TMI BlogNotes on clausesX X X X Extracts X X X X X X X X Extracts X X X X ..... rporate having perpetual succession and a legal entity separate from its partners and any change in the partners of such partnership shall not affect its liabilities. Clause 4.- This clause seeks to provide that the provisions of the Indian Partnership Act, 1932 shall not apply to an LLP. Clause 5.- This clause seeks to provide that an individual or a body corporate may become a partner in an LLP. The clause also indicates the disqualifications which will prohibit an individual to become a partner of any LLP. Clause 6.- This clause seeks to provide that an LLP shall consist of at least two partners and also provides that in a situation where the number of partners is reduced to one and such LLP carries on business with such sole partner for more than six months and then such partner, if having knowledge of such a situation, shall be liable personally for the obligations of the LLP. Clause 7.- This clause seeks to provide that an LLP shall have at least two designated partners who shall be individuals and at least one of them shall be resident in India. This clause also seeks to provide that an individual shall not become a designated partner in any LLP unless he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by any person, knowing it to be false, or not believing it to be true, which shall not be less than ten thousand rupees and may extend to five lakhs rupees and also for imprisonment for a term which may extend to two years. Clause 12.- This clause seeks to provide for registration of incorporation document of LLP and issue of a certificate of its incorporation by the Registrar. The said clause indicates that the certificate of registration shall be conclusive evidence that the LLP is incorporated by the name specified therein. Clause 13.- This clause seeks to provide that every LLP shall have a registered office to which all communications will be made and received. It also seeks to provide for mode of serving the documents to LLP and intimating the change of the address of the registered office in the prescribed manner and subject to prescribed conditions to the Registrar. This clause further seeks to provide for penalties of not less than two thousand rupees which may extend to twenty-five thousand rupees in case the LLP contravenes the provisions of this clause. Clause 14.- This clause seeks to provide that LLP shall be a body corporate and can sue and be sued, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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. Clause 21.- This clause 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. Clause 22.- This clause seeks to provide that the persons who subscribe their names to the incorporation document shall be partners of LLP and any other person may also become partner of the LLP in accordance with its agreement. Clause 23.- This clause seeks to provide that the mutual rights and duties of the partners of the LLP inter se and that of the LLP and its partners shall be governed by the LLP agreement and in absence of any such agreement, such mutual rights and duties shall be determined as set out in the First Schedule of the Bill. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct or otherwise will solely be the obligation of LLP. It also seeks to provide that liabilities of LLP are to be met from the property of LLP. It further seeks to provide that LLP shall be liable for a wrongful act or omission by a partner in the course of the business of the LLP or with its authority. Clause 28.- This clause seeks to provide that the partner is not personally liable directly or indirectly for an obligation of LLP solely by reason of his being a partner of the LLP. It further seeks to provide that the obligation of an LLP shall not affect the personal liability of a partner for his own wrongful act or omission but a partner shall not be personally liable for wrongful act or omission of any other partner. Clause 29.— This clause seeks to provide that any person, who by words spoken or written or by conduct, represents himself, or knowingly permits himself to be represented to be a partner in any LLP is liable to any person who has on the faith of any such representation given credit to the LLP, whether the person representing himself or represented to be a partner does or does not know that the representation has reached the person so giving credit. It al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Clause 32.— This clause seeks to provide various kinds in which contributions may be made by partners of an LLP and the manner in which such contributions shall be valued and disclosed in the accounts of the LLP. Clause 33.— This clause seeks to provide that obligation of a partner to make contribution shall be as per the LLP Agreement. The clause further seeks to provide that a creditor of an LLP may enforce the original obligation against any partner of the LLP without notice of any subsequent compromise between partners. Clause 34.— This clause seeks to provide for requirement relating to maintenance of proper books of account by the LLP relating to its affairs for each year and for filing of an annual Statement of Account and Solvency with the Registrar in such form and manner as may be prescribed. This clause seeks to empower the Central Government to prescribe rules for the manner in which the accounts of LLPs shall be audited. It also seeks to empower the Central Government to grant exemption to any class or classes of LLPs from audit requirement. It also seeks to provide for imposition of a fine of not less than twenty-five thousand rupees but which may ext ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39.— This clause seeks to provide for empowering the Central Government to compound any offence under this Bill which is punishable with fine by collecting a sum not exceeding the amount of maximum fine prescribed for such offence. Clause 40.— This clause seeks to empower the Central Government to prescribe by rules the manner in which the Registrar may destroy any document filed or registered with him by the LLPs. Clause 41.— This clause seeks to provide that in case any LLP is in default in complying with the provisions relating to filing with the Registrar of any return, account or other document or giving of any notice to him, the Registrar may make an application before the Tribunal for making an order for directions in order to make good the default within a time frame. Clause 42.