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Posted by on Feb 8, 2014 in LLP Act |

Highlights of LLP Act 2008 (Part 2)

Financial Disclosure (Section 34-41)   

  • Every LLP shall maintain records or books of account and make a statement of account or solvency within 6months of end of a financial year. Also LLP shall file an annual return within 60 days of end of a financial year with duly authenticated by registrar in such manner as may be prescribed.
  • Any LLP contravenes with above provision can be fined from 25000 to 5lakh rupees and designated partner of such LLP can be fined from 10k to 1lakh rupees.
  • All above document include changes in incorporation document shall available for inspection with Registrar in manner/fees as may be prescribed. If any person make any false statement or try to remove any material then he shall be liable for imprisonment up to 2 yrs and fine up to 5lakh rupees.

Transfer of Partnership Rights (Section 42)

  • Every partner who has share in LLP can transfer his rights either wholly or in part as case may be. But transferee may not have rights to participate in management of LLP.

Investigation (Section 43-54)

  • The Central govt/Tribunal either Suo motto or on an application of at least 1/5 partners of LLP can appoint inspectors for investigation into affairs of LLP either in creditors or partners interest as case may be. No Firm, body corporate or other association can be appointed as an inspector.
  • On behalf of Inspector report, Central govt may file a petition to Tribunal for winding up of LLP and start proceedings in public interest for recovery of damages made by such LLP with expenses of Investigation incurred by govt itself.

Conversion into LLP (Section 55-58, 2nd, 3rd & 4th Schedule)

  • A Partnership firm, Private Limited and Unlisted Public company may convert into LLP as per provisions in Second, Third and Fourth Schedules respectively such as :-
    • In case of Firm, all partners of LLP shall comprise of all partners of firm.
    • In case of Private or unlisted public Company, there shall be no security interest subsisting in assets of company at time of application and partners of LLP shall comprise all the shareholders of the company.
    • To convert into LLP all partners shall file a statement and incorporation document to Registrar in manner as provided under this act or may be prescribed. The Firm/company may proceed to court or tribunal if registrar refused for conversion into LLP.
    • Every Partner shall be personally liable for all obligation incurred before conversion into LLP.

Compromise, Arrangement or Reconstruction of LLP’s (Section 60-62)

  • The Tribunal on application of LLP/Partners/creditors or in case of wound up can call a meeting of creditors/partners as case may be for any compromise proposed only b/w LLP or Partners/creditors.
  • If 3/4th members in meeting agree for compromise and sanctioned by Tribunal then compromise shall be binding on all creditors or partners as case may be.

Winding up or Dissolution of LLP (Section 63-65)

  • A LLP may be wound by Tribunal in cases such as:-
    • If LLP voluntary decides for wound up.
    • If number of partners are less than 2 for period of more than 6 months.
    • If LLP is unable to pay debts and make any false statement of account or solvency.
    • If LLP has acted against interests of sovereignty & integrity of India or security of State.

Miscellaneous (Section 66-81)

  • The Central Govt shall apply any provisions of companies act to LLP act by notification but shall be laid them before Parliament for approval.
  • The Provisions of this act in addition to and not in derogation of the provisions of any other law for the time being in force (Section 71).
  • The Tribunal has power of jurisdiction in matters as provided under this act and aggrieved can proceed to Appellate Tribunal against reward of Tribunal as specified in Companies Act. But notwithstanding to provisions of any act, Judicial Magistrate of 1st class has power to trial of any offence under this act.
  • The Registrar can strike through name of any LLP from register on reasonable grounds under this act by giving reasonable opportunity of being heard.

The Central have power to amend schedules and power to make any rules under this act.

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