Limited Liability Partnership Act, 2008 PDF

# Chapter 19 - Limited Liability Partnership ## Learning Objectives After going through this chapter, a student should be able to understand: - Concept of a limited liability partnership. - LLP Rules, 2009 and its administrative machinery. - Salient features of LLP Act, 2008. ## Introduction Li...

# Chapter 19 - Limited Liability Partnership ## Learning Objectives After going through this chapter, a student should be able to understand: - Concept of a limited liability partnership. - LLP Rules, 2009 and its administrative machinery. - Salient features of LLP Act, 2008. ## Introduction Limited Liability Partnership (LLP) is a new form of business entity that enables professional expertise and entrepreneurial initiative to combine, organize and operate in an innovative and efficient manner. For a long time, a need has been felt to provide for a business format that would combine the advantages of limited liability of a company and the flexibility of organizing their internal management on the basis of mutually arrived agreement, as is the case in a partnership firm, at a low compliance cost. Several expert Committees have recommended for legislation on Limited Liability Partnerships (LLPs). These include the Abid Hussain Committee, 1997, the Naresh Chandra Committee, 2003 and the Dr. J.J. Irani Committee, 2005. Consequently the Limited Liability Partnership (LLP) concept was initiated as an alternative to the 'traditional partnership firm' on the one hand, where partners are exposed to unlimited personal liability, and 'incorporated company' on the other, which is burdened with statute based governance structure. This form of business organization permits individual partners to be insulated from joint liability of any partner's business decision. The LLP enters into a contract in its name and the liability of its partners is limited to their agreed contribution in the LLP. An LLP is thus a hybrid entity between a company and a partnership firm. The LLP Act incorporates all the flexibility available under the Partnership Act and all the beneficial aspects of the Companies Act. The Limited Liability Partnerships can be formed to carry on a lawful business. Under Section 2(1)(e) of the LLP Act, the term 'business' has been defined to include every trade, profession, service and occupation. LLPs are essential to small and medium entrepreneurs (SMEs) in business and industry and to professional service providers like Chartered Accountants, Company Secretaries, Cost Accountants, Advocates and the like. ## Limited Liability Partnership Act, 2008¹ The law of Limited Liability Partnership (LLP) is contained in the Limited Liability Partnership Act, 2008. The Act contains 81 Sections and 4 Schedules. The LLP Act came into force, for most of the provisions, on 31st March, 2009 and for the left over remaining provisions on 31st May 2009. ## Schedules The nature of four Schedules that have been added at the end of the LLP Act may briefly be stated as follows: 1. **The First Schedule.** It contains provisions regarding matters relating to mutual rights and duties of partners and limited liability partnership and its partners applicable in the absence of any agreement on such matters (the model set of terms of LLP agreement) [refers to Section 23(4)]. 2. **The Second Schedule.** It contains provisions for conversion from firm into limited liability partnership (refers of Section 55). 3. **The Third Schedule.** It contains provisions for conversion from private company into limited liability partnership (refers to Section 56). 4. **The Fourth Schedule.** It contains provisions for conversion from unlisted public company into limited liability partnership (refers to Section 57). ## Limited Liability Partnership Rules, 2009 The LLP Rules, 2009 covering the procedural and operational aspects of the LLP Act, 2008 have been made effective from 1st April, 2009. However, Rules 32, 33, 38, 39 and 40 of these Rules came into force on 31st May, 2009. These Rules have since been amended several times, the latest amendment was made through the Limited Liability Partnership (Second Amendment) Rules, 2011 (notified on 14th September, 2011). The forms to be filed under the Act are annexed to these Rules and the fees to be paid in various circumstances is prescribed in Annexure A to the Rules. The filing requirement under the Act shall be complied using digital signature in prescribed electronic mode. The Central Government have launched a website, namely, www.llp.gov.in for operationalising various processes under the Rules. ## Administrative Machinery The Ministry of Corporate Affairs (MCA) and the Registrar of Companies (ROC) are entrusted with the task of administration of the Limited Liability Partnership Act, 2008 and the Rules framed thereunder. The Registrar of Companies is appointed by the Central Government in each State. The Registrar of Companies shall act as Registrars of LLPs at the State level and shall register and control LLPs. The office of the Registrar of Companies is a public office where LPs are required to file documents and returns and the public is authorized to inspect the same according to the provisions of law. ## Salient Features of LLP Act, 2008 The salient features of the LLP Act 2008, inter alia, are as follows: 1. The LLP shall be a body corporate and a legal entity separate from its partners. 