LLP

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LLP may soon have Reduced Additional Fee , MCA initiates process of De-criminalisation of compoundable offences under Limited Liability Act, 2008

Posted on by Fastlegal Team

With the object of unleashing the entrepreneurial spirits of our youth and to remove the fear of criminal prosecutions for non- substantive minor and procedural omissions and commissions in the normal course of their business transactions, the Government of India in the Ministry of Corporate Affairs (MCA) decided to initiate the process of decriminalization of compoundable offences under the limited liability partnership (LLP) Act, 2008, for greater ease of doing business for law abiding LLPs.

The Government treats Honest and Ethical Corporate entrepreneurs as wealth creators and nation builders. The objective of the De-criminalization exercise is to remove criminality of offences from business laws where no malafide intentions are involved. In furtherance of the said objective, an exercise was undertaken to identify those provisions of the Limited Liability Partnership Act, violations of which do not result in injury to public interest but are presently criminal in nature with fine as well as punishment after conviction being provided for in the Act.

Principles adopted for Decriminalization of Compoundable Offences:

  1. Principle 1: Offences that relate to minor/ less serious compliance issues, involving predominantly objective determinations, are proposed to be shifted to the In-house Adjudication Mechanism (IAM) framework instead of being treated as criminal offences.
  1. Principle 2: Offences that are more appropriate to be dealt with under other laws, are proposed to be omitted from the LLP Act, 2008.
  1. Principle 3: For non-Compoundable offences that are very serious violations entailing an element of fraud, intent to deceive and caused injury to public interest or non- compliance of order of statutory authorities impinging on effective regulation, Status Quo would be maintained.

In all, twelve (12) offences are proposed to be decriminalized and one (1) provision (Section 73) entailing criminal liability is proposed to be omitted. The 12 de-criminalized offences would then get shifted to IAM thereby de-clogging the criminal courts from routine cases.

In addition to the De-criminalization of the Act the Government also proposes Introduction of certain new concepts into the Act for greater Ease of Doing Business:

  1. Small LLP: It is proposed to create a class of LLP called as “Small LLP” in line with the concept of Small Companies. Such Small LLPs would be subject to lesser compliances, lesser fee or additional fee and lesser penalties in the event of default. Thus, lower cost of compliance would incentivize unincorporated micro and small partnerships to convert into the organized structure of an LLP and derive its benefits.
  1. Non-convertible Debentures (NCDs):  It is proposed to allow LLPs to raise capital through issue of fully secured Non-Convertible Debentures (NCDs) (as an alternative to equity participation) from investors who are regulated by SEBI or RBI. This will help deepen the Debt Market and enhance the capitalization of LLPs.

Reduction of Additional Fee: It is also proposed to amend Section 69 of the Act with a view to reduce the additional fee of Rs. 100 per day which is presently applicable for the delayed filing of forms, documents. A reduced additional fee is expected to incentivize smooth filing of records and returns of LLPs and consequently result in an updated registry for proper regulation and policy making.

Source: PIB

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Understanding Partners’ Liability in a Limited Liability Partnership (LLP)

Posted on by Fastlegal Team

Limited Liability Partnerships (LLPs) offer a form of business organization that combines the flexibility of a partnership with the limited liability protection normally associated with corporations. Understanding the extent to which partners in an LLP are liable is crucial for anyone considering this business structure. Below is a step-by-step guide that outlines the key aspects of partners’ liability in an LLP.

Step 1: Comprehend the Concept of Limited Liability

Limited liability means that the partners’ personal assets are mostly protected if the LLP faces bankruptcy or legal actions. Partners are not personally responsible for the debts incurred by the LLP beyond their investment in the business. However, it’s essential to understand that this protection is not absolute.

Step 2: Know the Exceptions to Limited Liability

While limited liability is a significant benefit, there are exceptions. For instance, if a partner guarantees a loan for the LLP, they could be liable for the full amount if the LLP defaults. Partners could also be liable if found guilty of wrongful actions or negligence performed in the course of business activities.

