Buisness laws and it's inside content

Anirudh gupta

(K.R Mangalam university, sohna road, gurugram)

 

Introduction to Limited liability partnership (llp)

Meaning and Concept of LLP

A Limited Liability Partnership or LLP is an alternative corporate business form which offers the benefits of limited liability to the partners at low compliance costs. It also allows the partners to organize their internal structure like a traditional partnership. A limited liability partnership is a legal entity, liable for the full extent of its assets. The liability of the partners, however, is limited. Hence, LLP is a hybrid between a company and a partnership.

Foreign llp

Foreign Limited Liability Partnership: A LLP formed, incorporated or registered outside India which establishes a place of business within India. ... Partner: Partner means any person who becomes a partner in the LLP in accordance with the LLP agreement.

How foreign llp is formed?

 

The form used for incorporation is FiLLiP(Form for incorporation of Limited Liability Partnership) which shall be filed with the Registrar who has a jurisdiction over the state in which the registered office of the LLP is situated. The form will be an integrated form. Fees as per Annexure 'A' shall be paid.

 

Can foreign company become partner in llp?

 

Yes, a NRI or Foreign National can be a Designated Partner in a Limited Liability Partnership after obtaining Designated Partner Identification Number(DPIN). However, atleast one Designated Partner in the LLP must be a Resident India.

 

 

Is Foreign direct investment(FDI) allowed in llp?

 

FDI is permitted under the automatic route in LLPs operating in sectors / activities where 100% FDI is allowed through the automatic route and there are no FDI linked performance conditions. FDI in LLP is subject to the compliance of the conditions of Limited Liability Partnership Act, 2008.

 

Can  non- resident of india(NRI) become partner in llp?

 

Yes a NRI can be a partner in a LLP. Since the liberisation of FDI through LLP route from 2015, LLPs can be formed with 100% foreign investments from NRIs and Foreign entities in areas where 100% FDI is allowed. If you want to register a LLP with and want to take a NRI as a partner, you can do so.

 

 

Can a foreign company be a partner in llp?

 

Yes, a NRI or Foreign National can be a Designated Partner in a Limited Liability Partnership after obtaining Designated Partner Identification Number(DPIN). However, atleast one Designated Partner in the LLP must be a Resident India

 

 

Winding Up of Foreign llp

A llp winding up can be initiated voluntarily or by striking off or by a Tribunal. If a llp is to initiate winding up voluntarily, then the llp must pass a resolution to wind up the llp with approval of at least three-fourths of the total number of Partners. If the llp has lender's, secured or unsecured, then the approval of the lenders would also be required for winding up of the llp.

To begin the process for winding up of llp, a resolution for winding up of llp must be passed and filed with the Registrar within 30 days of passing of the resolution. On the date of passing of resolution of winding up of  llp, the voluntary winding up shall be deemed to commence. IndiaFilings can help you wind up your llp quickly and easily.

Voluntary Winding Up

llps can also be wound-up easily with the approval of 3/4th of the partners. To start the liquidation process for a llp, a greater part of the designated partners, will have to make a declaration that the llp has no debt or that it will be competent to pay the debts in full within a period of not more than 1 year from the start of winding up. Further, the llp partners must declare that the llp is not being wound up to defraud any person or persons. This declaration for winding up of the llp must be prepared along with a statement of assets and liabilities until the most recent practicable date right before the making of declaration for winding up. A valuation of the assets related to the llp prepared by a valued must also be submitted, if there are assets in llp. Voluntary winding up will be deemed to start on the date of passing of resolution for the reason of voluntary winding up. 

Striking Off

The Ministry of Corporate Affairs has recently amended Limited Liability Partnership Rules, 2009 by introducing the Limited Liability Partnership (Amendment) Rules, 2017 with effect from 20th May, 2017. With this amendment, llp Form 24 has been introduced by the MCA and it is now possible to easily close a llp by making an application to the Registrar for striking off name of llp. Before the introduction of the Limited Liability Partnership (Amendment) Rules, 2017, the procedure for winding up a llp used to be long and cumbersome. However, with the introduction of llp Form 24, the procedure has been made easy and simple. 

Winding Up by Tribunal

Winding up of llp can be initiated by a Tribunal for the following reasons:

1. The llp wants to be wound up.
2. There are less than two Partners in the llp for a period of more than 6 months.
3. The llp is not in a position to pay its debts.
4. The llp has acted against the interests of the sovereignty and integrity of India, the security of State or public order.
5. The llp has not filed with the Registrar Statement of Accounts and Solvency or llp Annual Returns for any five consecutive financial years.
6. The Tribunal is of the opinion that it is just and equitable that the llp should be wound up.

Reasons to Wind Up llp

 

Avoid Compliance

A LLP is a legal entity and a juristic person requiring regular maintenance of compliance throughout its lifecycle. LLP winding up can be used close a LLP that is not active and avoid compliance responsibilities.

 

Avoid Fines

A LLP that doesn't file its compliance on time incurs fines and penalty, including debarment of the Partners from starting another LLP or Company.

 

Easy to Close

The formalities for winding up of a dormant LLP are relatively simple and easy to complete. Hence, its best to close an inactive LLP at the earliest.

 

Low Cost

LLPs can be wound up easily through IndiaFilings for just Rs.15899. On the other hand, a dormant LLP or non-compliant LLP could potentially acquire more penalty, if compliance is not maintained every year.

 

Easy Process

The Ministry of Corporate Affairs has simplified the process for liquidation or winding up of LLP through various initiatives. Hence, akin to incorporation, a LLP can be wound up easily with minimal procedural requirement.

 

 

 

 

 

 

References-

1. www.legalwiz.in
2. m.rbi.org.in
3. www.quora.com
4. www.taxmanagmentindia.com
5. www.toppr.com
6. indiafilling.com