Limited_Liability_Partnership

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Limited Liability Partnerships Zhaznzhigitov Almas Begassilev Berik 223/1

Reasons for LLP Legislation:

Reasons for LLP Legislation Provide an effective alternate corporate business vehicle to professionals and enterprises A vehicle to contain a partnership of any size A separate legal entity with perpetual succession Provide benefits of limited liability with flexibility of organizing their internal structure on mutually arrived agreement.

International Experience:

International Experience FRANCE :- LLP brought under Regulation first in 1673 UNITED STATES , - first introduced in New York in1822 Non Compliance of laws resulted in liability of partners becoming unlimited. Uniform Limited Partnership law was enacted for protection Hewlett- Packard are LLPs in operation UNITED KINGDOM: - LLP act passed in 1867. Came into force in 1907 Not being popular in UK, was replaced by LLP Act, 2000 Act designated the constituents of LLP as members and designated members as agents of LLP

What is LLP?:

What is LLP? Limited Liability Partnership is a Partnership formed and registered under this Act Legal entity separate from its partners with perpetual succession and with limited liability of its partners Body Corporate with capacity to acquire, hold & dispose property in its own name Sue and be sued independent of its partners

Incorporation of LLP:

Incorporation of LLP Two or more persons carrying a lawful business shall subscribe to an incorporation document. Name to have ‘Limited Liability Partnership’ or ‘LLP’ as the last words. Reservation of name in Form 1 – for 3 months Name not to be identical or too nearly resembles any other Partnership Firm, LLP, Body Corporate a registered trade mark – if resembles CG may direct to change the name – 3 months to change (Section 17)

Incorporation of LLP:

Incorporation of LLP Form 2 to be filed along with fee. No provision to amend Incorporation Document i.e MOA of Company Flexibility for amendment in LLP Agreement i.e AOA of Company is available

Certificate of Incorporation:

Certificate of Incorporation COI shall be given by ROC in Form 16 Registered LLP shall be assigned LLP Identification Number (LLPIN) COI does not prove the objects as Legal or permissible It only proves conclusively that Incorporation was properly done.

LLP Agreement:

LLP Agreement LLP Agreement (S. 2(o))means Any written agreement Between partners of LLP or LLP and its partners Which determines the mutual rights & duties of the partners and their rights & duties in relation to that LLP. LLP Agreement and any change to be filed in Form 3 within 30 days from date of Agreement Agreement is theoretically optional In absence of agreement, First Schedule to LLP Act would be applicable

Partner in LLP:

Partner in LLP Any Individual who is of sound mind Solvent or Body Corporate can become a partner of LLP.

Body Corporate:

Body Corporate Body Corporate includes Company incorporated in & Outside India LLP incorporated in India & outside India Registered Cooperative Society But does not include Corporation Sole Cooperative Society Partnership firm or HUF

Partners - Provisions:

Partners - Provisions Subscribers to incorporation documents to be partners Minimum Partners required: 2, Maximum: No limit Personal liability if the number falls below 2 Relationship (rights & duties) to be governed by LLP agreement Notice of change of Partner or change in address to be filed within 30 days in Form 4 No specific provision for restriction on Partner after he retires

Partners - Provisions:

Partners - Provisions Admission or cessation requires amendment in the Agreement Partner can bind LLP but not other Partners Partners can give loans to LLP as independent persons

Conversion into LLP:

Conversion into LLP Application for Conversion Form 17 – From Partnership firm to LLP (Schedule II) Form 18 – From Private company to LLP (Schedule III) Form 18 – From unlisted public company to LLP (Schedule III) Incorporation documents also to be submitted All partners required to apply for conversion Registrar to give Certificate in Form 19 If rejected, appeal can be filed with NCLT

Conversion into LLP:

Conversion into LLP Intimation of conversion to be intimated to ROC in 14 days in Form 14 Conversion shall not affect any rights or liabilities of erstwhile firm or company Every official correspondence after conversion shall be supported by a Statement bearing Name of earlier firm/ company and Registration number for 12 months Penalty for Non- Compliance Min. 10,000 Max. 1,00,000

Contribution:

Contribution Contribution in LLP is Similar to Authorised Capital in Companies Act, 56 Required to be mentioned in the Incorporation document Contribution of each partner to be disclosed in Accounts Contribution can be either in terms of Money Tangible movable / Immovable property Intangible property Contracts for services performed or to be performed

Contribution:

Contribution Contribution in form of Tangible movable or immovable property Intangible property or Agreement for services to be valued by practising CA/CWA or approved valuer from panel maintained by Central Government

Designated Partners:

Designated Partners LLP must have 2 Designated Partners (DP) who must be Individuals Details of DP to be filed with ROC within 30 days of his appointment in Form 4 Atleast one DP must be Resident of India Person willing to act as DP must obtain DPIN (Designated Partner Identification Number) from Central Government

Designated Partners:

Designated Partners Responsible for doing all acts, matters, things, etc. required by LLP To appoint DP within 30 days of vacancy No DP appointed shall make all partners as Designated Partners Implied authority of DP To check and verify accounts of LLP Statement of accounts & solvency to be signed & authenticated by DP on behalf of LLP

Designated Partner Identification Number (DPIN):

Designated Partner Identification Number (DPIN) Provisions applicable to DIN under section 266A to 266G of Companies Act will apply to DPIN Form No. 7 to be filed electronically Provisional DPIN is allotted for 60 days Formal application alongwith fee of Rs. 100 to be filed with Central Government Person who already has DIN is also required to obtain DPIN Same DIN can be allotted as DPIN

Disqualification as DP:

Disqualification as DP A Person appointed as DP been adjudged insolvent in past 5 years Suspends payment to creditors in last 5 years been convicted by court for moral turpitude or fraud and sentenced to imprisonment for not less than 6 months shall disqualify to become a Designated Partner

Accounts:

Accounts Each LLP to maintain books either on Cash basis Accrual basis Accounts to be kept at the registered office [Sec. 34(1)] Statement of accounts & solvency to be prepared 6 months prior to closure of financial year Accounting records to be preserved for a period of 8 years

Filing of Accounts:

Filing of Accounts Statement of account & solvency to be filed in Form 8 within 30 days from end of 6 months of financial year with prescribed fees. Statement to be signed by DP on behalf of LLP Insolvency of LLP to be specifically mentioned in statement of solvency

Auditor of Accounts:

Auditor of Accounts Deemed reappointment of retiring auditor unless otherwise provided in LLP Agreement Remuneration of auditor shall be as per LLP Agreement Removal of auditor shall be As per LLP agreement With consent of all partners Resignation of auditor to be given Through notice in writing to LLP Atleast 14 days before end of time for new appointment

Winding up & Dissolution:

Winding up & Dissolution LLP can be wound up By Tribunal (Presently High Court) or Voluntary Conditions for winding up Voluntarily Declaration of solvency to be submitted Winding up to be done by LLP Liquidator Petition of winding up to be filed by LLP, its partner, any creditor, ROC, Central/State Government

Winding up & Dissolution:

Winding up & Dissolution Conditions for winding up by the Tribunal LLP decides itself No. of partners fall below 2 for a period exceeding 6 months LLP unable to pay its debts LLP has acted against the interests of sovereignty & Integrity of India LLP defaults in filing Statement of Account& Solvency & Annual return for 5 years Just & Equitable in the opinion of NCLT

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