A Limited Liability Partnership (LLP): specifies that a business in which at least two partners are needed and there would be no threshold on the max number of partners. The liabilities of the partners are limited within the extent of the capital contribution performed by each partner in LLP.
LLP would be another corporate business form that is a basic blend of the company and partnership firm limiting the liability of the partner to the capital contributed and controlled by the LLP agreement. LLP provides the advantages of the limited liability of the company and the ease of the partnership.
The LLP could continue its presence whether there are changes in the partners or not. The same poses the capability of entering into the contracts and holding property in its own name.
The LLP would be the separate statutory entity responsible for the full extent of the assets however the liability of the partners would be limited to their agreed contribution to the LLP.
Compliance Chart of Initial and Annual LLP Forms
Limited liability partnerships compose of only two yearly compliances and other event-based compliances such as amendments in objects, amendment in the partners and their capital along with LLP address, etc, need to be reported to the Registrar of Companies by filing e-forms. The initial and annual forms to be filed by an LLP are:-
| S.No | Name of the form / Compliance | Purpose | Timelines |
|---|---|---|---|
| 1 | RUN – LLP & FiLLiP | For reserving the name of LLP and incorporation of new LLP | XX |
| 2 | LLP Form 3 | Registration of Fresh LLP Agreement or Amended/ Revised LLP Agreement: The Partners of an LLP are required to execute an LLP Agreement and a copy has to be filed with the Registrar or Companies in LLP Form 3 within 30 days of incorporation of the LLP or from any change in agreement. | Within 30 days of incorporation or from any change in agreement. |
| 3 | LLP Form 11 | Annual Return of capital | 30th May |
| 4 | LLP Form 8 | Statement of Account & Solvency | 30th October |
| 5 | Annual KYC | Designated partners KYC/any individual holding DIN | Between 1st April to 30th September |
| 6 | ITR | Every LLP has to file Income Tax Returns every year. | Every year, LLP returns must be filed by the 31st of July. LLPs required to conduct tax audit must, however, file their income tax returns by September 30th |
| 7 | Tax Audit | Tax audits are required only for LLPs whose revenues exceed 40 lakhs rupees or whose contributions exceed 25 lakhs rupees. | — |
LLP Benefits in Deep Comparison to a Company:
- Exemptions from maintenance of Minutes book, Statutory Registers, flexible tax rates, etc
- AGM would not be needed for LLP, As there would be no concept of shareholding in LLP, no AGM is to be conducted.
- There shall be no directors who are engaged in LLP, instead there are designated partners who run the business and would be liable for the rules/regulations. Thus the meeting of the designated partners is recommended in the case of the LLP firm and not mandatory.
- No threshold on the maximum number of partners.
- An existing partnership firm could be transformed into LLP by following the provisions of clause 58 and Schedule II of the LLP Act. Form 17 ought to be furnished including FiLLip for these conversions and incorporation of LLP.
- Any existing private firm or existing unlisted public company could be transformed into LLP by following the provisions of clause 58 and Schedule III and IV of the LLP Act. Form 18 is required to be furnished with the registrar including FiLLip for these types of conversion.
- The same would not be essential to furnish the information of the charge with the office of the registrar however the stakeholders could voluntarily furnish that. The charge information that is creation, modification, or satisfaction of charge, could be furnished via Annexure/Appendix to e-Form 8.
Latest LLP Changes in Act and Rules
MCA vide notification on 11.02.2022 reported that the provisions of sections 1 to 29 of the LLP amendment act 2021 would be affected from the date 1st April 2022 which is the start of the date for all the provisions of the specified act.
- The same could be 5 rather than 2 designated partners excluding any DIN during the time of the start
- All the LLP forms would now become web-based.
- LLPs would be given their PAN and TAN including the certificate of incorporation itself.
- To furnish the approval of partners, a web-based Form 9 will be available. As a result of which the digital signature of all the designated partners rather than 1 as in the former case, would be needed during the time of the start of LLP
- The revised rules indeed cover the need of filing a certificate of the correctness of the yearly returns of LLPs with the sales of Rs 5 cr or Rs 50 lakhs partners contribution.
- LLP Form 8 (Statement of Solvency and Annual Return) to retain Contingent Liability reporting particularly
- Form 28 and Form 29 would get integrated. As a result of which form 28 would be needed to get furnished for the notice of
- Alteration in the COI (Certificate of Incorporation or Registration)
- Alteration in Names and Addresses of any individual authorized to accept the service on the grounds of foreign LLP.
- Alteration in the principal place of business in India
- No more having a place of business in India
- The former provision needs each LLP to attain a minimum of one designated partner who lives in India and to meet the same need, these designated partners need to live in India for the duration of min 182 days in the immediately former 1 year. The same duration would be relaxed and the resident-designated partner would now need to stay for a min of 120 days in the financial year
- Concept of “Small Limited Liability Partnership” introduced. “Small Limited Liability Partnership” rendered to a limited liability partnership:
- Contribution of which, do not more than Rs. 25,00,000 or these higher amounts, not more than Rs 5 cr, as might be defined
- The turnover, according to the statement of accounts and solvency for the former fiscal year would not be more than Rs 40 lakh, also these higher amounts would not be more than Rs 50 cr as mentioned
- Or that is similar to these additional needs as specified and fulfils these terms and conditions as might be mentioned.
- Name amendment of the limited liability partnership.
- (Section 17), The same section would get replaced and Section 18 is overlooked
- Towards that, the name central government might directly impose the name within three months.
- The trademark owner would make the application in 3 months from the incorporation date.
- The Limited Liability Partnership (Amendment) Rules, 2022 added new Rules 37A, 37B, 37C, and 37D which give the adjudication of penalties of an LLP.
- The Limited Liability Partnership (Amendment) Rules, 2022 modified the LLP fee norms by replacing the Annexure A of the LLP Rules, 2009.