Step 3: Differentiate Between Different Types of Partners

In many LLPs, there are different roles which might include:

  • General Partners: They manage the day-to-day operations and may have greater liability.
  • Limited Partners: They typically contribute capital and have minimal involvement in management, hence enjoy greater liability protection.

Understand the type of partnership agreement you are entering into and the implications it has on your liability.

Step 4: Analyze the LLP Agreement

The LLP Agreement is a legal document that specifies the rights and responsibilities of each partner. It will also outline how liability is distributed among the partners. Ensure you read and understand this document, as it will be key in determining your personal risk.

Step 5: Consider the Role of Insurance

Many LLPs obtain professional liability insurance or errors and omissions insurance to protect against potential claims. Insurance can provide an extra layer of security for the partners’ personal assets. Assess the types and levels of insurance that may be appropriate for your LLP.

Step 6: Assess Joint and Several Liability

In some jurisdictions, LLP partners may be subject to joint and several liability for the actions of other partners. This means a single partner could be held responsible for the full amount of a debt or liability, with the right to seek contribution from the other partners later.

Step 7: Understand the Tax Consequences

LLPs typically offer pass-through taxation, where the profits and losses pass through to the individual partners. However, tax liability will depend on the income and losses of the LLP and the individual tax circumstances of the partners. Consult with a tax advisor to understand the implications fully.

Step 8: Recognize the Impact of State Laws

LLP laws can vary significantly by jurisdiction. It’s imperative to understand how your state governs LLPs, as this will impact your liability. Consult with a local attorney who specializes in business law to gain clarity on your state’s specific rules and regulations.

Step 9: Stay Informed and Compliant

As a partner in an LLP, it’s your responsibility to stay informed about the business’s activities, ensuring that it remains compliant with all relevant laws and regulations. Regularly review the LLP’s financials and legal standing to help minimize your risk exposure.

Step 10: Consult with Legal Professionals

Before forming an LLP or if you ever have concerns about your liability as a partner, it is wise to seek professional legal advice. An experienced attorney can provide guidance specific to your situation and help you to navigate the complexities of partners’ liability within an LLP.

Understanding and managing your liability as a partner in an LLP is critical to protecting your interests and ensuring the long-term success of the business. Regular consultation with legal and financial advisors will help you to maintain this balance effectively.

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FDI in Limited Liability Partnership (LLP) in India

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FDI in LLPs is permitted subject to the following conditions:

(i) FDI is permitted under the automatic route in Limited Liability Partnership (LLPs) operating in sectors/activities where 100% FDI is allowed through the automatic route and there are no FDI-linked performance conditions.

(ii) An Indian company or an LLP, having foreign investment, is also permitted to make downstream investment in another company or LLP in sectors in which 100% FDI is allowed under the automatic route and there are no FDI-linked performance conditions.

(iii) Conversion of an LLP having foreign investment and operating in sectors/activities where 100% FDI is allowed through the automatic route and there are no FDI linked performance conditions, into a company is permitted under automatic route.

Similarly, conversion of a company having foreign investment and operating in sectors/activities where 100% FDI is allowed through the automatic route and there are no FDI-linked performance conditions, into an LLP is permitted under automatic route.

(iv) FDI in LLP is subject to the compliance of the conditions of LLP Act, 2008.

Reference: https://dipp.gov.in/sites/default/files/CFPC_2017_FINAL_RELEASED_28.8.17.pdf 

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LLP Form 11 Annual Return for LLP

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LLP Form 11 is the annual return that must be filed by every LLP (Limited Liability Partnership) registered in India. The form must be filed once every year, and it provides information about the LLP’s management, partners, and capital contributions.

Form 11 LLP

Who needs to file LLP Form 11?

