INCORPORATION OF LIMITED LIABILITY PARTNERSHIP

[Mr. M. GOVINDARAJAN]

INTRODUCTION:

     Sec.2 (d) of the Limited Liability Partnership Bill 2008 ('Bill' for short) includes the limited liability partnership registered under the Limited Liability Partnership Act in the definition of a body corporate.  Chapter III of the bill provides for the incorporation of the limited liability partnership. 

INCORPORATION DOCUMENT:

     Sec. 11(1) provides that for incorporation of a limited liability partnership, two or more persons associated for carrying on a lawful business with a view to profit shall subscribe their names to an incorporation document.   The incorporation document shall-

Be in a form as may be prescribed;

·  State the name of the limited liability partnership;

·  State the proposed business of the limited liability partnership;

·  State the address of the registered office of the limited liability partnership;

·  State the name and address of each of the persons who are to be partners of the limited liability partnership of incorporation;

·  State the name and address of the persons who are to be designated partners of the limited liability partnership on incorporation;

·  Contain such other information concerning the proposed limited liability partnership as may be prescribed.

Besides there shall be filed along with the incorporation document, a statement in the prescribed  form, made by either an advocate or a Company Secretary or a Chartered Accountant or a Cost Accountant, who is engaged in the formation of the limited liability partnership and by any one who subscribed his name to the incorporation document, that all requirements of this Act and the rules made there under have been complied with, in respect of incorporation and matters precedent and incidental thereto.  The incorporation document is similar that of the document prescribed for the companies to be registered under the Companies Act, 1956.  The Companies Act provides that the Memorandum and Articles of the Association shall be accompanied along with the incorporation document.   Even though the bill provides for the limited liability partnership agreement, the same is not made compulsory to file along with the incorporation document.  The partnership agreement is necessarily to be filed along with the incorporation document.  The Government has to consider this aspect while giving shape this bill as an act.

NAME OF LIMITED LIABILITY PARTNERSHIP:

     Every limited liability partnership shall have either the words 'limited liability partnership' or the acronym 'LLP' as the last words of its name.  No limited liability partnership shall be registered by a name which, in the opinion of the Central Government is-

Undesirable; or

·  Identical or too nearly resembles to that of any other partnership firm or limited liability partnership or body corporate or a registered trade mark, or a trade mark which is subject of an application for registration, of any other person under the Trade Marks Act, 1999.

As like in the Companies Act, the name is to be reserved for limited liability partnership.  A person may apply in such form and manner and accompanied by such fee as may be prescribed to the Registrar for the reservation of a name set out in the application as-

The name of a proposed limited liability partnership; or

·  The name to which a limited liability partnership proposes to change its name.

Upon receipt of an application and on payment of prescribed fee, the Registrar may, if he is satisfied, subject to the rules prescribed by the Central Government in the matter, that the name to be reserved is not one which may be rejected on any ground reserve the name for a period of three months from the date of intimation by the Registrar.

REGISTERED OFFICE:

     Every limited liability partnership shall have a registered office to which all communications and notices may be addressed and where they shall be received.   A document may be served on a limited liability partnership or a partner or designated partner thereof by sending it by post under a certificate of posting or by registered post or by any other manner, as may be prescribed, at the registered office and any other address specifically declared by the limited liability partnership for the purpose in such form and manner as may be prescribed.

DESIGNATED PARTNERS:

     Every limited liability partnership shall have at least two designated partners who are individuals and at least one of them shall be a resident in India.  In case of a limited liability partnership in which all the partners are bodies corporate or in which one or more partners are individuals and bodies corporate, at least two individuals who are partners of such limited liability partnership or nominees of such bodies corporate shall act as designated partners.    If the incorporation document specifies who are to be designated partners, such person shall be designated partners on incorporation, or states that each of the partners from time to time of limited liability partnership is to be designated partner, every partner shall be a designated partner. 

     An individual shall not become a designated partner unless he has given his prior consent to act as such to the limited liability partnership in such form and manner as may be prescribed.  His consent shall be filed with the Registrar by the limited liability partnership in such form and manner as may be prescribed within thirty days of his appointment.   An individual eligible to be a designated partner shall satisfy such conditions and requirements as may be prescribed. 

INCORPORATION:

     The incorporation document shall be filed in such manner and with such fees, as may be prescribed with the Registrar or the State in which the registered office of the limited liability partnership is to be situated.  The incorporation document may also be filed electronically.  The Registrar under the Companies Act shall be Registrar for this purpose.

     When all the requirements have been complied with the Registrar shall retain the incorporation document and register the incorporation document and give a certificate that the limited liability partnership is incorporated by the name specified therein.  The Registrar may accept the statement filed along with the incorporation document as sufficient evidence that the requirements have been complied with.   The certificate shall be signed by the Registrar and authenticated by his official seal.   The certificate shall be conclusive evidence that the limited liability partnership is incorporated by the name specified therein.

EFFECT OF REGISTRATION:

     On registration, a limited liability partnership shall by its name, be capable of-

Suing and being sued;

·  Acquiring, owning, holding and developing or disposing of property, whether moveable or immovable, tangible or intangible;

·  Having a common seal, if it decides to have one; and

·  Doing and suffering such other acts and things as bodies corporate may lawfully do and suffer.

CONCLUSION:

     The process of incorporation of a limited liability partnership is the simplified one and the professionals may play a vital role in this work.  The professionals are to be careful in making the statement which is to be attached with the incorporation document since the bill provides for punishment.  The bill provides that if a person makes a statement which he knows to be false or does not believe to be true shall be punishable with imprisonment for a term which may extend to two years and with fine which shall not be less than ten thousand rupees but which may extend to five lakh rupees.