A New Arena for professionals in LLP By Anujain

1.         LLP shall be a body corporate and a legal entity separate from its partners. It will have perpetual succession and any change in the partners shall not affect the existence, rights or liabilities of LLP. [Section 3]

2.         Indian Partnership Act, 1932 shall not be applicable to LLP. [Section4]

3.         Every LLP shall have at least two partners, if the business carried out for more than six months with only one partner, the liability of LLP should become unlimited. There is not any upper limit on number of partners in LLP. [Section 6]

4.         There shall have at least two or more designated partners who are individuals and at least one of them shall be a resident in India. [Section 7]

5.         Punishment for the violation of sections entitled every partner shall be punishable with fine which shall not less than ten thousand rupees but which may be extend to five lakh rupees as the case may be.

6.         For incorporation of LLP any two or more person can incorporate LLP by applying the same with the Registrar, along with incorporation document, with prescribe fees along with prescribe forms made by either an Advocate or CA or CS or ICWA who is engaged in the formation of the LLP. [Section 11]    

7.         A registered LLP can acquire/dispose of property (tangible or intangible/ movable or immovable), and can sue and be sued in its own name and having a common seal. [Section14]

8.         To make distinguish between firm name or company name, it is compulsory for the every LLP to include the words “limited liability partnership” or “LLP” as the last words of its name. [Section 15]

9.         LLP name needs to be approved from Registrar. He will not approve the name if the proposed name undesirable or it is similar/resembles/ identical with the name of another LLP or body corporate or a trade mark with is subject to an application for registration, of any other person under the Trade Mark Act, 1999. [Section15]

10.       If by mistake an LLP registered by the similar/ identical/ undesirable name the central government may direct for the change in the name within 3 months. [Section17]

11.       Any partner can retire from LLP after giving 30 days notice to the other partners of his intention to retire such notice that the former partner has been ceased to be partner of the LLP has been delivered to the Registrar. But if the notice of his retirement is not delivered to the Registrar, the liability of the outgoing partner towards the third party who has entered into contract with the LLP while he was a partner does not cease. [Section 24]

12.       The cardinal principal of Partnership “Mutual Agency” i.e. a concept in which every partner is agent as well as principal of other partners does not exists in LLP. In LLP every partner is for the purpose of business the agent only of the LLP but not of other partners. [Section 26]

13.       To prevent the corporate fraud, this act contains the provision to change the liability of its partners from limited to unlimited liability where the partners out an act with intent to defraud creditors or any other person or if they carry out an act for any fraudulent purpose knowingly shall be punishable with imprisonment for a term which may extended to two years and with fine which shall not be less than fifty thousand rupees but which may be extend to five lakh rupees. [Section30]

14.       LLP provides the provision of Whistle Blowing. In which court or tribunal may reduce or waive any penalty leviable against any partner or employee of a LLP in case such partner or employee has provided useful information during investigation for finding out the offence. [Section31]

15.       LLP needs to get its accounts audited compulsorily in accordance with rules framed thereunder, irrespective of minimum turnover. [Section34]

16        LLP shall file an annual return duly authenticated with the Registrar within sixty days of closure of its financial year, failure to comply with this shall be punishable with fine not less than twenty five thousand but which may extend to five lakh rupees. [Section35]   

17.       If any return, statement or other document required under this act which is false, knowing it to be false, omit any material fact knowing it to be material, he shall be punishable with imprisonment for a term which may be extend to two years, and shall also be liable to fine which may extend to five lakh rupees but not less than one lakh rupees. [Section37]   

18.       LLP empowers its partners to transfer of any right of the whole/ part of his/ her right to an outsider, it restrict the purchaser of such right of a partner in participating in the management or conduct of the activities or access information concerning the transaction of the LLP. [Section42]

19.       LLP provides the provisions of conversion existing partnership firm, Private Company, Unlisted Public Company into Limited Liability Partnership. [Section 55, 56, 57] 

20.       LLP Chapter XI provides the provision of Foreign Limited Liability Partnership to establishment of place of business within India. (Section 59)

21.       Keeping in view of changing technological scenario, the any document required to be filed, recorded or registered under this act may be filed via internet through affixing digital signature as per the Information Technological Act 2000.[Section68]

22.       LLP empowers the Central Government to make any rules by notification in the Official Gazette for carrying out the provisions of this act. [Section 79]

By the enactment of this piece of legislation government open a new era for business organization as well as the professionals for performing their profession and business in smooth manner so that they can increase their income and meet global competitiveness in changing trend of economy. Moreover this act is a step of economic growth, attracting the FI (foreign investment), and Lawyers, CA, CS into India. A great step, in any case!