LIMITED LIABILITY PARTNERSHIP ACT, 2008

SEGMENT I – NATURE AND BASICS

Section 1
1. Called the limited liability partnership act, 2008.
2. Extended to the whole of India.
3. Came on to force by the notification of CG.
Provided that the CG can chose different dates for different sections
Dates- 31st march 2009 &31st may 2009

Section 2(1)(n)
Limited liability means partnership incorporated under this Act.

Section 4
The provisions of Indian partnership Act, 1932 are not applicable on any LLP.

Section 3
LLP is a body corporate having separate legal identity and perpetual succession.

Section 6
1. Minimum 2 members (no max cap)
2. If no of partners fall below 2 members than the LLP can work for another 6 months. After 6
months, if the LLP carries on business with only 1 partner (in knowledge of the partner), the
partner will be personally liable for all the liabilities after the said 6 months.

Section 5
Partner can be an individual or a body corporate.

Provided that the individual will be disqualified if-

a. He is of unsound mind and finding is in force; or

b. He is undischarged insolvent; or
c. He has applied for adjudication as an insolvent and application is pending.

Section 2(1)(d)
Body corporate means a company as per ‘companies act 2003’ and includes-

i. LLP
ii. LLP incorporates outside India
iii. Company incorporated outside India
But excludes-
 Corporation sole
 Co-operative society
 Any other body corporate notified by the CG.
(CG cannot exempt company or LLP)

Section 7
 1. LLP will have
 2 designated members
 Who are individual
 And 1 is a resident In India
(resident means staying in India for at least 120 days in the current FY)
Provided that if all the members are body corporates, then their nominees will be appointed as
designated partners. If partly body corporate and individual the any of the individual or
nominee can be appointed as body corporates.
2. Appointment of designated partners-
i. If incorporation document
a. Specifies the name, he will be designated partner
b. Staes that all will be designated partner
ii. Any partner may become or cease to be a designated partner as per the LLP agreement.
3. Any individual will become designated partner only on his written consent. (Form 9)
4. LLP should file with the registrar the details of designated partner with their written consent
within 30 days from appointment. (Form 4/Form FiLLiP)
5. An individual should not be disqualified according to the prescribed list.
6. An individual to be a designated partner will require DPIN. (no DPIN DIN can be used as DPIN)

Section 8
A designated partner will be responsible for all the doing of the act, filing of documents, etc. and will be
liable to all the penalties.

Section 9
Designated partner will be appointed within 30 days from vacancy

Provided that if no designated partner is appointed or at any time there is only 1 designated partner,
then all partners will deem to be designated partner.

Section 10
Penalty: on non-compliance with

Section 7(1) LLP and every partner Rs 10,000 Continuing default-

Rs 100/day
Max of LLP- Rs 1,00,000
Max of partner- Rs 50,000

Section 7(4) LLP and designated Rs 5,000 Continuing default-

partner Rs 100/day
Max of LLP- Rs 50,000
Max of partner- Rs 25,000

Section 7(5) LLP and every partner Rs 10,000 Continuing default-

Section 9 Rs 100/day
Max of LLP- Rs 1,00,000
Max of partner- Rs 50,000
Section 2(1)(ta)
Small LLP means an LLP in which-

 Contribution does not exceed Rs 25 Lakh or a higher amt prescribed but not exceeding 5 cr; AND
 T/o of PY does not exceed Rs 30 lakh or higher amt prescribes but not exceeding 50 cr.

SEGMENT II – INCORPORATION

Section 15
1. Every LLP will have ‘limited liability partnership’ or ‘LLP’ at the end of their name.
2. The name should not be in the opinion of CG-
 Undesirable
 Identical to an existing LLP, company, trademark.

Section 16
A person may apply for the reservation of name in form RUN-LLP with same fees & the registrar will
reserve the name for a period of 3 months from the date of intimation.

