The Chartered Accountant

e converted into a LLP by following this simplified
procedure stated above. Such partnership
firms and companies, after such conversion, will
not be required to comply with the provisions of
the Partnership Act or the Companies Act.
Winding Up of LLP
A LLP can be wound up voluntarily. In the alternative,
it can be wound up by the National Company
Law Tribunal (Tribunal) under the following circumstances:
(i) If LLP decides that it be wound up by the
Tribunal.
(ii) If for a period of more than 6 months
the number of partners of LLP is reduced
below two.
(iii) If the LLP is unable to pay its debts.
(iv) If the LLP has acted against the interests
of the sovereignty and integrity of India,
the security of the State or Public order.
(v) If the LLP has made a default in filing
with ROC the statement of Account and
Solvency or annual return for any five
consecutive financial years.
(vi) If the Tribunal is of the opinion that is
just and equitable that the LLP be wound
up.
The Central Government is authorised to make
Rules providing for the procedure for winding up
and dissolution of any LLP.
Some Procedural Provisions
The LLP Act is divided into 14 Chapters. There
are 81 sections and Four Schedules. The ROC has
been given powers to regulate the working of
LLPs. For this purpose, certain documents are
required to be filed with ROC and filing fees will
have to be paid. Some of the important proce-
DECEMBER 2008 1024 THE CHARTERED ACCOUNTANT
CORPORATE AND ALLIED LAWS
LLP Act is silent regarding taxation of LLP under the Income tax Act. Since
the basic structure is that of a partnership and the only difference is that
the liability of partners is limited, it is possible that under the Income tax
Act LLP will be recognised as a ‘Firm’. In that case LLP will be taxed at
the rate applicable to a ‘Firm’ and deduction for interest to partners and
remuneration to partners will be allowed as provided in section 40 (b) of the
Income tax Act.
dural provisions of the LLP Act are as under:
(i) ROC has power to conduct inspection of
documents.
(ii) ROC has power to call for information
from LLP.
(iii) ROC can conduct investigation of the
affairs of LLP. Detailed provisions are
made in sections 43 to 54 of the LLP
Bill.
(iv) The Central Government has power to
make Rules for provisions in relation to
establishment of place of business by a
Foreign LLP in India and for carrying on
its business as LLP in India.
(v) The Central Government can notify the
provisions of Companies Act which may
apply to any LLP.
(vi) The Central Government may make Rules
for electronically filing of documents with
ROC.
(vii) If there is delay in filing any statement or
document with ROC, the same can be filed
with default fee of Rs.100 for every day of
delay.
(viii) The procedure for reference of matters to
the Tribunal as contained in the Companies
Act will apply to LLP also.
(ix) LLP Act provides for levy of fine for
defaults in filing information, documents,
statement, annual return etc. with ROC.
This fine can be between Rs.10,000 to
Rs.5,00,000.
(x) If any LLP is not carrying on any business
or its operations in accordance with
LLP Act, the ROC has power under
section 75 to strike off the name of such