2. Any two or more persons, associated for carrying on a lawful business with a view to profit, may by subscribing their names to an incorporation document and filing the same with the Registrar, form a Limited Liability Partnership. Every registered LLP shall be assigned an LLP Identification Number (LLPIN). 3. The LLP will have perpetual succession. 4. The mutual rights and duties of partners of an LLP inter se and those of the LLP and its partners shall be governed by an agreement between partners or between the LLP and the partners subject to the provisions of the LLP Act 2008. The Act provides flexibility to devise the agreement as per their choice. However, in the absence of any such agreement, the mutual rights and duties shall be governed by the provisions of the LLP Act, 2008. 5. The LLP will be a separate legal entity, liable to the full extent of its assets, with the liability of the partners being limited to their agreed contribution in the LLP which may be of tangible or intangible nature or both tangible and intangible in nature. 6. No partners would be liable on account of the independent or un-authorized actions of other partners or their misconduct. 7. The liabilities of the LLP and partners who are found to have acted with intent to defraud creditors or for any fraudulent purpose shall be unlimited for all or any of the debts or other liabilities of the LLP. 8. Every LLP shall have at least two partners. It shall have at least two individuals as Designated Partners, of whom at least one shall be resident in India. 9. The duties and obligations of Designated Partners shall be as provided in the law. 10. There shall not be any upper limit on number of partners in an LLP. 11. The LLP shall be under an obligation to maintain annual accounts reflecting true and fair view of its state of affairs. A statement of accounts and solvency shall be filed by every LLP with the Registrar every year. 12. The accounts of LLPs shall be audited, subject to any class of LLPs being exempted from this requirement by the Central Government. 13. The Central Government shall have powers to investigate the affairs of an LLP, if required, by appointment of competent Inspector for the purpose. 14. The compromise or arrangement including merger and amalgamation of LLPs shall be in accordance with the provisions of the LLP Act 2008. 15. A firm, private company or an unlisted public company is allowed to be converted into LLP in accordance with the provisions of the Act. Upon such conversion, on and from the date of certificate of registration issued by the Registrar in this regard, the effects of the conversion shall be such as are specified in the LLP Act. 16. Upon conversion into LLP, on and from the date of registration specified in the certificate of registration, all tangible (moveable or immoveable) and intangible property vested in the firm or the company, all assets, interests, rights, privileges, liabilities, obligations relating to the firm or the company, and the whole of the undertaking of the firm or the company, shall be transferred to and shall vest in the LLP without further assurance, act or deed and the firm or the company, shall be deemed to be dissolved and removed from the records of the Registrar of Firms or Registrar of Companies, as the case may be. 17. The LLP Act, 2008 confers powers on the Central Government to apply provisions of the Companies Act, 1956, as it thinks appropriate, by notification with such changes or modifications as deemed necessary. 18. The Indian Partnership Act, 1932 shall not be applicable to LLPs. 19. The Tax issues of LLP shall be addressed under the Income Tax Act, 1961 separately. The Finance Act, 2009, has laid tax provisions for LLP. 20. Every LLP shall use the Forms annexed to the LLP Rules, 2009 for the purpose of the LLP Act, 2008 and shall specify therein its limited liability partnership identification number (LLPIN). The electronic Form shall be authenticated by authorized signatories using electronic or digital signatures. ## Proposals for boosting LLPs in India Ministry of Corporate Affairs (MCA) at Government of India constituted a Company Law Committee on 18th September, 2019 with a view to revamp the LLP Act, 2008 (LLP Act) and bring necessary amendments in line with the economic scenario. The Committee presented its recommendations on 18 January, 2021. These recommendations had been put up for further discussion and comments. It would take time before it becomes law and become part of the LLP Act, as and when it is taken up by the Government in Parliament. However, the main recommendations are summarized below. - With the object of developing the entrepreneurial spirits among youth of India and to remove the fear of criminal prosecutions for various non-compliances, the Government of India in the Ministry of Corporate Affairs (MCA) should 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. - 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: - **Small LLP:** It is proposed to create a class of LLP called as "Small LLP" in lines similar with the concept of Small Companies in the Companies Act, 2013. 