LIMITED LIABILITY PARTNERSHIP RULES, 2009 - AN OVERVIEW

[Mr. M. GOVINDARAJAN]

Most of the provisions of 'The Limited Liability Partnership Act, 2008 came into effect from 31.3.2009 by means of Notification No.891(E), dated 31.03.2009 issued by the Ministry of Corporate Affairs. In exercise of the powers conferred by Sec. 79 (1) and Sec. 79(2) the Central Government made 'The Limited Liability Partnership Rules, 2009' vide Notification No. GSR 229(E), dated 01.04.2009.

The Rules contain XVIII chapters as detailed below:

Ø      Chapter I - Preliminary - Sections 1 to 5 ;

Ø      Chapter II - Nature of Limited Liability Partnership - Sections 7 to 9;

Ø      Chapter III - Designated Partner's Identification Number - Sections 10;

Ø      Chapter IV - Incorporation of Limited Liability Partnership - Sections 11 to 20;

Ø      Chapter V - Partners and their Relations - Sections 21 & 22;

Ø      Chapter VI - Form of Contribution - Sec. 23;

Ø      Chapter VII - Financial Disclosures - Sections  24 to 26;

Ø      Chapter VIII - Destruction of Old Records - Sec. 27;

Ø      Chapter IX - Investigations - Sections 28 to 31;

Ø      Chapter X - Conversion to Limited Liability Partnership - Sections 32 to 33;

Ø      Chapter XI - Foreign Limited Liability Partnership - Section 34;

Ø      Chapter XII - Compromise, Arrangement or Reconstruction of Limited Liability Partnerships - Section 35;

Ø      Chapter XIII - Electronic filing of documents - Section 36;

Ø      Chapter XIV - Striking of name of defunct LLP - Section 37;

Ø      Chapter XV - Conversion from firm to limited liability partnership - Section 38;

Ø      Chapter XVI - Conversion from private company to limited liability partnership - Section 39;

Ø      Chapter XVII - Conversion from unlisted public company to limited liability partnership - Section  40;

Ø      Chapter XVIII - Compounding of offences - Section 41.

Rules 1 to 31, rules 34 to 37 and rule 41 of these came into effect from 01.04.2009.  Rules 32, 33 and 38 to 40 shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint.  Rules relating to conversion to limited liability have not come into force.

The Rules contains two Annexure as detailed below:

Ø      Annexure A - Fee structure;

Ø      Annexure B - Name of documents to be preserved and period of preservation.

31 forms are prescribed for the purposes of these rules as detailed below, which are to be filed electronically except the forms meant for the use of Registrar of Firms and other authorities:

Form 1 - Application for reservation or change of name;

Form 2 - Incorporation document and statement;

Form 3 - Information with regard to limited liability partnership agreement and changes, if any, made therein;

Form 4 - Notice of appointment of partners/designated partner and changes among them, intimation of DPIN by the LLP to Registrar and consent of partner to become a partner/designated partner;

Form 5 - Notice of change of name;

Form 6 - Intimation of particulars of name or address of a partner/change in such particulars by a Partner to the Limited Liability Partnership;

Form 7 - Application for allotment of designated Partner Identification Number;

Form 8 - Statement of Account & Solvency;

Form 9 - Consent to act as designated partner;

Form 10 - Intimation of changes in particulars by Designated Partners;

Form 11 - Annual Return of Limited Liability Partnership;

Form 12 - Form for intimating other address for service of documents;

Form 13 - Specimen of notice of cessation by a ceasing partner to other partners;

Form 14 - Form for intimating the Registrar of Firms/Registrar of Companies of conversion of firm/company into Limited Liability Partnership;

Form 15 - Notice of Change of place of registered office;

Form 16 - Certificate of incorporation;

Form 17 -  Application and statement for the conversion of a firm into Limited Liability partnership;

Form 18 - Application and Statement for conversion of a private company/unlisted public company into limited liability partnership;

Form 19 - Certificate of Registration on conversion;

Form 20 - Affidavit in support of Summons;

Form 21 - Summons for directions to convene a meeting under Sec.60 (1);

Form 22 - Notice of intimation of Order of Court/Tribunal/CLB/Central Government to the Registrar;

Form 23 - Application for direction to LLP to change its name;

Form 24 - Application to the Registrar for striking off name;

Form 25 - Application for reservation/renewal of name by a foreign company;

Form 26 - Form of Proxy;

Form 27 - Form for registration of particulars by foreign limited liability partnership;

Form 28 - Alteration in the

Ø      Incorporation document, or other instrument constituting or defining the constitution of a limited liability partnership incorporated or registered outside India; or

Ø      Registered or principal office a limited liability partnership incorporated or registered outside India; or

Ø      Partner or designated partner if any of a limited liability partnership incorporated or registered outside India.

Form 29 - A. Alteration in the certificate of incorporation or registration of limited liability partnership incorporated or registered outside India;

B. Alteration in the name or address of any of the persons authorized to accept service on behalf of a foreign limited liability partnership in India;

C. Alteration in the principal place of business of foreign limited liability partnership in India;

D. Cessation to have place of business in India;

Form 30 - Certificate for establishment of place of business in India;

Form 31 - Application for compounding of an offence under the Act.

Maximum of the provisions of these Rules are derived from the provisions of Singapore Law and some provisions of United Kingdom and some of that Japan law. The rules mainly prescribe the forms to be used and the procedures thereof.

The forms prescribed are mostly akin to the forms for companies to file with Registrar of companies. Rules 28 prescribes the amount of security payable for the purpose of Sec.43(3) to file an application by the partners to investigate into the affairs of the limited liability partnership, for an amount calculated on the following scale but not exceeding twenty five lakh rupees, for payment of costs of the investigation:

Turnover (Rs.) (as stated in the Statement of Account of Solvency for the immediately preceding financial year)	Amount of Security
(i) Up to 1 crore	2 lakhs
(ii) 1 Crore or more but less than 5 crores	5 lakhs
(iii) 5 crores or more but less than 10 crores	10 lakhs
(iv) 10 crore or more	25 lakhs

In the absence of Statement of Account and Solvency for the preceding financial year, such amount of security may be fixed by the Central Government.

Chapter XIII elaborately discuss the procedure for electronic filing of documents and the arrangements made by the Central Government in this regard. 

The long awaited form of business viz., Limited Liability Partnership is given life at present. Merits, demerits, benefits as well as discrepancies may be there in the course of LLP. Litigations may arise in interpreting the provisions of the Act and Rules.  However we have to make the optimum utilization of the provisions of Act and Rules.