All about LLPs in India – LLP in India is viewed as an alternative corporate business vehicle that provides the benefits of limited liability and also allows its members the flexibility of organizing their internal structure as a partnership based on a mutually arrived agreement. It may be interpreted as a hybrid of general partnership and private limited company, in the sense that the internal structuring, including profit sharing, capital infusion, remuneration drawing, etc being in the nature of an orthodox partnership firm. On the other hand, unlike partnership firms, it is a completely separate legal entity, independent from its owners, or capital contributors. This article is intended to highlight all about LLPs in India, from the inherent features, advantages, disadvantages, recent changes brought under LLP Act, 2008 and more. Let us get started. The concept of Limited Liability Partnerships (LLPs) in India was introduced in the year 2009 with the enactment of the “Limited Liability Partnership Act, 2008 (6 of 2009) which was notified on 31.03.2009. The first LLP was formed on the 02^nd Day of April 2009 and since then almost 10,000 LLPs have been formed so far as per the records of the Ministry of Corporate Affairs.

PROMINENT FEATURES

  Merits and Demerits Of LLP Some of the main advantages and disadvantages of LLP may be briefed as under :

ADVANTAGES	DISADVANTAGES
No major Investment	Mandatory Disclosure of financial information
Limited Liability	Cannot raise public money
Commercially efficient vehicle	Loss of secrecy of information
No personal liability	Untried structure
Internal flexibility	More legal documentation
Less statutory compliances	Stringent rules on FDI
Lesser paper work and formalities	Practical issues in formation
Perpetual succession	Lack of awareness among general public
Secure and financial less risky	Â
Scope for expansion and growth	Â

Landmark Changes in Recent Times : One of the major changes which has taken place in LLP is the integration of LLP site with MCA site w.e.f 11th June 2012. The erstwhile LLP website (www.llp.gov.in) has been merged with the MCA site (www.mca.gov.in) and all filing pertaining to LLPs has to be done on the MCA portal only. MCA has issued detailed guidelines on how to login and access records of existing LLPs on the MCA website and what all updations need to be done by designated partners and LLps in order to be able to do filing on MCA site. The Procedure for formation of LLP is almost same. For the erstwhile forms on LLP website, corresponding forms have been made available on MCA website and the names of forms have remained same in most of the cases. One practical difference is that Residential status of each designated partner needs to be updated by filing form DIN 4. A look at the recent Circulars and Notifications issued by MCA pertaining to LLP

REFERENCE NO.	DATE	DESCRIPTION
No. 22	02.06.2012	Notice under Rule 37(3) of LLP Rule, 2009
G.S.R. (E)	05.06.2012	The Limited Liability Partnership (Amendment) Rules, 2012
General Circular No. 13/2012	06.06.2012	Extension of time in Filing Annual Return by Limited Liability Partnerships
G.S.R. (E)	21.06.2012	Corrigendum to LLP notification dated 05.06.2012
General Circular No. 15/2012	29.06.2012	Extension of time in Filing of annual return by Limited Liability Partnerships(LLPs)
G.S.R. (E)	10.07.2012	Sections 51, 63-65 of LLP Act, 2008 notified.
G.S.R. (E)	10.07.2012	Limited Liability Partnership (Winding up and Dissolution) Rules, 2012

Synopsis of the above circulars and notifications:

• Notifications No. 22 -  Notice Under Rule 37(3) Of LLP Rule, 2009

• G.S.R. (E) – The Limited Liability Partnership (Amendment) Rules, 2012

• General Circular No. 13/2012 – Extension of time in Filing Annual Return by Limited Liability Partnerships

 

• G.S.R. (E) – Corrigendum to LLP notification dated 05.06.2012

  General Circular No. 15/2012 – Extension of time in Filing Annual Return by Limited Liability Partnerships    

• G.S.R. (E) – Sections 51, 63-65 of LLP Act,2008 notified

 

•  G.S.R. (E) – Limited Liability Partnership (Winding up and Dissolution) Rules, 2012

Þ     Ministry has notified the new Limited Liability Partnership (Winding up and Dissolution) Rules, 2012 which will be effective from 10th July 2012. Þ     The Following modes of winding up have been notified:  

CIRCUMSTANCES FOR WINDING UP

VOLUNTARY WINDING UP Þ Resolution with approval of 3/4th majority of partners Þ Approval of secured / unsecured creditors Â

WINDING UP BY TRIBUNAL Inability to pay debts, i.e. to a creditor exceeding one lakh rupees / Execution in favour of Creditor returned unsatisfied / Tribunal is satisfied that LLP is unable to pay debts. Â

The First LLP Formation in India : The legal consultants Handoo and Handoo have become the first Limited Liability Partnership firm of India, a new form of business structure where the partners’ liability is limited to the extent of their stake, introduced by the government from April 1. Delhi-based R K Handoo and Associates is the first LLP that has opted for the LLP form of entity. The firm has four members– R K Handoo, Yogendra Handoo, Roohi Kohli and Sushma Handoo, in which Sushma is a non-practicing partner. Conclusion : The Ministry of Corporate Affairs is continuously striving to bring about improvements in the field of regulations governing LLP and their formation. Integration of LLP and MCA site has further simplified the procedure for formation of a LLP and other filings related thereto. Limited Liability Partnership though came very late to India, has finally found its space. LLP is best suited to small and medium business enterprises by offering a good mix of company and partnership form of organization. We at Taxmantra.com have a dedicated corporate law team comprising of Chartered Accountants, Company Secretaries and Legal Practitioners who expertly handles all about LLPs in India, ranging from Registration/Incorporation services of LLP nationwide, along with the annual compliances that LLPs are supposed to adhere to, in order to remain in perfect compliance with the law. Further, we also have a direct taxation team who would plan the best tax structure for LLPs and an accounting team who handles day to day maintenance of the books of accounts of LLPs. You may also like to explore more on LLPs : Taxation of LLPs in India LLP Registration in India Winding Up of LLPs