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. - **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 and 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. ## Chapter 20 - Nature and Incorporation of LLP ## Learning Objectives After going through this chapter, a student should be able to understand: - Definition, characteristics and nature of LLP. - Difference between LLP, partnership and a limited liability company. - Understand the difference between condition and warranty. - Incorporation of LLP including Online Incorporation of LLP. - Effects of Incorporation of LLP. ## Definition of Limited Liability Partnership Section 2(1)(n) of the LLP Act defines LLP as "limited liability partnership means a partnership formed and registered under this Act." The above definition does not explain the substance of what constitutes a limited liability partnership. In the light of the nature of a LLP, as stated in Section 3, a comprehensive definition of a LLP giving its main essentials may be given as follows: 'A limited liability partnership is a body corporate, which is an artificial person, having a separate legal entity, with a perpetual succession, a common seal and carrying limited liability.' ## Characteristics of LLP An examination of the above definition reveals the following essential characteristics of a limited liability partnership: 1. **Body corporate.** A 'body corporate' is generally taken to be a legal entity distinct and separate from its constituents and having perpetual existence and a common deal, with capacity to hold property, sue and be sued, in its own name. Just as a 'company' formed and registered under the Companies Act is a body corporate, similarly an 'limited liability partnership' is a body corporate formed and incorporated under the LLP Act. An LLP is formed by the registration of an incorporation document with the LLP Act. Act of Companies of the State in which the registered office of the LLP is to be situated. Incorporation by registration creates a LLP. 2. **Artificial legal person.** A limited liability partnership is an artificial legal person registered. It is created by a process other than natural birth and does not possess the physical attributes of a natural person, and on the other hand, it is clothed with many of the rights of a natural person. It is invisible, intangible, immortal (law alone can dissolve it) and exists only in the eyes of law. It has no body, no soul, no conscience, neither it is subject to the imbecilities of the body. But it cannot be treated as a 'fictitious' entity because it really exists. As a rule, a LLP may acquire and dispose of property, it may enter into contracts through the agency of natural persons, may be fined for the contravention of the provisions of the Limited Liability Partnership Act. Thus, for most legal purposes a LLP is a legal person, just like a natural person, who has rights and legal duties at law. In a sight of that a LLP being an artificial legal person can do every thing like a natural person, except of course that, it cannot take oath, cannot appear in its own person in the Court (must be represented by counsel), cannot be sent to jail, cannot practice a learned profession like law or medicine, nor can it marry or divorce. 3. **Separate legal entity.** A limited liability partnership is a legal person having a juristic personality entirely distinct from and independent of the individual persons who are for the time being its partners. It has the right to own and transfer the title to property in any way it likes. No partner can either individually or jointly claim any ownership rights in the assets of the LLP during its existence or in its winding up. It can sue and be sued in its own name by its partners as well as outsiders. Creditors of the LLP are creditors of the LLP alone and they cannot directly proceed against the partners personally. So far as this characteristics is concerned an LLP is at par with a company formed and incorporated under the Companies Act. The principle of separate legal entity was first judicially recognized in the famous case of Salomon vs Salomon & Co. Ltd (1897). The facts of this case are as follows: Mr. Salomon, who carried on a prosperous business as a leather merchant, sold his business for the sum of £30,000 to 'Salomon & Co. Ltd.', which consisted of Salomon himself, his wife and daughter and his four sons. The purchase consideration was paid by the company by allotment of 20,000 fully paid £1 shares and £10,000 in secured debentures conferring a floating charge over all the company's assets, to Mr. Salomon. One share of £1 each was subscribed for in cash by the remaining six members of his family. Salomon was the managing director of the company and as he held virtually the whole of its stock, he had absolute control over the company. Only a year later, the company became insolvent and winding up commenced. On winding up the statement of affairs was roughly like this: Assets £6,000; Liabilities: Salomon as secured debenture holder £10,000 and unsecured creditors £7,000. Thus, its assets were running short of its liabilities by £11,000. The unsecured creditors claimed priority over the debenture holder (Mr. Salomon) on the ground that a person cannot owe to himself and that Salomon and the company were one and the same person. They further contended that the company was a mere 'alias' or agent for Salomon, the business was solely his, conducted solely for him and by him and the company was a mere sham and fraud, hence Salomon was liable to indemnify the company against its trading debts. But it was held that the existence of a company is quite independent and distinct from its members and that the company's assets must be applied in payment of the secured debentures first in priority to unsecured creditors. Here, it may be noted that it is 'partners' in case of a LLP instead of shareholders' or 'members' of a company. 