LLP Form 11 is an annual return that must be filed by every LLP registered in India. The form provides information about the LLP’s management, partners, and capital contributions. It must be filed once every year, and the due date for filing the form is 30th May of each financial year.

Who needs to file LLP Form 11?

Every LLP registered in India must file LLP Form 11 annually, regardless of whether it has carried out any business activities during the financial year.

What is included in LLP Form 11?

LLP Form 11 includes the following information:

  • Name and registered address of the LLP
  • Details of the designated partners and partners
  • Details of the LLP’s capital contributions
  • Details of the turnover of the LLP during the financial year
  • Details of any changes in the management or partners of the LLP during the financial year

It is important to note that LLP Form 11 does not require the submission of tax returns or financial statements.

Late fee for filing LLP Form 11

The late fee for filing LLP Form 11 has been revised by the Ministry of Corporate Affairs as per the latest notification dated April 30th, 2021. The revised late fee structure is as follows:

  • For filing the form after the due date but within 30 days: No late fee
  • For filing the form after 30 days but within 60 days from the due date: Rs. 10 per day for small LLPs and Rs. 20 per day for other LLPs
  • For filing the form after 60 days from the due date: Rs. 100 per day for small LLPs and up to 50 times of normal fee applicable to other than small LLPs based on the number of days delayed.

It is important to note that late fees for LLP Form 11 are only applicable to the number of days delayed and not for the tax return or financial statement.

Frequently Asked Questions (FAQs) for filing LLP Form 11

Q. Is it mandatory to file LLP Form 11? A. Yes, every LLP registered in India must file LLP Form 11 annually.

Q. What is the due date for filing LLP Form 11? A. The due date for filing LLP Form 11 is 30th May of each financial year.

Q. What is the late fee for filing LLP Form 11? A. The late fee for filing LLP Form 11 is as per the revised structure mentioned above.

Q. What information is required to be submitted in LLP Form 11? A. The LLP’s management and partner details, capital contributions, and turnover during the financial year are required to be submitted in LLP Form 11.

Q. Is it necessary to submit tax returns and financial statements with LLP Form 11? A. No, tax returns and financial statements are not required to be submitted with LLP Form 11.

In conclusion, LLP Form 11 is an important annual return that must be filed by every LLP registered in India. The form provides information about the LLP’s management, partners,

capital contributions, and turnover during the financial year. The late fee for filing LLP Form 11 has been revised, and it is important for LLPs to file the form before the due date to avoid any late fees.

LLP Form 11 is a simple form that does not require the submission of tax returns or financial statements. LLPs must ensure that they provide accurate and up-to-date information in the form to avoid any penalties or legal issues.

In summary, filing LLP Form 11 is a mandatory requirement for all LLPs registered in India. The form must be filed annually and provides important information about the LLP’s management, partners, and capital contributions. LLPs must ensure that they file the form before the due date and provide accurate information to avoid any legal issues or penalties.

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Step-by-Step Guide: Filing Form 3 LLP Agreement with ROC

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Limited Liability Partnerships (LLPs) offer the benefits of limited liability to their partners and are required to comply with various regulatory filings. One such compliance is the filing of Form 3, which pertains to the LLP Agreement. Here’s your step-by-step guide to understanding and filing Form 3 LLP Agreement with the Registrar of Companies (ROC).

Understanding LLP Form 3

LLP Form 3 is a document that provides details about the LLP Agreement, which governs the mutual rights and duties of the partners and the rights and duties in relation to that LLP.

Components of an LLP Agreement Typically Include:

  • Name of LLP
  • Name of partners and designated partners
  • Form of contribution
  • Profit-sharing ratio
  • Rights & duties of partners
  • Rules for governing the LLP
  • Dispute resolution mechanism
  • Indemnity clause

Filing Form 3: LLP Agreement with ROC

Step 1: Draft the LLP Agreement

  • Consult a legal expert to draft the LLP Agreement to ensure it complies with the LLP Act, 2008.
  • The agreement should be printed on Stamp Paper of a requisite value, which varies from state to state.

