The Chartered Accountant

etained in LLP Bill - 2008 and some changes, as
suggested by the Committee, are made in the Bill as
passed by Rajya Sabha.
With the growth of the Indian Economy, the role
played by our entrepreneurs as well as our technical
and professional manpower has been acknowledged
world over. The need for traditional partnership
concept, with limited liability, was felt in order
to enable professional expertise and entrepreneurial
initiative to combine, organise and operate in flexible,
innovative and efficient manner. Concept of
LLP has been accepted in USA, U.K, Australia and
other countries. The new Bill, when enacted, will
provide for an alternative corporate business vehicle
that provides the benefits of limited liability but allows
its members the flexibility of organising their
internal structure as a partnership based on a mutually
arrived agreement. This enactment will come
into force on the date of notification to be issued by
the central government after the Bill is passed by the
Lok Sabha.
Formation of LLP
Any two or more persons can form a LLP for the
purpose of carrying on any business, trade, profession,
service or occupation. Even a limited company,
a foreign company, a LLP, a foreign LLP or a nonresident
can be a partner in LLP. Although there is
no specific mention, a HUF represented by its Karta
can be a partner of LLP. A Co-operative Society or
a corporation sole cannot be a partner of LLP. If
the number of Partners fall below two, the surviving
partner will have to admit at least one more partner
within 6 months. If he does not do so, his liability
will become unlimited and LLP will be wound up.
It may be noted that at least one of the partners
in LLP should be a resident in India. Every LLP
shall have at least two designated partners who are
Individuals. At least one of such designated partner
shall be a resident individual. If all partners of LLP
are corporate bodies, at least two individuals, who
are nominees of corporate bodies, will be designated
DECEMBER 2008 1016 THE CHARTERED ACCOUNTANT
CORPORATE AND ALLIED LAWS
The Incorporation Document will have to be signed by two or more partners
of LLP. This Document will have to be filed with a statement in the prescribed
form signed by an Advocate, a Chartered Accountant, a Company Secretary
or a Cost Accountant who is engaged in the formation of LLP and any one
of the partners who has signed the Incorporation Document. This statement
should state that all the requirements of LLP Act and Rules relating to
incorporation of LLP have been complied with.
as designated partners.
A person who has been found to be of unsound
mind by a court, who is an undischarged insolvent
or who has applied to be adjudicated as an insolvent
and his application is pending, cannot be a partner
of LLP. There is no mention in the Bill whether a
minor can be a partner of LLP. However, it appears
that under the General Law a minor can be admitted
to the benefits of partnership (i.e. LLP).
Every LLP will have to get itself registered with the
Registrar of Companies (ROC). For this purpose,
the LLP will have to file an Incorporation Document
with the ROC of the State in which its Registered
Office is situated. Such Incorporation Document
shall be in such form as may be prescribed and
shall include the following particulars:
(i) Name of LLP
(ii) Proposed business, trade, profession, service
or occupation of LLP
(iii) Address of the Registered Office
(iv) Names and Addresses of each of the partners
of LLP.
(v) Names and addresses of each of the Designated
Partners.
(vi) Such other information as may be prescribed.
The Incorporation Document will have to be signed
by two or more partners of LLP. This Document will
have to be filed with a statement in the prescribed
form signed by an Advocate, a Chartered Accountant,
a Company Secretary or a Cost Accountant
who is engaged in the formation of LLP and any
one of the partners who has signed the Incorporation
Document. This statement should state that all
the requirements of LLP Act and Rules relating to
incorporation of LLP have been complied with. It
will be necessary for LLP to deposit the prescribed
fees with the ROC. On completion of these formali-