Statutory Compliance For Limited Liability
Partnership (LLP)
As
per section 3 of the LLP Act, 2008 a Limited Liability Partnership has the following
characteristics:
per section 3 of the LLP Act, 2008 a Limited Liability Partnership has the following
characteristics:
· A limited liability
partnership is a body corporate formed and incorporated under this Act and is a legal entity separate from that of its
partners.
partnership is a body corporate formed and incorporated under this Act and is a legal entity separate from that of its
partners.
· A limited liability
partnership shall have perpetual succession.
partnership shall have perpetual succession.
· Any change
in the partners
of a limited liability partnership shall not affect
the existence, rights or liabilities of the limited liability
partnership. A limited
liability partnership is popularly known as an “LLP”, and has
become an alternative business vehicle to carry out business as it combines the characteristics of a
Private company and a conventional partnership. Over the period of time a LLP
has gained popularity due to the following:
in the partners
of a limited liability partnership shall not affect
the existence, rights or liabilities of the limited liability
partnership. A limited
liability partnership is popularly known as an “LLP”, and has
become an alternative business vehicle to carry out business as it combines the characteristics of a
Private company and a conventional partnership. Over the period of time a LLP
has gained popularity due to the following:
· LLP provides limited liability
status to its partners and offers the flexibility of internal arrangement through an agreement between the
partners.
status to its partners and offers the flexibility of internal arrangement through an agreement between the
partners.
· This combination gives entrepreneurs and businessmen a more structured business vehicle compared to a sole proprietorship or a
conventional partnership.
conventional partnership.
· It
provides the flexibility of controlling the business operation in accordance
with the partnership agreement whilst enjoying the limited liability status
compared to a company which is subject to strict compliance requirements under
the Companies Act 1965 in most of its affairs.
provides the flexibility of controlling the business operation in accordance
with the partnership agreement whilst enjoying the limited liability status
compared to a company which is subject to strict compliance requirements under
the Companies Act 1965 in most of its affairs.
· LLP is a
business vehicle which offers simple and flexible procedures in terms of its
formation, maintenance and termination while simultaneously has the necessary dynamics and appeal to be able
to compete domestically and internationally.
business vehicle which offers simple and flexible procedures in terms of its
formation, maintenance and termination while simultaneously has the necessary dynamics and appeal to be able
to compete domestically and internationally.
List of Compliance
Requirement under LLP Act, 2008
Requirement under LLP Act, 2008
|
1
|
Section 32 of read
with sub-rule
(1) of Rule 23
|
The contribution of each partner
shall be accounted for and disclosed in the Accounts of the limited liability partnership along with the nature of contribution and amount. |
|
2
|
sub-rule (2) of
Rule 23
|
The
contribution of a partner consisting of tangible, movable or immovable or intangible property or other benefits brought or contribution by way of an agreement or contract for services shall be valued by a practicing Chartered Accountant or by a practicing Cost Accountant or by approved valuer from the panel maintained by the Central Government. |
|
3
|
Section 34
|
The LLP shall maintain
its books of account relating to its affairs for each year of its existence on a cash basis or accrual basis and according to double entry system of accounting.