Step 2: Obtain Digital Signatures

  • Every designated partner must have a Digital Signature Certificate (DSC) because the filing process is online.

Step 3: Log in to the MCA Portal

  • Access the Ministry of Corporate Affairs (MCA) portal: http://www.mca.gov.in.
  • If you’re a new user, you need to create an account. Existing users can log in using their credentials.

Step 4: Fill Out Form 3

  • Navigate to the ‘LLP Forms’ section under the ‘MCA Services’ tab.
  • Download Form 3 from the LLP Forms section.
  • Fill in the necessary details as per the LLP Agreement, such as
    • Date of Agreement
    • Details of LLP and obligation of partners

Step 5: Attach Required Documents

  • The LLP Agreement must be attached as a pdf document.
  • Ensure that you have all Annexures and schedules to the agreement ready to be attached.

Step 6: Verify and Digitally Sign the Form

  • The form must be digitally signed by a designated partner.
  • A practicing professional (Chartered Accountant, Company Secretary, Cost Accountant, or Lawyer) must certify the form.

Step 7: Pay the Filing Fees

  • Filing fees for Form 3 will depend on the total contribution of partners in the LLP.
  • You can find the applicable fee structure on the MCA portal.

Step 8: Submit Form 3

  • Once the payment is made, you can submit the Form 3 on the portal.
  • A Service Request Number (SRN) will be generated after submission, which can be used to track the form.

Step 9: Keep Track of the Filing Status

  • Check the status of your Form 3 filing using the SRN on the MCA portal.
  • It usually takes around 7-10 working days for the ROC to process and approve the Form 3.

Step 10: Receipt of Form 3 Registration

  • After approval, the ROC will register the LLP Agreement and a registration certificate for Form 3 will be issued.
  • The certificate is a conclusive proof of registration of the LLP Agreement.

After your Form 3 has been successfully filed and registered, ensure to comply with further statutory filings as required under the LLP Act, like the annual return in Form 11 and the Statement of Accounts in Form 8.

Always consult with a corporate lawyer for accurate and legal advice tailored to your specific circumstances. This general guide is informative but does not account for every possible scenario or change in law over time.

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Things You Must Know About Limited Liability Partnership (LLP)

Posted on by Fastlegal Team

Limited Liability Partnership (LLP) being the new form of Business Structure in India,  Here are the things you should  know about LLP



  1. Separate Legal Entity and Body Corporate:   LLP has its own Name, Own Structure, Own Style, It is different from its partners, can sue or be sued in its name.
  2. Decision Makers: Minimum number of two Designated Partners are required all the time in LLP, who takes decisions in the day-to-day working of LLP, DP’s are responsible for compliance with statutory laws applicable to LLP.
  3. Capital Contribution: LLP can have any number of Partners, Partners contribute in the capital of the LLP and share profits and losses of LLP at an agreed ratio.
  4. Flexible: LLP structure is flexible in its nature, LLP agreement is its charter document, Business of LLP is run out in accordance with LLP agreement, partners agree to an agreement that how the business of LLP will be carried out.
  5. Easy Compliance: You Don’t need to give any disclosures, do not need to issue or allot shares, have an audit of account till certain limit, have statutory registers, have deadlines for meetings, take approvals for Change in name, registered office and much more.



  6. Less Tax: Distribution of Profits to partners attracts no taxes, if you distribute profits in a company it will attract Dividend Distribution Tax, Income arising to Partners as a profit shared is also exempt.
  7. Limited Liability: Liability of partners is limited to their agreed contribution, in bad times it saves you from your personal property.
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Annual Filing Requirements for LLP in India for Financial Year 2017

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Every LLP (Limited Liability Partnership) is required to file its Annual Accounts (Statement of Accounts and Solvency ) , Annual Return and Income tax Return every year within the stipulated time, even LLP having nil turnover or   LLP has not carried out any business operation during the reporting period.