4. **Perpetual existence.** A limited liability partnership alike an incorporated company, is a stable form of business organization. Its life does not depend upon the death, insolvency or retirement of any or all partner(s). The provision for transferability of economic rights of a partner (Sec. 42), as also for cessation of partnership interest (Sec. 24), helps to preserve the perpetual existence of a LLP. Law creates it and law alone can dissolve it. Partners may come and go but the LLP can go on for ever. An LLP may be compared with a flowing river where the water keeps on changing continuously still the identity of the river remains the same. Thus, a LLP has perpetual existence, irrespective of changes in its partners. 5. **Common seal.** A limited liability partnership acts through its partners and designated partners. But having a legal personality, it may have a common seal, if it decides to have one (Sec. 14). Thus, it is optional for an LLP to have a common seal. The name of the LLP shall be engraved on the common seal. It shall be used as a substitute for its signature in accordance with the provisions of the limited liability partnership agreement and in the presence of at least two of the designated partners of the LLP. 6. **Limited liability.** Every partner of an LLP would be, for the purpose of the business of the LLP, an agent of the LLP but not of other partners. Liability of partners of a LLP shall be limited only to the extent of their investment except in case of unauthorized acts, fraud and negligence. But a partner shall not be personally liable for the wrongful acts or omission of any other partner. An obligation of LLP, whether arising in contract or otherwise, shall solely be the obligation of the LLP only [Sec. 27(3)]. The liabilities of the LLP shall be met out of the property of the LLP [Sec. 27(4)]. ## Distinction Between LLP and Traditional Partnership The main points of distinction between a limited liability partnership and erstwhile partnership firm are as follows: 1. **Regulating Act.** An LLP is regulated by the Limited Liability Partnership Act, 2008, whereas a partnership firm is governed by the provisions of the Indian Partnership Act, 1932. 2. **Number of partners.** The maximum number of partners in the case of a partnership firm is fixed at 50, but no such maximum limit of partners is fixed in case of a LLP. 3. **Separate legal entity.** A LLP is a legal entity separate from its partners. The death or lunacy of its partners would not dissolve the LLP. A LLP may hold property in its own name and sue or be sued in its own name. A partnership, on the other hand, does not have a distinct legal entity separate from its partners and its existence comes to an end upon the death or lunacy of its partners. Moreover, the firm cannot hold property in its own name, cannot sue or be sued in its own name. A firm may hold property and sure or be sued only in the names of partners. 4. **Liability.** In the case of a partnership firm each partner has unlimited liability and is personally liable for all the debts of the firm. In a LLP, on the other hand, a partner has limited liability to the extent of his agreed contribution in the LLP except in case of unauthorized acts, fraud and negligence of partner(s) when the delinquent partner will be personally liable. 5. **Authority of partners.** Every partner of a partnership is an agent of other partners, whereas every partner of an LLP is not an agent of other partners. As such in a partnership each partner has an implied authority to bind his co-partners by acts done within the ordinary course of business, but in an LLP a partner has no such authority, there being no mutual agency between various partners. 6. **Legal compliances.** The responsibility for carrying out the legal obligations as laid down by the LLP Act shall be solely of the 'designated partners' and other partners would not be liable for any omissions in fulfilling the legal obligations. On the other hand, in the case of a partnership every partner would be responsible for carrying out the legal obligations. 7. **Audit.** Section 34(4) provides that the accounts of limited liability partnership shall be audited in accordance with such rules as may be prescribed. In this regard Rule 24(8) of the LLP Rules, 2009 provides that "an LLP whose turnover does not exceed. in any financial year, ₹40 lakhs, or capital contribution does not exceed 25 lakhs shall not be required to get its accounts audited." Only one criterion is prescribed in the case of a partnership firm and it shall not be required to get its accounts audited if its annual turnover does not exceed one crore. 