Meaning of LLP-Limited liability Partnership
LLP-Limited Liability Partnership means it is a partnership with the benefit of limited liability of a company. In this type of partnership firm, the partner’s liability is only up to the maximum limit of his agreed contribution. In a traditional partnership firm, the liability of partners is unlimited and all the partners are liable for all acts of the firm done by any partner .
It is a separate legal entity separate from its partners, can sue or be sued. LLP can enter into contracts and can acquire property in its name. Changes in partners do not affect its existence, rights and liabilities, it can continue its function as usual. It has perpetual succession.
One of the main features of LLP is that liability created by wrongful decisions or misconduct of a partner will not bring any liability/obligations on other partners. But as a separate legal entity, it is liable for its other obligations.
Here in the case of LLP, provisions of Partnership Act 1932 shall not apply. It is a combination of a company and partnership firm, governed by “The Limited Liability Partnership Act. 2008”. The registration of LLP with ROC is mandatory.
Numbers of Partners in a LLP-Limited Liability Partnership:
Every LLP should have minimum two partners and at least one of them shall be a resident of India. Here resident in India refers to a person who has stayed in India for a period of not less than 182 days during the immediately preceding one year. There is no maximum limit for partners in LLP. LLP’s operational area, Partner’s rights and duties are determined in an agreement executed between the partners or between the partners and the LLP.
Every designated partner should obtain a Designated Partner Identification Number (DPIN) from the Central Government and the provisions of Sections 266A to 266G (both inclusive) of the Companies Act, 1956 shall apply mutatis mutandis for the said purpose.
Designated partners are responsible for all acts, matters and things which are required to be done by the limited partnership in respect of the compliance of the provision of the act. And/or in case of violation of the provisions they are liable to all penalties imposed on the limited liability partnership.
If the partners/partnership firm violates the provisions of the act, the limited partnership and its partners are punishable with a fine.
All partners should have the Pan Card.
Every Limited liability Partnership should have a registered office to which all communications and notices may be addressed/received.
Every Limited Liability Partnership should incorporate the words “limited liability partnership” or “LLP” as the last words of its name.
No Limited Liability Partnership shall register its name which is undesirable as per Central Government and it as should not be identical or resemble the name of any other partnership firm or Limited Liability partnership, body corporate or a registered trademark, etc.
Books of accounts of LLP:
All LLP’s should maintain proper books of accounts. LLP should file its Annual Returns with the Registrar of Companies every year. As per the rule 24 of LLP, Rules 2009 if the turnover of LLP in a financial year is 40 lakhs & above or/and contribution exceeds 25 lakhs rupees, books of accounts are required to be audited. It is the responsibility of designated partners to appoint auditors at any time for the first financial years but within 30 days before the end of the financial year. And if designated partners fails in appointing the auditors within the prescribed time, then the partner have the right to appoint the auditors.
Requirements for opening a LLP’s Current Account in a Bank:
- Permanent Account Number (PAN) in the name of LLP.
- Certificate of incorporation issued by ROC.
- Registered office address proof.
- LLP Agreement.
- Board Resolution.
- PAN, address proof and Photos of all partners AND,
- Any other document if required by bank.
For identity or address proof of the partners of LLP-Limited Liability Partnership, partners can submit following documents :
- Aadhar Card
- Pan Card
- Passport
- Voter’s ID
- Driving License
- Electricity Bill or any other Utility bills
- Lease agreement
- Tax Documents
- Bank Statements and/ or
- any other documents issued by statutory authorities etc.
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