partners
Partner as agent
Every partner of the LLP is there for the desire of business and is an agent of the LLP but not to any other partners of the company.
Extent of liability of LLP
The extent of a LLP after registration includes the below:
1)The LLP s not bound by the words or deeds of any partner if:
a)if the person does not hold any authority to act on behalf of the company;
b)if the person is not aware of his rights or does not know his limitations.
2)The LLP is liable for the wrongful act of any partner and lack of duties in business of the LLP.
3)Any obligation of the LLP shall be solely the accountability of the LLP.
Extent of liability partner
1)A partner shall not be personally liable to any agreement of the LLP just for the fact of being a partner of the company.
2)According to the provisions, the personal liability of the partner shall not be affected by the LLP and any wrongful deed of one partner shall not affect the liability of other partners.
Holding out
1) Any person, who by words spoken or written or by conduct, represents himself, or purposely allows himself to be spoken to be an accomplice in a LLP organization is subject to any individual who has on the confidence of any such portrayal offered credit to the LLP.
2)When the business is continued in the same LLP partnership name even after the death of a partner with the continued use of that name of the late partner shall not claim a legal representation of his estate for any act of the company that occurred after his death.
Unlimited liability in case of fraud
1)In the event of any fraudulent activities carried out by LLP or any partner of the LLP with the intention to defraud the investors or creditors for any illegitimate purpose shall impose an unlimited liability for all in concern of debts or other liabilities of the company.
2)In case of any such incident that is done by the partner, then the LLP is as liable as the partner unless it is declared that it was without the knowledge or authority of the LLP.
3)If any kind of business is started with an illegitimate partner, all the partners who were a part of it deliberately shall be punishable with an imprisonment of two years along with a fine of five lakh rupees maximum.
4)If any partner or designated partner of the LLP or has conducted the affairs of the LLP in an illegal way, then without any kind of prejudice the LLP and the concerned person shall be punishable and is liable to provide a reimbursement to the person for the loss or damage incurred .
5) The LLP shall not be liable to the fraudulent deeds of its partners if it has happened without the knowledge of the company.
Whistle blowing
1)The court shall suspend any penalty against any partner or employee of the LLP if the following are satisfied:
a)such partner or employee providing factual information at the time of investigation of the LLP;
b)if any partner or employee gives any information which finds the partnership of LLP or any partner or employee of such LLP guilty under any governmental Act.
2)No partner or employee of any LLP shall be suspended, downgraded, threatened, pestered in any other discriminated manner against the terms and conditions of the LLP partnership merely because of his providing any information with the motive to demote the company.
Contributions
Form of contribution
1)A contribution of a partner to the LLP can be tangible, movable, intangible, immovable property including funds, other agreements to contribute money or property and contracts of services.
2)The monetary contribution of each partner shall be accounted and disclosed in the accounts of the LLP in the prescribed manner.
Obligation to contribute
1)The accountability of a partner to subsidize or other property or benefits to perform services for a LLP shall bound to the LLP partnership agreement.
2)A creditor of a LLP partnership, which extends in credit on an obligation as mentioned in the agreement, without any prior notice of compromise among partners might enforce the original obligation against such partner.
Financial disclosures
Maintenance of books of account, other records and audit
1)The LLP shall maintain proper books or records of account to its affairs as prescribed for every year of its existence on cash and aggregate basis at the registered office for the period prescribed.
2)Every LLP shall prepare and maintain a statement of account and solvency within six months from the end of financial year in a prescribed form ratified by all the designated partners of the LLP.
3)Every LLP shall file its statement of account and insolvency within the stipulated time with the registrar every year in the appropriate form and fees.
4)The accounts of the LLP shall be audited in correspondence with rules prescribed.
5)In case of violation of these provisions by any LLP shall be punishable with a sum amount of one lakh rupees.
Annual return
1)Every LLP shall file an annual return accordingly authenticated with the registrar within sixty days of end of its financial year in the prescribed form and with the prescribed fees.
2)Any LLP negating this provision shall be punishable with a fine amount of five lakh rupees to the maximum.
3)If the LLP violates this provision then the designated partner shall be punishable with a fine of one lakh rupees maximum.
Inspection of documents kept by registrar
All the official documents such as company registration document, names and address of partners and its changes, statement of account and insolvency and annual return filed by each LLP with the registrar shall be available for inspection.
Penalty for false statement
If any document or statement for the governmental purpose if found to be false , then the LLP shall be punishable with an imprisonment of two years and a fine amount of five lakh rupees maximum.
Power of registrar to obtain information
1)In order to obtain information to carry out the necessary proceedings, the registrar shall require any person present or former partner or designated partner or employee of the LLP to answer any question or declaration within the stipulated time.
2)In case a person fails to answer the question, declaration and supply the required details or if the registrar is not satisfied with the data provided by the person shall summon that particular person to appear before him or an inspector or any other public officer nominated by the registrar to answer such question or make declaration or supply details accordingly.
3)Any person who fails to appear for the summon without legal excuse shall be punishable with a fine of twenty five thousand rupees to the maximum.
Compounding of offences
The Central Government may aggregate any offense that is punishable with fine, by collecting a fine for the committed offense which may extend to the maximum amount as prescribed.
Enforcement of duty to make returns
1)Any LLP which in default abides by:
a)any provision of this Act or other law that requires a filing of any document with the Registrar or by giving a notice
b)any request made by the registrar to alter and resubmit any document
and if the LLP fails to make a good within two weeks of service then the court shall make an order to do the required good within the time mentioned in the order.
2)Any such order may state that all the costs related to the application shall be carried out by the LLP partnership.
3)No statement of this section shall restrict the operation of any other provision or law imposing penalty to the LLP.
Assignment and transfer of partnership rights
Partner’s transferable interest
1)The rights or privileges of a partner to acquire shares , profits and losses shall be transferable partly or wholly.
2)The transfer of any right by a partner does not allow any separation or disassociation of the partner or the LLP.
3)The transfer of shares and profits does not allow in transfer of participating in the management or conduction of events of the LLP, or access of any information of the LLP.
Investigation of the affairs
1)The Central Government shall nominate a public officer or inspector to investigate the affairs of the LLP under the following cases:
a)If more than one fifth of the number of partners of the LLP submitted an application, then the Court declares that the affairs of the LLP should be investigated.
b)any Court by itself declares that the proceedings of the LLP should be investigated.
2)The Central Government may assist two or more inspectors to enquire the affairs of the company on any report filed.
3)The nomination of inspectors would be made under the following cases
a)If more than one fifth of the number of partners of the LLP submitted an application with factual evidence and the prescribed fees.
b)if the LLP by itself makes an application that the affairs of the company needs to be investigated.
c)If any of the following circumstances are seen in the eyes of law
i)that the LLP is carries out an illegitimate business with an intention to defraud its creditors or partners or employees, biased practice towards any partner or if the company was formed under any illegal procedure.
ii)the conduction of the LLP partnership is found to violate the provisions of this Act;
iii)Any intimation from the registrar or any other investigating agency with supporting reasons stating the practice of proceedings is in need of an investigation.
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