Section 17
1. If the LLP is registered with an identical name, them the LLP is required to change the name
within 3 months of such issue on the order of CG. Application to CG can be made by-
 An LLP
 A company
 Proprietor of the registered trademark
Provided that the proprietor of the trademark should make an application within 3 years
from the date of incorporation.
2. When the LLP changes its name, then intimate the ROC within 15 days of such change.
Within 30 days the Registrar will make changes in the certificate of incorporation and LLP will
change the LLP agreement.\
3. If on order of CG, the LLP does not change name within 3 months, then CG will appoint a new
name as prescribed and the certificate of incorporation will be issued.
Provided that this does not stop the LLP to subsequently change the name.

RULE 19A: NEW NAME BY CG

The CG will appoint the following name-

ORDNC + year of passing the order + serial no + LLPIN

Provided nothing shall apply if application of form 5 is pending.

Section 11
1. For an LLP to be incorporated,
 2 or more persons who are subscribers to the LLP should sign the incorporation document
(FiLLiP)
 FiLLiP should be filed with the registrar with the prescribed fee.
 The incorporation document should contain a statement by an advocate or CS or CA or cost
accountant and 1 of the subscribers stating that all the provisions of the act are complied
with.
 2. The incorporation document should include-
a. Name
b. Business
c. Address full
d. Name & Address of every partner
e. Name & address of designated partner
3. Punishment for non-compliance-

Imprisonment – 2 years Min – Rs 10,000 Max – Rs 5,00,000

Section 12
1. If all the requirements are complied with the registrar within 14 days issue a certificate of
incorporation (form 16 with LLPIN) and the LLP will be registered.
2. The statement issued shall be enough evidence for the compliance of section 11(1)
3. Certificate will be signed by the registrar
4. Conclusive evidence

Section 14
On receiving the certificate of incorporation or on being incorporated the LLP will be capable of –

 Suing or being sued

 Own maintain etc. assets in its own name
 Act as a body corporate

Section 13
1. Every LLP will have a registered office for all the communications.
2. The documents will be served to the LLP by post, or nay other prescribed method on the
registered office or any other address mentioned.
3. LLP may change its registered office and file a notice to the registrar in the prescribed manner.
4. Punishment-

Rs 500/day Up to Rs 50,000 for both LLP and partner

SEGMENT III – PARTNERS

Section 22
All the subscribers during the incorporation will be called the partner so the and any other person can
become partner as per the LLP agreement.

Section 23
1. All the rights and duties will be mentioned in the LLP agreement.
2. The LLP agreement shall be filed with the registrar in the form and time limit prescribed
RULE 21: LLP AGREEMENT
LLP agreement will be filed in form 3 within 30 days from incorporation
3. Obligation of any pre incorporation contract shall be imposed on the LLP only if it is ratified by all
the members post incorporation
 4. If the LLP agreement does not exist the rights and duties will be governed by Schedule 1

Section 24
1. A person may cease to be a partner as per the LLP agreement and in absence of such agreement,
a written notice shall be sent by the partner for not less than 30 days.
2. A person will cease to the partner in case of -
a. Death
b. Dissolution
c. Declared to be of unsound mind
d. The person has filed to be adjudicated as an insolvent
3. A person will not cease to be a partner in respect of another partner unless –
a. The other partner has recd a notice of cessation
b. The cessation notice has been submitted to the registrar either by LLP or the partner
being ceased.
c. The cessation of a partner does not release from any obligation incurred during him
being a partner.
d. When the partner of a LLP resigns, the person will be entitled –
 To receive his capital contributions and
 Share in accumulated profits after deducting the accumulated losses.
e. The partner being ceased will not have any right in the management of the LLP.