Filing requirements with Registrar of Companies :

  • Filing of Annual Return in Form 11 : Every LLP is required to File its Annual Return to ROC by 30th May of Every Year,  failure to file Annual Return will attract Additional Fee of Rs. 100 per day with no upper limit. ( Delay of 30 days will cost you Rs. 100*30= 3000)
  • Filing of Annual Accounts and Solvency in Form 8 : Every LLP is required to file its Annual Accounts with ROC by 30th Oct of every year, failure to file Annual Accounts will attract Additional Fee of Rs. 100 per day with no upper limit.   ( Delay of 50 days will cost you Rs. 100*50= 5000) this is in addition to Additional fee to be paid for Form 11 , if not filed.

Filing Requirements with Income Tax Department :

  • The due date for filing income tax return in case of a company for A Y 2017-18 is 30th September 2017(whether audit of accounts is required or not). It is applicable for income earned from April 1st, 2016 to March 31st, 2017. For LLP due date is September 30th (where audit is required), November 30th(where there are foreign transaction or specified domestic transactions) and in other cases due date is July 31.

 

Place your request for LLP Filings Online With Fastlegal Team Members



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LLP Registration: How to Register Limited Liability Partnership in India

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Limited Liability Partnership (LLP Registration ) is an advanced form to traditional form of normal partnership having the liability of partners of LLP limited to the extent to capital contributed by partners in LLP. The major benefit to incorporate an LLP is to have Limited Liability in its operations.

Often seen in a bad time of business the personal assets of the partners come into stake and partners have to repay all debts even by selling personal assets. The major way to get it out is to get the benefit of Limited Liability where at the time of winding up of LLP all the assets of LLP is sold and all the liabilities of LLP are paid and afterward if nothing left or full liabilities are not paid as par law than partners of LLP need not to pay the balance from their personal assets. Another benefit of  LLP is it also body corporate and is a separate Legal Entity, Partners come in and goes but LLP will always remain in existence.

llp registration

Step by Step Procedure on LLP Registration in India  

Obtaining Digital Signature of all the Designated Partners of LLP

Digital signature are issued by Certifying Authority in India after due verification of applicant, Digital Signatures are used to electronically sign the documents, it is as valid as normal signature.

Obtain DIN of Designated Partners for LLP Registration  

Designated Partners of LLP  must have Director Identification Number to become Designated Partners , In LLP DIN is also Named is Designated Partner Identification Number (DPIN) , DIN is obtained by filing Form DIR-3 with MCA. (DIN is valid for lifetime, you don’t need to apply for DIN if you have already obtained DIN.

Filing Name Approval Application for LLP Registration

Once DIN is Obtained Application for Approval of Name of LLP is Obtained in LLP Form 1 to ROC. Name of the proposed LLP should be unique , means if there is already a company , LLP or trademark is registered or applied , the name is simply not available.

Drafting of Incorporation Documents for LLP Registration

Once the Name of LLP is approved Subscriber sheet, Consent of Partners form is drafted and than is Signed by all the Partners of LLP. Subscribers sheet should also be attested by Professional like Company Secretary, CA or CMA.

Filing of Incorporation Document to ROC for LLP Registration

Along with Signed Subscriber sheet, Consent and Registered Office proof documents (Electricity Bill ,Rent Agreement/ Sale Deed  and NOC from Owner ) LLP form 2 is filed with ROC.

Incorporation of LLP

Once Form 2 gets approved , LLP gets incorporated a Certificate of Incorporation is issued and  LLP Identification Number is Allotted to LLP .

Drafting and Filing of LLP Agreement to ROC

This is Final Stage to Incorporation procedure of LLP.   LLP Agreement is prepared and printed on stamp duty of applicable value and signed by all the partners of LLP alog with signature of 2 witness.   Scanned LLP agreement is now filed with ROC in LLP form 3 within 30 Days of Incorporation of LLP.