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