The Limited Liability Partnership (LLP) Act, 2008 is a significant piece of legislation in India that provides for the formation and regulation of limited liability partnerships in the country.
Important provisions of the LLP Act:
- Definition of Limited Liability Partnership: The LLP Act defines a limited liability partnership as a partnership in which the liability of the partners is limited to the extent of their capital contributions in the LLP.
- Formation of LLP: The LLP Act provides for the formation of an LLP by filing an application with the Registrar of Companies (ROC) along with the necessary documents and fees. The LLP can be formed with a minimum of two partners, and there is no limit on the maximum number of partners.
- Designated Partners: The LLP Act requires the LLP to have at least two designated partners who are responsible for complying with the provisions of the Act. The designated partners are also responsible for maintaining the books of accounts, filing the necessary returns with the ROC, and ensuring compliance with tax laws.
- Liability of Partners: The LLP Act provides that the liability of the partners in an LLP is limited to the extent of their capital contributions. This means that the personal assets of the partners cannot be used to pay off the debts of the LLP.
- Management of LLP: The LLP Act provides for the management of the LLP by the partners or by a designated partner who is authorized by the partners. The Act also provides for the appointment of a manager or a CEO to manage the day-to-day affairs of the LLP.
- Taxation: The LLP Act provides for the taxation of LLPs as separate legal entities. The LLP is required to file its income tax return separately from the partners.
- Conversion of Partnership into LLP: The LLP Act provides for the conversion of a partnership firm into an LLP by filing an application with the ROC. The partners of the partnership firm become partners of the LLP, and the assets and liabilities of the partnership are transferred to the LLP.
- Winding up of LLP: The LLP Act provides for the winding up of an LLP in case of insolvency or on the decision of the partners. The winding-up process is governed by the provisions of the Act.