The LLP shall maintain its books of account at its registered
office for a period of eight years. |
|
4
|
Rule 24
|
The Books of Account of a limited liability partnership shall
contain the following:
1. particulars
of all sums of money received and expended and the matters in respect of which the receipt and expenditure takes place;
2. a record of the assets
and liabilities;
3. statements of cost of
goods purchased, inventories, work-in-progress, finished goods and cost of goods sold; and
4. any other particulars
which the partners may decide. |
|
5
|
sub-rule (3) of
Rule 24
|
The books of account of
a limited liability partnership are required to be preserved for eight years from the date on which they are made. |
|
6
|
sub-section (3) of
Section 34 read
with sub-rule (4)
Rule 24
|
Every limited
liability partnership shall file the Statement of Account and Solvency in Form 8 with the Registrar, within a period of thirty days from the end of six months of the financial year to which the Statement of Account and Solvency relates. |
|
7
|
Section 35
|
every LLP is required to
file an Annual Return duly authenticated with the Registrar in 60 days of closure of financial year in Form 1 |
|
8
|
sub-rule (4) of
Rule 34
|
every foreign limited
liability partnership its Statement of Account and Solvency in Form 8 with the Registrar the in accordance with provisions of rule 24 duly signed by the authorized representatives within a period of 30 days from the end of six months of the financial year |
|
9
|
Statement of
Account and Solvency of a LLP |
The designated partners
on behalf of the limited liability partnership are required to sign the Statement of Account and Solvency of a LLP. |
|
10
|
sub-section (4) of
Section 34 read
with sub-rule (8)
of Rule 24,
|
The accounts of
following limited liability partnerships, shall be required to get its accounts audited:
l whose turnover in any financial year exceeds forty lakh
rupees, or
l whose contribution exceeds twenty-five lakh rupees
|
|
11
|
eligible to be
appointed as an auditor of a LLP |
A Chartered Accountant in practice shall be qualified for
appointment as an auditor of a limited liability partnership. |
|
12
|
sub-rule (17) of
Rule 24
|
The remuneration of an auditor appointed by the limited liability partnership shall be fixed by the designated partners or
by following the procedure as laid down in the limited liability partnership agreement. |
|
13
|
Rule 25(2)
Additional certificates |
Circumstances where additional certificates required
l Turnover up to Rs.5 crores during Financial Year or Contribution upto Rs.50 lakhs
require Certificate from designatory partner other than signatory of Annual Return
l In other Cases Certificates from Company Secretary in Practice
|
|
14
|
Rule 27, records of
LLP to be preserved |
Records to be preserved
Permanently
a)
Incorporation document [Section 11(1)(b)] Permanent
b)
Notice of situation of registered office [Section 13] Permanent
c) Information with
regard to Limited Liability Permanent Partnership Agreement or any changes made therein [Section 23(2)]
d) Notice
of other address of any limited liability Permanent partnership at which documents to be served [Section 13(2)]
Records to be preserved
for 21 Years
l All papers, registers, refund orders and correspondence
relating to the limited liability partnership liquidation accounts to be preserved for 21 years.
Records to be preserved
for 5 Years
a)
copies of Government orders relating to limited liability partnership; registered documents of limited liability partnership which have been fully wound up and finally dissolved together with |
|
|
|
b)
correspondence relating to such limited liability partnership;
c)
papers relating to legal proceedings from the date of disposal of the case and appeal, if any;
d)
copies of statistical returns furnished to Government;
e) all
correspondences including correspondences relating to scrutiny of accounts, annual returns, prosecutions, reports to the Central Government and the Tribunal and the correspondences relating to complaints.
In case
of prosecution matter, the date is to be recorded from the date of disposal of the case and appeal, if any.
Records to be preserved
for 3 Years
(a) All books,
records and papers, other than those specified in other categories.
(b) Routine correspondence regarding payment of fees, additional filing fees
and correspondence about the return of documents.
Preservation of Records
under Annexure C of the LLP rules
a)
Statement of compliance with requirements of the Act by an Advocate or Company Secretary or Chartered Accountant or Cost Accountant in whole-time practice and by any person who subscribed his name to the incorporation document [Section 11(1)(c)] – 5 years
b)
Notice of a person ceasing to be a partner and any change in the name or address of a partner – 5 years
c) Registered documents relating to LLP struck
off under Section 75 together with correspondence or copy of the order of restoration of the LLP into the register – 5 years
d)
Annual return of a limited liability partnership 5 years
e) Consent of candidates to act as designated partner
to be filed with the Registrar [section 7(4)] – 5 years
f)
Consent to act as a partner – 5 years
g)
Statement by all the partners of firm containing particulars of firm along with application for its conversion into limited liability partnership – 5 years
h) Statement by all the shareholders containing particulars of private
company/ unlisted public company along with application for its conversion into limited liability partnership – 5 years
i) Certified copy
of the order(s) of the Tribunal under section 60/61/62.- 5 years
j) Copy of the order
of dissolution of a LLP by Tribunal [Section 63] -5 years
k)
Statement of Account and Solvency – 8 years
Records of foreign
limited liability partnerships:
Registered documents of
foreign limited liability partnerships which cease to have any place of business in India shall be destroyed after expiry of three years from the date such limited liability partnerships cease to have any place of business in India. |
Related Post :