INTRODUCTION OF THE LIMITED LIABILITY PARTNERSHIP ACT, 2008
1. LIMITED LIABILITY PARTNERSHIP-MEANING AND CONCEPT
Meaning A LLP is a new form of legal business reality with limited liability. It's an indispensable commercial business vehicle that not only gives the benefits of limited liability at low compliance cost but allows its mates the inflexibility of organising their internal structure as a traditional cooperation. The LLP is a separate legal reality and, while the LLP itself will be liable for the full extent of its means, the liability of the mates will be limited.
LLP as a separate legal reality and business organisation is an indispensable commercial business form that gives the benefits of limited liability of a company and the inflexibility of cooperation.
Since LLP contains rudiments of both‘a commercial structure’as well as‘a cooperation establishment structure LLC is called a mongrel between a company and a cooperation.
Important Delineations
1. Body Commercial ( ( Section 2 (d)) It means a company as defined in section 3 of the Companies Act, 1956 ( now Companies Act, 2013) and includes
(i) a LLP registered under this Act;
(ii) a LLP incorporated outside India; and
(iii) a company incorporated outside India, but doesn't include
(i) a pot sole;
(ii) a united society registered under any law for the time being in force; and
(iii) any other body commercial (not being a company as defined in section 3 of the Companies Act, 1956 or a limited liability cooperation as defined in this Act), which the Central Government may, by announcement in the Official Gazette, specify in this behalf.
2. Business ( Section 2 (e)) “ Business” includes every trade, profession, service and occupation.
3. Designated Partner ( Section 2 (j)) “ Designated mate” means any mate designated as similar pursuant to section 7.
4. Reality ( Section 2 (k)) ‘’ Reality” means any body commercial and includes, for the purposes of sections 18, 46, 47, 48, 49, 50, 52 and 53, a establishment setup under the Indian Partnership Act, 1932.
5. Financial Year ( Section 2 (l)) “ Fiscal time”, in relation to a LLP, means the period from the 1st day of April of a time to the 31st day of March of the ensuing time.
Still, in the case of a LLP incorporated after the 30th day of September of a time, the fiscal time may end on the 31st day of March of the time next following that time.
The Income Duty department has specified invariant fiscal time from 1st April to 31st March of coming time. In keeping with the Income duty law, the fiscal time for LLP should always be from 1st April to 31st March each time.
6. Foreign LLP ( section 2 (m)) It means a LLP formed, incorporated or registered outside India which establishes a place of business within India.
7. Limited liability cooperation ( Section 2 (n)) Limited Liability Partnership means a cooperation formed and registered under this Act.
8. Limited Liability cooperation agreement ( Section 2 (o)) It means any written agreement between the mates of the LLP or between the LLP and its mates which determines the collective rights and duties of the mates and their rights and duties in relation to that LLP.
9. Partner ( Section 2 (q)) Partner, in relation to a LLP, means any person who becomes a mate in the LLP in agreement with the LLP agreement.
Non-applicability of the Indian Partnership Act, 1932 ( Section 4) Save as else handed, the vittles of the Indian Partnership Act, 1932 shall not apply to a LLP.
Mates ( Section 5) Any existent or body corporate may be a mate in a LLP. Still, an individual shall not be able of getting a mate of an LLP, if —
(a) he has been plant to be of unsound mind by a Court of competent governance and the finding is in force;
(b) he is an undischarged insolvent; or
(c) he has applied to be arbitrated as an insolvent and his operation is pending.
Minimal number of mates ( Section 6)
(i) Every LLP shall have at least two mates.
(ii) If at any time the number of mates of a LLP is reduced below two and the LLP carries on business for further than six months while the number is so reduced, the person, who's the only mate of the LLP during the time that it so carries on business after those six months and has the knowledge of the fact that it's carrying on business with him alone, shall be liable tête-à-tête for the scores of the LLP incurred during that period.
Designated mates ( Section 7)
(i) Every LLP shall have at least two designated mates who are individualities and at least one of them shall be a occupant in India.
(ii) If in LLP, all the mates are bodies commercial or in which one or further mates are individualities and bodies commercial, at least two individualities who are mates of similar LLP or appointees of similar bodies commercial shall act as designated mates.
(iii) Resident in India For the purposes of this section, the term “ occupant in India” means a person who has stayed in India for a period of not lower than 182 days during the incontinently antedating one time.
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