Section 25
1. Intimation by the partner –
Partner shall inform the LLP in any change in name or address in form 6 within 15 days from such
change.
On non compliance penalty to the partner of RS 10,000
2. Intimation by LLP –
The LLP shall file a notice to the registrar in case –
 A person ceases to be a partner with 30 days
 Change of address or name within 30 days
On noncompliance penalty to LLP and every designated partner of Rs 10,000
3. Notice shall be filed with the registrar –
a. In form 4 with fee
b. Signed by designated partner
c. If incoming partner, signed and authenticated giving consent
4. Intimation by the former partner
 A partner may intimate about his cessation if he believes that the LLP will not inform the
registrar.
 The registrar on such application will confirm with the LLP.
 Provided that if no reply is recd from the LLP within 15 days of notice, then the notice of
cessation will be registered.

SEGMENT IV – RELATION B/W PARTNERS & LLP

Section26
Partner is the agent of LLP but there is no mutual agency between the partners.

Section27
1. LLP is not liable for any wrongful act done by the partner with a 3rd party which is –
a. Not in the authority of the partner i.e., the act done by the partner is ultra vires
b. The 3rd party knew or did not know the authority of the partner i.e., the 3rd party cannot
say that he did not knew the objectives of the LLP because the agreement is a public
document and doctrine of constructive notice is applicable.
2. the LLP will liable of any wrong doing of the partner only if is in the authority of the LLP.
3. Obligation of LLP is solely its obligation
4. The liability of LLP will be paid out of its property.

Section 28
1. The partner is never personally liable.
2. This does not protect him for his personal wrong doings but there is no mutual agency

Section 30
1. If the intend of the LLP (act by LLP) is to defraud any person then the corporate veil will be lifted
and the liability of the LLP and every partner will be unlimited.
Provided that in any fraudulent act done by the partner the LLP will be equally liable as the
partner unless the LLP established that such act is done without the LLP’s knowledge.
2. Punishment –
Imprisonment for 5 years
Fine minimum Rs 50,000 maximum Rs 5,00,000
3. LLP and partners have to shall be liable for compensation for any loss suffered by the aggrieved
party.
Provided that LLP will not be liable if done without its knowledge.

Section 31
1. NCLT will waive off or reduce the penalty of partner of employee is such person has provided
some useful information
2. No partner or employee will be discharged by the company because of provision of such
information.

Section 29
1. The person who represents himself as a partner of the firm by his actions, words or conduct is
liable to the person who on this representation has given credit to the LLP.
(it does not matter if the person representing himself as partner does or does not know the
representation has reached the person)
Provided that the LLP will also be liable to the extent of credit recd or financial benefit derived.
2. In case of death of the partner and the continuance of the use of the same name, the legal
representative will not liable of the liabilities arising after his death.
(for any obligations arise before the death of the partner, the legal representative will be liable
to the extent of the amt of estate)
 SEGMENT V – CAPITAL CONTRIBUTION & FINANCIAL DISCLOSURE

Section 32
 Contribution can be in any form
 The value so derived should be disclosed in the accounts.

Section 33
1. The obligation to contribute is given in the LLP agreement.
2. The creditor given credit according to the agreement, if no notice of compromise between the
partners is given to the creditor, then the creditor will impose the original obligation to the
partners.

Section 34
1. The LLP is required to prepare its books of accounts either by cash or accrual basis according to
the double entry book system & maintain them at the registered office for the prescribed time
limit. (by default, accrual basis)
RULE: time limit = 8 years
2. The LLP shall prepare the statement of accounts and solvency within 6 months from the end of
the financial year signed by the designated partners.
3. LLP shall file the statement of solvency and accounts with the registrar I the prescribed form and
time limit accompanied with fee.
RULE: form 8; time limit 30 days from the end of 6 months (i.e., 7 months)
4. The prescribed companies are required to audit their statements
Provided that the government can exempt some class of companies from audit
RULE:
 LLP are required to audit
Provided that LLP with
- T/o not exceeding Rs 40 lakh in the FY; &
- Contribution not exceeding Rs 25 lakh, are not required to perform audit
 Audit can only be done by a practicing CA
 Designated partners appoint auditor
 In the 1st FY, any time during the FY but before the end of the FY
 In subsequent years, at least 30 days before the end of FY
 In case of casual vacancy
 In case of vacancy due to removal

5. On noncompliance of sub section 3 (filing with roc), punishment

LLP & designated partner Rs 100/ day Max cap for LLP Rs 1,00,000
Max cap for DP Rs 50,000
6. On non compliance of sub section 1,2 ,4, punishment

LLP Min – Rs 25,000 Max – Rs 5,00,000

Designated partner Min – Rs 10,000 Max – Rs 1,00,000

Section 34A
CG may with consultation with NFRA will prescribe AS & SA recommended by ICAI.