— This clause seeks to provide that the rights of a partner to a share of the profits and losses of the LLP and to receive distributions shall be transferable in accordance with the LLP agreement and such transfer shall not by itself cause the disassociation of the partner or a dissolution and winding up of the LLP. The clause further seeks to provide that such transfer would not ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter seeking permission from the Judicial Magistrate of the First Class or Metropolitan Magistrate in this regard, if he has reasonable cause that the partner of such LLP or other entity may destroy, mutilate, alter, falsify or secret the documents. The clause also seeks to empower inspector to keep such books and papers in his custody for a period not exceeding six months for investigation and return the same, after needful is done, to the concerned entity or person and inform the Magistrate of such return. Clause 49.— This clause seeks to provide that an inspector investigating an LLP may, and if so directed by the Central Government, shall make interim reports to that Government in relation to an investigation carried out by him. It further seeks to provide that on conclusion of the investigation, a final report shall be made to the Central Government by the inspector. This clause further seeks to provide that the Central Government shall forward a copy of the report other than an interim report to the concerned LLP or related entity or persons. A copy of such report may also be furnished to any person or entity related to or affected by the report on the request and on pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vered by such LLP or other entity during investigation. The clause further seeks to provide that the amount of expenses in respect of which any LLP, other entity, a partner or designated partner or any other person is liable to reimburse to the Central Government shall be recoverable as arrears of land revenue. The clause further seeks to provide that any costs or expenses incurred by the Central Government or in connection with proceedings for recovery of damages or property brought by virtue of this Bill shall be treated as expenses of the investigation. Clause 54.— This clause seeks to provide that a copy of any report of any inspector appointed under this Bill, authenticated in a manner as may be prescribed by rules, shall be admissible in any legal proceeding as evidence in relation to any matter contained in the report. Clause 55.— This clause seeks to provide that a firm may convert into a LLP in accordance with the provisions contained in Chapter X and the Second Schedule. Clause 56.— This clause seeks to provide that a private company may convert into a LLP in accordance with the provisions contained in Chapter X and the Third Schedule. Clause 57.— This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... modifications in the compromise or arrangement, as it may consider necessary, for the proper working of the compromise or arrangement. The said clause further seeks to provide that if the Tribunal is satisfied that a compromise or an arrangement sanctioned cannot be worked satisfactorily, it may make an order for winding up of the LLP. Clause 62.— This clause seeks to provide that where an application is made to the Tribunal for sanctioning of a compromise or arrangement which relates to reconstruction of any LLP or LLPs, or the amalgamation of any two or more LLPs and under a scheme the whole or any part of the undertaking, property or liabilities of any LLP concerned in the scheme is to be transferred to another LLP, the Tribunal may, either by the order sanctioning the compromise or arrangement or by a subsequent order, make provisions for matters like transfer to the transferee LLP of the whole or any part of the undertaking, property or liabilities of any transferor LLP, the continuation by or against the transferee LLP of any legal proceedings pending by or against any transferor LLP; the dissolution, without winding up, of any transferor LLP; the provision to be ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal fees of one hundred rupees for every day of such delay in addition to any fees as is payable for filing of such document or return. The clause also provides that such document or return may, without prejudice to any other action or liability under this Act, also be filed after such period of three hundred days on payment of fees and additional fees specified in this section. Clause 70.— This clause seeks to provide that in case a LLP or any partner or designated partner of such LLP commits any offence, the LLP or any partner or designated partner shall, for the second or subsequent offence, be punishable with imprisonment as provided, but in case of offence for which fine is prescribed either along with or exclusive of imprisonment, with fine which shall be twice the amount of fine for such offence. Clause 71.— This clause seeks to provide that other laws are also applicable to the LLP in addition to the provisions of this Bill and their application is not barred. Clause 72.— This clause seeks to provide that the Tribunal shall discharge such powers and perform such functions as are, or may be, conferred on it by or under the provisions of this Bill or any other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notification in respect of such alteration shall be laid before both the Houses of Parliament. Clause 79.— This clause seeks to confer upon the Central Government the power to make rules for carrying out the provisions of this Bill. The clause seeks to enumerate the various matters in respect of which such rules may be made. The clause further seeks to provide that every rule made under the provisions of this Bill is required to be laid before both the Houses of Parliament. Clause 80.— This clause seeks to confer power upon the Central Government to make provision, by order published in the Official Gazette, to remove difficulties which may arise in giving effect to the provisions of this Bill and such order to be issued only within a period of two years from the date of the commencement of this Bill. The clause seeks to provide that the orders made under this clause shall be required to be laid before both the Houses of Parliament. Clause 81.— This clause seeks to provide that until the Tribunal and the Appellate Tribunal are constituted under the provisions of the Companies Act, 1956, the provisions of this Bill shall have effect subject to the following modificat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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