8. **Registration.** A partnership firm may or may not be registered but in the case of a limited liability partnership registration is mandatory. 9. **Filing of statement of account, etc.** Every limited liability partnership shall file within the prescribed time the 'Statement of Account and Solvency' and an 'Annual Return' with the Registrar of Companies each year [Secs. 34(3) and 35]. A partnership firm is not required to file 'Statement of Account and Solvency' or 'Annual Return' with the Registrar of Firms. ## Distinction Between LLP and Limited Liability Company The main points of distinction between a limited liability partnership and limited liability company are as follows: 1. **Regulating Act.** An LLP is regulated by the Limited Liability Partnership Act, 2008, whereas a company is governed by the Companies Act, 2013. 2. **Number of members.** No maximum limit of partners has been laid down by the LLP Act. Similarly, no maximum limit of members is fixed in the case of public company. The maximum number of members of a private company, however, must not exceed 200 excluding members who are or were in the employment of the company. The minimum number of members in a public company is seven and in case of a private company two. In case of a LLP the minimum number of partners is two. 3. **Management.** In the case of a LLP, management rests with those partners (including designated partners) who are authorized by LLP agreement. (As designated partners they are responsible only for legal compliances). But in the case of a company the right to control and manage the business is vested in the Board of Directors elected by the shareholders. Thus the management ownership divide inherent in a company is not there in a limited liability partnership. 4. **Internal governance structure.** A basic difference between an LLP and a company lies in that the internal governance structure of a company is regulated by the Companies Act, 2013, whereas for an LLP it would be by a contractual agreement between partners. LLP will have more flexibility as compared to a company. In the case of LLP, any change either in the business to be conducted or in the manner of functioning could be mutually agreed upon between the partners, documented and filed with the Registrar of Companies. The elaborate procedure prescribed under the Companies Act for changes in the Memorandum and Articles of Association and the restrictions envisaged in the functioning of the Board of Directors have been completely dispensed with. 5. **Transfer of interest.** In the case of a limited liability partnership a partner's economic rights (i.e. right to a share of the profits and losses and to receive contribution at the time of winding up) shall be transferable (Sec. 42). However, such transfer shall not by itself cause the disassociation of the partner and a winding up and dissolution of the LLP. Further, such transfer would not make the transferee a 'partner' of the LLP entitled to participate in its management (Sec. 42). For becoming a partner of LLP, unless otherwise provided in the LLP agreement, consent of all the existing partners is required (Schedule I appended to LLP Act). In the case of a private company also transfer of shares requires the prior permission of the Board of Directors. But in the case of a public company a shareholder can transfer his shares freely without restriction and the transferee succeeds to all the rights of membership. 6. **Audit.** The audit of the accounts of a company is a legal necessity but it is not so in the case of an LLP if the capital contribution does not exceed ₹25 lakhs or if the annual turnover does not exceed 40 lakhs [Rule 24(8) of the LLP Rules, 2009]. ## Nature of Limited Liability Partnership Section 3 deals with the nature and legal character of LLP and declares its three essential attributes: 1. An LLP is a body corporate formed and incorporated under the LLP Act and as such it is a legal entity separate from that of its partners. 2. An LLP shall have perpetual succession. 3. Any change in the partners of an LLP shall not affect the existence, rights or liabilities of the LLP. The above attributes of an LLP have already been elaborated under the foregoing heading: "Characteristics of LLP". Section 4 provides that unless specifically provided, the provisions of the Indian Partnership Act, 1932 shall not apply to a limited liability partnership. ## Incorporation of Limited Liability Partnership ### Name of the LLP Before a limited liability partnership can be incorporated, the persons desirous of forming an LLP should find out the availability of the proposed name from the Registrar of Companies (RoC). Any suitable name can be chosen by an LLP, subject, however, to the following restrictions: 1. Every limited liability partnership shall have either the words "limited liability partnership" or the acronym 'LLP' as the last words of its name. 2. The name chosen must not be undesirable in the opinion of the Central Government or a name which is identical or too nearly resembles to that of any other partnership firm, or limited liability partnership or body corporate or a registered trade mark or a trade mark the application of which is pending. The reason for this rule is that the reputation of a company, LLP or