The Chartered Accountant

CORPORATE AND ALLIED LAWS
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 non-resident 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.
ties, the ROC has to register the document and issue
a Registration Certificate within 14 days.
A LLP, upon incorporation, will be treated as a body
corporate and will be considered as a legal entity separate
from that of its partners. It shall have a common
seal and a perpetual succession. Any change in
the partners of LLP shall not affect the existence,
rights or liabilities of LLP. Every LLP will have to
use “LLP” as the last words of its name.
It will be possible for any LLP to change its objects,
its name or registered office, to admit new partners
or delete the names of partners who have resigned,
to make changes in the Designated Partners etc. For
this purpose, LLP will have to execute supplementary
deed and to file the prescribed particulars with
ROC.
The procedure for obtaining the name of LLP is the
same as for obtaining the name for a limited company.
Application for this purpose is to be made to
ROC and the prescribed fee is to be paid. The ROC
has to ensure that the name selected by LLP is not
identical or too nearly resembles to the name of any
other partnership or LLP or a corporate body or a
registered trade mark. It may be noted that this
particular requirement will be difficult to comply
with if the name of LLP is to be compared with
the name of any other Partnership Firm all over
the country. Firstly, there is no central database
for names of partnership firms as the law relating
to partnerships is administered by the State Governments.
At present, there are several partnership
firms with identical names. Therefore, it will be difficult
to determine whether there is a partnership
firm will identical name in the country.
Any entity (including a Firm), which already has
a name similar to the name of a LLP which has
been incorporated subsequently, can approach
the ROC objecting to the name of LLP. Such application
can only be made within 24 months from
date of registration of LLP. If ROC is satisfied with
the objection, he can direct the LLP to change its
name. For this purpose, ROC will have to give
hearing to the LLP.
Section 11 of the Companies Act provides that
no company, association or partnership consisting
of more than 20 persons shall be formed for the
purpose of carrying on a business unless it is registered
under the Companies Act or is formed in
pursuance of some other Indian Law. For banking
business, the above restriction applies with reference
to 10 or more persons. It may be noted that the LLP
Act is a Central legislation. This restriction for number
of partners will not apply for carrying on any
business, trade, profession, service or occupation if
the partnership is registered as LLP. In other words,
LLP with more than 20 persons can be formed by
Chartered Accountants for carrying on profession as
Management Consultants. Similarly, LLP with unlimited
number of partners can be formed for carrying
on any business or profession.
relationship of Partners
Upon Registration of LLP, the partners will have to
enter into a partnership agreement in writing. This
agreement will determine the mutual rights and
duties of the partners and their rights and duties
in relation to the LLP. Persons who have signed
the Incorporation Document as Partners along
with other persons can execute this Partnership
Agreement. This partnership agreement is required
to be filed with ROC and prescribed fees should
be paid as provided in the Rules. Whenever there
are changes in the terms and conditions of the
partnership, LLP has to file the details of the
change in the prescribed form with ROC and pay
the prescribed fees for the same. If the partnership
agreement is executed before registration of LLP,
the partners will have to ratify this agreement after
incorporation of LLP and file with ROC. Similarly,
each partner has to inform the LLP about
change of his name or address within 15 days
and the LLP has to file notice of such change
with ROC within 15 days.
THE CHARTERED ACCOUNTANT 1017 DECEMBER 2008