INCORPORATION OF LIMITED LIABILITY PARTNERSHIP- PART-VI - (Change / Publication of Name etc)

[Dr. Sanjiv Agarwal]

Change of registered name

Section 19 of LLP Act, 2008 seeks to provide that an LLP may change its name by filing with the Registrar a notice of such change in such form, and manner and on payment of fee as may be prescribed by the rules.

Section 19 read with Rule 20 of the LLP Rules provides that a limited liability partnership may change its name by following the procedure as laid down in the limited liability partnership agreement. Where the limited liability partnership agreement is silent on this matter, consent of all partners shall be required for changing the name of the limited liability partnership. Notice of change of name shall be given to the Registrar in form 28.  The Registrar on being satisfied that the changed name is the one as reserved by him, issue fresh certificate of incorporation in the new name. On the issue of such certificate, the changed name shall be effective.

Penalty for improper use of words "limited liability partnership" or "LLP"

Section 20 of LLP Act, 2008 seeks to provide for imposition of a fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees in case any person carries on business using the words 'Limited Liability Partnership' or 'LLP' without getting incorporated as LLP.

This section prohibits the use of words Limited Liability Partnership" or "LLP" or any contraction or imitation thereof is or are the last word in the name of an entity which is not registered under the LLP Act. The purpose is to save the sanctity of this suffix so as to only depict that the entity having this suffix is certainly a limited liability partnership. This kind of provision exists in various statues giving a definite status to an entity. In the Companies Act, 1956, analogous provision is Section 631 thereof which reads as under:

"If any person or persons trade or carry on business under any name or title of which the word "Limited" or the words "Private Limited", or any contraction or imitation thereof is or are the last word or words, that person or each of those persons shall, unless duly incorporated with limited liability, or unless duly incorporated as a private company with limited liability, as the case may be, be punishable with fine which may extend to five hundred rupees for every day upon which that name or title has been used."

Similar provisions exist in corporate legislation of UK, Hong Kong and many other countries. Also clause 7 of Schedule I of the UK LLP Act contains the similar provision.

Publication of name and limited liability

Section 21 of LLP Act, 2008 seeks to provide that every LLP shall ensure that its invoices, official correspondence and publications bear the name, address of its registered office and registration number of the LLP and the statement that it is registered with limited liability. It also seeks to provide for imposition of a fine of not less than two thousand rupees which may extend to twenty-five thousand rupees in case the LLP contravenes these provisions.

This section provides that the name of an LLP including the address of the registered office thereof must be mentioned on its invoices, official correspondence and publication.

Section 147 of the Companies Act, 1956 which is analogous to this provision is much wider in its coverage. Sub-section (1) thereof reads as under:

"(1) Every company-

(a) shall paint or affix its name and the address of its registered office, and keep the same painted or affixed, on the outside of every office or place in which its business is carried on, in a conspicuous position, in letters easily legible; and if the characters employed therefor are not those of the language or of one of the languages in general use in that locality, also in the characters of that language or of one of those languages;

(b) Shall have its name engraven in legible characters on its seal; and

(c) shall have its name and the address of its registered office mentioned in legible characters in all its business letters, in all its bill heads and letter paper, and in all its notices and other official publications; and also have its name so mentioned in all bills of exchange, hundies, promissory notes, endorsements, cheques and orders for money or goods purporting to be signed by or on behalf of the company, and in all bills of parcels, invoices, receipts and letters of credit of the company."

A comparison of the two provisions show that a company is required to display its name outside its office, all business letters, bill heads, letter paper, notices, other official correspondence and also on bills of exchange, cheques, hundies…..letter of credit of the company but an LLP may not display its name outside its office.

Further, the expressions 'invoices, official correspondence and publications' used in the LLP provision may include some of the documents like notices, bill heads etc. mentioned in the company provision, but may not include other documents like bill of exchange, cheques etc. However, these are such documents which, by nature, are required to mention the name of the party on whose behalf these are being signed.