partnership firm may be injured, if a new LLP adopts an allied name. (Sec. 15) Keeping in view the above restrictions, an application for reservation of name with which the proposed LLP is to be registered shall be made to the Registrar of Companies having jurisdiction where the registered office of the LLP is to be situated. It is advisable that six names in order of priority should be submitted to afford flexibility to the Registrar. Where the Registrar informs the applicant about reservation of name with which the LLP is to be registered, such name shall be available for reservation for a period of three months from the date of intimation by the Registrar (Sec. 16). If through inadvertence or otherwise an LLP's name is wrongly registered by a name which, in the opinion of the Central Government, is identical with the name of another existing LLP or body corporate or is undesirable, the Central Government may direct such LLP to change the name and the LLP must comply with the said direction within three months from the date of direction (Sec. 17). An LLP may change its name voluntarily by filing with the Registrar a notice of such change in such form as may be prescribed (Sec. 19). Once the name is chosen and the LLP is registered in that name, Section 21 requires that every LLP shall ensure that its name, address of its registered office, registration number and a statement that it is registered with limited liability is mentioned on all its invoices, official correspondence and publications. ### Incorporation Document (Sec. 11) Two or more persons associated for carrying on a lawful business with a view to earn profit will be required to subscribe their names to an 'incorporation document' for getting a Limited Liability Partnership incorporated. The 'incorporation document' shall be filed in such manner and with such fees, as may be prescribed, with the Registrar of Companies of the State in which the registered office of the LLP is to be situated. Note that an LLP cannot be formed for charitable or non-profit making activities. A 'statement' in the prescribed form shall be filed with the 'incorporation document' stating that all the requirements of the LLP Act and the rules made thereunder precedent to incorporation have been complied with. The 'statement' must be signed by either an advocate, or a Company Secretary or a Chartered Accountant or a Cost Accountant, who is engaged in the formation of the LLP and by any one who subscribed his name to the incorporation document. It may be noted that the 'Incorporation Document' is a public document and it is open to public inspection in the office of Registrar on payment of prescribed fee (Sec. 36). ### Contents of Incorporation Document [Sec. 11(2)] The 'incorporation document' shall be in a form as prescribed in LLP Rules, 2009. It shall contain information regarding the following matters: - Having a common seal, if it decides to have one; and - Doing and suffering such other acts and things as bodies corporate may lawfully do and suffer. Every limited Liability Partnership shall have a registered office to which all communications and notices may be addressed and where they shall be received. The LLP may, in addition to the registered office address, declare any other address as address for service of documents in the manner as laid down in the LLP agreement. Where LLP agreement does not provide for such manner, consent of all the partners will be required for declaring any other address as the address for service for documents (Rule 16 of LLP Rules, 2009). A document may be served on an LLP or a partner or designated partner thereof by sending it by post under a certificate of posting or by registered post or by any other manner as may be prescribed. Rule 15 of LLP Rules, 2009 lays down the following other modes: (i) electronic transmission; (ii) courier. ### Change of Registered Office The LLP may change its registered office from one place to another. The following procedure (as laid down in Rule 17 of the LLP Rules, 2009) is to be followed for effecting the change: 1. The procedure as laid down in the LLP agreement should be followed. Where the LLP agreement does not provide for such procedure, consent of all partners shall be required. However, in case of change of registered office from one State to another State, consent of secured creditors, if any, shall also be required. 2. In case of change of registered office from one State to another State, the LLP shall publish a public notice, at least 21 days before filing any notice of change in Form 15 with the Registrar, in a daily newspaper published in English and local language. 3. Where the change in place of registered office is from one place to another place within the State from the jurisdiction of one Registrar to the jurisdiction of another Registrar or from one State to another State, the LLP shall file the notice in Form 15 annexed to LLP Rules, 2009 with the Registrar from where the LLP proposes to shift its registered office with a copy thereof for the information to the Registrar under whose jurisdiction the registered office is proposed to be shifted. 4. Notice of change of place of registered office shall be filed with the Registrar in Form 15 within 30 days of complying with the procedural requirements stated above along with the requisite filing fee. The change shall take effect only after such filing. 