Section 35
1. LLP shall file with the registrar the annual return within 60 days from the closure of the FY
2. Penalty-

LLP & designated partner Rs 100/ day max to

LLP Rs 1,00,000
DP Rs 50,000
RULE:
 AR to be filed in form 11
 Every LLP with
 T/o up to Rs 5 cr; &
 Contribution up to Rs 50 lakh
Shall be accompanied by the certificate from the designated partners stating the
books of accounts are true and fair.
All other companies the annual return should be accompanied with a statement
from the CS stating the same.

Section 36
The Annual return, incorporation document, statement of solvency and accounts are open for inspection
by any person

Section 37
The statement any person in any document, annual return, etc. is false (knowingly) or omits a material
fact, penalty

Imprisonment 2 year Min- Rs 1,00,000 Max- Rs 5,00,000

Section 38
1. The registrar may require any person to answer any question or to make any declaration in order
to obtain information
2. In case the person does not reply, the registrar can summon the person
3. Punishment – Rs 2,000 to Rs 25,000

Section 39
1. The RD may compound any offence punishable with fine by collecting a sum in the range of
minimum to maximum fine.
2. If same offence committed withing 3 years, it shall not be compounded.
3. Application of compounding should be mase to the registrar, who shall forward it to the RD.
4. The intimation of compounding to the registrar should be given within 7 days
5. If offence compounded before institution of any prosecution, then no prosecution
6. If offence compounded after institution of any prosecution, then a written notice shall be sent to
the court and the offender shall be discharged
7. The RD may direct to file any document
8. On non compliance with sub section 7 maximum fine will be twice the amt provided in that
section.
 SEGMENT VI – MISCELLANEOUS

Section 42
1. The partner can t/f his rights in share of profits and losses
2. t/f does not mean dissociation of the partner with LLP or dissolution of LLP
3. the transferee has no right to involve in the management of the LLP

Section 58
1. The registrar on satisfaction that the provisions of the schedules are complied with shall register
the LLP and issue of certificate of incorporation.
Provided that the LLP shall within 15 days of registration shall inform the concerned registrar of
firm and company.
2. Upon conversion the LL, its partner, partner of the form shareholders (as the case maybe) will be
bound by the provisions of this Act.
3. Upon conversion the, the effects shall be specified in the schedules
4. On and from the date of registration –
a. An LLP will exist
b. All assets t/f and vested in LLP
c. The firm or company will be dissolved.

Section 59
CG will make rules for

 Establishment of place of business within India

 Carrying on the business

Section 60

Section61

Section 62

Section 63
Winding up- voluntarily or by NCLT

Section 64
LLP will be wound up by Tribunal in following cases –
SIRAJ
a. Sovereignty and integrity of India is disturbed (terrorism)
b. If the LLP says so (insolvent)
c. Reduced partners below 2 partners for a period of more than 6 months
d. Annual Return + Statement of solvency and accounts (defaulted in filing in last 5 FY)
e. Just and equitable

Section 65
CG will make rule for winding up

Section 66
Any partner can lend money or do business transaction with the LLP as 3rd party.
Section 67
CG by notification can apply any of the section of the Companies Act 2013 on the LLP with exception,
modification

Such notification should be presented in n=both the houses of the parliament for at least 30 days.

Section 69
The filing can be done after the due date on payment of some additional fees

Section 70
On second or subsequent offence, the LLP or partner shall be punishable by imprisonment or in case of
fine, twice the amount.