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Limited Liability Partnership ('LLP')
In India, the law of LLP is very new. In fact, the Limited Liability Partnership Bill, 2008 is approved by the Indian Parliament on 12 December 2008 and received assent of the President of India on 7th January 2009. It has been notified under the official gazette of India on 9th January 2009 as the Limited Liability Partnership Act 2008 (6 of 2009) ('the LLP Act') .
The LLP Act 2008 became operational on 31st March 2009.
Provisions (Sections 55 to 58 and Schedules Second, Third and Fourth) of the LLP Act pertaining to conversion of existing partnership firms, private limited and unlisted public limited companies into LLP have been brought into force with effect from 31st May 2009.
Thus, the entire law of LLP is in force. Until National Company Law Tribunal ('NCLT') and Naitonal Company Law Appellate Tribunal ('NCLAT') are constituted under the Companies Act 1956, the Company Law Board and the High Court, respectively will exercise the jurisdiction.
The Limited Liability Partnership Rules 2009 ('the LLP Rules') notified on 01st April 2009 and broght into force from that date, except the Rules pertaining to conversion of existing partnership firms, private limited and unlisted public limited companies into LLP, which are brought into force from 31st May 2009.
Now only the Rules pertaining to winding up of LLP are to be notified.
As per the LLP Act any two persons can incorporate a LLP.
Every LLP shall have two designated partners (i.e. partners responsible for compliance of law of LLP) and one of the two designated partners, shall be resident in India.
LLP shall have a registered office and optionally one other address for serving of documents by the Government and others.
Audit of books of accounts of LLP by an Indian Chartered Accountant is mandatory, except for small LLPs. As per Rule 24(8) of the LLP Rules 2009 -where turnover of LLP does not exceed Rs. 4 million (Rs. forty lakhs) in any financial year or contribution of partners in LLP does not exceed Rs. 2.5 million (Rs. Twenty Five lakhs) need not get their accounts audited.
The said law provides for annual filing of statement of accounts and annual return.
The law provides for conversion of any existing partnership firms or private limited or unlisted public limited companies into LLP and such conversion will not affect rights and/or liabilities of erstwhile firm or company.
One of the major benefits of LLP is limited liability as compared to unlimited liability of partners under existing partnership firms.
In case of unlisted companies, major benefit of conversion into LLP would be more flexible regulatory provisions and lower cost of compliance.
To read features of Indian LLP (including income tax treatment), click here.
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