Limited liability partnership is serving as one of the highly preferred choice of company registration. Do you have queries on it? Here is a complete information that will solve your needs. Read now and go to register llp online.
- What is the liability of a partner in an LLP?
1.1. The obligations of an LLP, whether arising from contractual arrangements or otherwise, are solely their own. A LLP’s obligations must be met through its property. A limited liability partnership agreement limits a partner’s liability, except in the case of fraud, to his or her contribution to the LLP.
1.2. Partners act as agents only of the LLP, not of other partners. Partners can be held liable for wrongful acts or omissions committed as part of the LLP’s business or with the permission of the LLP. If the person dealing with the LLP is aware that the partner does not have the necessary authority to handle an action on behalf of the LLP, the LLP will not be liable for such acts.
- Who can be a designated partner?
2.1. A designated partner in an LLP can be any partner. When a body corporate is a partner in an LLP, it can appoint individuals as nominees to act on its behalf as designated partners. A body corporate’s nominees will act as designated partners in an LLP where all the partners are body corporates.
2.2. An individual can be a designated partner if he or she:
As a designated partner, he or she has provided prior consent;
A company that has not been adjudicated insolvent for the past five years;
The company has not suspended payments to creditors or negotiated a compromise in the last five years;
Has not been convicted for any crime involving moral turpitude and has not been imprisoned for more than six months for such an offense;
The LLP has not been convicted by the court of any offence involving the intent to defraud its creditors or any other person, or for acting fraudulently or conducting its affairs in a fraudulent way.
- What are the statutory obligations and liabilities of a designated partner?
3.1. An LLP must have at least two designated partners. In an LLP, at least one of the designated partners should reside in India, that is, the person should have resided in India for at least 182 days during the previous year.
3.2. A designated partner is responsible for all acts required by an LLP to comply with the LLP Act, including filing documents, returns, statements, or reports. In the event of non-compliance with these acts, the designated partner will be liable for penalties imposed on the LLP.
3.3. According to the LLP Act, a designated partner must comply with the following obligations:
On behalf of the LLP, sign the annual statement of accounts and solvency;
A notice relating to any change in information relating to partners of the LLP, including the admission of new partners or the cessation of existing partners, should be signed and authenticated; and
Making sure any order passed by a tribunal relating to a compromise, arrangement, or reconstruction is duly filed with the RoC.
3.4. In addition to statutory obligations, the limited liability partnership agreement may specify additional responsibilities for the designated partners or allow partners to delegate power to designated partners.
- Can an existing partnership firm be converted to LLP?
4.1. By complying with the provisions of the LLP Act, an existing partnership firm can be converted into an LLP if all of the partners of the existing partnership firm are included in the partnership firm so converted.
4.2. To make such an application, file Form 17 and FiLLiP (incorporation form) with the RoC. A statement from each partner should also be included in the application in the format prescribed in Form 17. After approval, the RoC will issue a certificate of registration.
4.3. Following conversion, the converted LLP must inform the registrar of firms with which it was registered of the conversion and the particulars of the new LLP within 15 days.
4.4. Any existing agreement or contract or pending proceeding or continuance of conviction, ruling, order or judgment that the partnership firm was a part of prior to conversion, continues to apply to the converted LLP. Further, each partner of the partnership firm that has been converted into an LLP shall continue to be personally liable for the liabilities and obligations of the partnership firm that were incurred prior to the conversion or arising from any contract entered into prior to the conversion.
- Can a company be converted into an LLP?
5.1. Under the LLP Act, private limited companies and unlisted companies can be converted into LLPs.
5.2. A private limited company or an unlisted company can convert into an LLP only if:
The assets of the company do not have any security interests in them at the time of application, and the shareholders of the company become the only partners of the new LLP.
5.3. Before the RoC, Form 18 and FiLLiP (incorporation form) should be filed for this purpose. A statement of the shareholders of the applicant company should also accompany the Form 18.