5. Form 15 should be signed by a designated partner and certified by a Company Secretary or Chartered Accountant in practice. This form also provides for applying for allotment of DPIN, if an individual who is to be appointed as a designated partner does not have a DPIN or DIN. The application for allotment shall be allowed to be made by two individuals only. The application for reservation may be made through FiLLiP too. If the name that is applied for is approved, then this approved and reserved name shall be filled as the proposed name of the LLP. ### Step 6: File LLP Agreement After incorporation of LLP, an initial LLP agreement is to be filed within 30 days of incorporation of LLP. The user has to file the information in Form 3 (Information with regard to Limited Liability Partnership Agreement and changes, if any, made therein). With the online registration of LLP on MCA portal, the LLP can be registered within a short time period of 15-20 days. ### Conclusiveness of Certificate of Incorporation [Sec. 12(4)] A Certificate of Incorporation/Registration issued in respect of any LLP shall be conclusive evidence of the fact that the LLP is duly registered by the name specified in the incorporation document. Once the Certificate of Incorporation is issued nothing is to be inquired into as to the regularity of the prior proceedings. Even though the signatories to the 'Incorporation Document' be all infants or their signatures come out to be forged, once the Certificate of Incorporation is issued, the Registrar has no power to revoke or cancel it. The logic of this provision is that once the LLP is held out to the world as LLP ready to contract engagements, then it would be most disastrous if, years after, any person was allowed to show that it was not properly registered. It may, however, be noted that if an LLP having illegal objects has been registered, the illegal objects do not become legal by the issue of the Certificate. But the Certificate would be all the same conclusive and the legal personality of the LLP cannot be extinguished by cancellation of the certificate of incorporation. The remedy in such a case would be 'to wind up' the LLP. ### Effect of Incorporation or Registration (Sec. 14) On obtaining the 'Certificate of Incorporation' the LLP becomes a body corporate, having separate legal entity and perpetual succession. The effect of registration is that, from the date of registration/incorporation given in the Certificate, the LLP shall be capable forthwith of exercising the following powers: - Suing and being sued; - Acquiring, owning, holding and developing or disposing of property, whether movable or immovable, tangible or intangible; ### Penalty for Improper use of Words 'Limited Liability Partnership' or 'LLP' (Sec. 20) If any person or persons carry on business under any name or title of which the word 'Limited Liability Partnership' or 'LLP' is incorporated as word or words, that person or each of those persons shall, unless duly incorporated as limited liability partnership, be punishable with fine which shall not be less than ₹50,000 but which may extend to ₹5 lakhs. ## Objective Type Questions Indicate the best answer in the following questions: 1. Which of the following is required to be filed each year by an LLP - - (a) Annual Return - (c) Directors Report - (b) Statement of Account and Solvency - (d) (a) and (b) above. 2. The liability of partners of an LLP shall be - - (a) Joint and several - (b) Unlimited - (c) Limited to the extent of their investment - (d) Personal liability. 3. An LLP is not required to get its accounts audited if its turnover does not exceed - - (a) 25 lakhs - (c) 60 lakhs - (b) 40 lakhs - (d) 100 lakhs. 4. Name of an LLP must end with the words - - (a) Limited - (c) LLP - (b) Pvt Limited - (d) None of the above. 5. The responsibility of carrying out the legal obligations as laid down by the LLP Act shall be of the - - (a) Partners of LLP - (b) Designated partners of LLP - (c) Any partner mutually agreed upon - (d) Seniormost partner. 6. An LLP cannot be formed for - - (a) Trading activities - (c) Charitable activities - (b) Professional work - (d) Courier service. **[Answers: 1(d), 2(c), 3(b), 4(c), 5(b), 6(c)]** ### Step 2: Acquire/ Register DSC The Information Technology Act, 2000 provides for use of Digital Signatures on the documents submitted in electronic form in order to ensure the security and authenticity of the documents filed electronically. This is the only secure and authentic way that a document can be submitted electronically. As such, all filings done by the LLP(s) are required to be filed with the use of Digital Signatures by the person authorised to sign the documents. **Acquire DSC** - A licensed Certifying Authority (CA) issues the digital signature. Certifying Authority (CA) means a person who has been granted a license to issue a digital signature certificate under Section 24 of the Indian IT-Act 2000. **Register DSC** - Role check can be performed only after the signatories have registered their Digital signature certificates (DSC) with LLP application. ### Step 3: New User Registration To file an eForm or to avail any paid service on