Introduction
- Limited Liability Partnership (LLP) is an incorporated partnership formed and registered under the Limited Liability Partnership Act 2008 with limited liability and perpetual succession.
- The Act came into force on 31st March 2009.
- This Act has been enacted to make provisions for the formation and regulation of Limited Liability Partnerships and for matters connected there with or incidental thereto.
- LLP is a body corporate and a legal entity separate from its partners.
- LLP provides the benefits of limited liability but allows its members the flexibility of organizing their internal structure as a partnership based on a mutually arrived arrangement.
- The ‘Indian Partnership Act, 1932 does not apply to LLP.
- Words and expressions used and not defined in this Act but defined in the Companies Act, 2013 shall have the meanings respectively assigned to them in that Act.
- The Ministry of Corporate Affairs and the Registrar of Companies (ROC) are entrusted with the task of administrating the LLP Act, 2008. The Central Government has the authority to frame the Rules with regard to the LLP Act, 2008, and can amend them by notifications in the Official Gazette, from time to time.
- The LLP Act, 2008 has 81 sections (of which section 81 is now omitted with effect from 1st April 2022) and 4 schedules.
| Schedule | Deals with |
| First Schedule | Mutual rights and duties of partners, LLP and its partners where there is no formal agreement between them |
| Second Schedule | Conversion of firm into LLP |
| Third Schedule | Conversion of private company into LLP |
| Fourth Schedule | Conversion of unlisted public company into LLP |
Partners [Section 5]
As per Section 2(q) of the Act, Partner, in relation to a LLP, means any person who becomes a partner in the LLP in accordance with the LLP agreement.
Any individual or body corporate may be a partner in a LLP. However, an individual shall not be capable of becoming a partner of a LLP, if-
(a) he has been found to be of unsound mind by a Court of competent jurisdiction or
(b) he is an undischarged insolvent; or
(c) he has applied to be adjudicated as an insolvent and his application is pending.
Minimum and Maximum number of partners
1) Minimum number of partners [Section 6]
- Every LLP shall have at least two partners.
- If at any time the number of partners of a LLP is reduced below two and the business of LLP is carried by the remaining one partner even after six months from the reduction, then he shall be personally liable for all the liabilities of the LLP incurred after six months.
2) Maximum number of partners
- There is no upper limit on the number of partners in LLP.
Designated partners [Section 7]
(i) Every LLP shall have at least two designated partners who are individuals and at least one of them shall be a resident in India. The Designated partners shall be responsible for all acts and matters required to be done by the LLP.
(Resident in India: The term “resident in India” means a person who has stayed in India for a period of not less than 120 days during the financial year)
Provided that in case of a limited liability partnership in which all the partners are bodies corporate or in which one or more partners are individuals and bodies corporate, at least two individuals who are partners of such limited liability partnership or nominees of such bodies corporate shall act as designated partners.
(ii) If body corporate is the partner of LLP, nominees of such body corporate shall act as designated partners.
Other points to be noted:
1) If the incorporation document
(a) specifies who are to be designated partners, such persons shall be designated partners on incorporation; or
(b) states that each of the partners from time to time of limited liability partnership is to be designated partner, every partner shall be a designated partner.
2) In accordance with the limited liability partnership agreement
Any partner may become or cease to be a designated partner by and in accordance with the limited liability partnership agreement.
3) An individual shall become a designated partner only after has given his prior consent to act as such to the limited liability partnership in Form 9.
4) The LLP shall file with the Registrar the particulars of every individual who has given his consent to act as designated partner within 30 days of his appointment.
5) Every designated partner of a limited liability partnership shall obtain a Designated Partners Identification Number (DPIN) from the Central Government and the provisions of sections 153 to 159 (relating to DIN) of the Companies Act, 2013 shall apply mutatis mutandis for the said purpose.
(Note: Mutatis Mutandis means with the necessary changes having been made or with consideration of the respective differences)
Best CA FOUNDATION LAW classes
CA Preeti Aggarwal offers best CA Online Coaching in India for CA Foundation and CA Intermediate Law. Check CA Study Materials, test series, lectures by best online classes for CA Business and Corporate Law.
The online lectures are as per the latest syllabus of ICAI. Gain confidence in Law and get your doubts solved directly by CA Preeti ma’am.