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