Statutory Compliance For Limited Liability Partnership (LLP)

Statutory Compliance For Limited Liability Partnership (LLP)

June 14, 2020
     
Statutory-Compliance-For-Limited-Liability-Partnership-LLP

Statutory Compliance For Limited Liability Partnership (LLP) 

As 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.
·         A limited liability 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:
·   LLP provides limited liability 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.
·     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.
·     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.

List of Compliance 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 :
Procedure for incorporation of LLP
Procedure for Conversion of Private Company Into LLP
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