Frequently asked questions on LLP

1.How should a Stamp Duty for LLP Agreement be paid?

The Stamp Duty payable for LLP Agreement is subject to which state the LLP is incorporating and the Stamp duty is applicable to the State Stamp Act of that State. Stamp duty for LLP Agreement should not be paid on MCA Portal. Till the time specific Stamp Duty is prescribed in respective Stamp Act, the Stamp duty on LLP Agreement may be paid as per the stamp duty payable on partnership agreement in view of the Finance Bill, 2009.

2.What are the rights and duties of a Designated Partner of an LLP

Mutual rights and duties of the members are governed by the agreement between the partners or between the LLP and its partners subject to the provisions of the LLP Act 2008. The act provides flexibility to devise the agreement as per their choice. In the absence of any such agreement, the mutual rights and duties shall be governed by the provisions of proposed the LLP Act.

3.Is Foreign Direct Investment is allowed in LLP?

Foreign Direct Investment is approved under the automatic route where 100% FDI is permitted. In Electronic System Design & Manufacturing( ESDM ) Sector 100% FDI is allowed in LLP under the government route is approved, however an investment in manufacturing of defense electronics and Brownfield investments in medical devices making are not allowed. In a Government Route, the applications are considered by the Foreign Investment Promotion Board (FIPB).

4.Can a Foreign LLP establish a business in India?

Foreign LLP can establish a place of business in India by filing Form 27 giving the particulars of incorporation of foreign LLP, details of Designated Partners of that foreign LLP and details of at least two authorised representatives for complying with regulation of LLP act.

5.Is it possible for a Foreign Entity to reserve a name for a long period as per LLP Act?

A foreign entity can reserve a name by filing an application in Form 25. The name will be reserved in system for a period of three years and an application for renewal of name should be filed before the expiry of three years. In case of renewal of name, the name should be reserved for a further period of three years after renewal date.

6.How to convert an existing partnership to LLP

An existing partnership firm can be converted into LLP by complying with the Provisions of clause 58 and Schedule II of the LLP Act. Form 17 needs to be filed along with Form 2 for such conversion and incorporation of LLP. Similarly, an existing company can be converted to an LLP by filing Form 18 along with Form 2.

7.Is it mandatory to end an LLP Company with LLP?

As per the LLP Naming Guidelines, Name of the LLP shall end with either ‘Limited Liability Partnership’ or ‘LLP'

8.Is it possible to incorporate an LLP with a Designated Partner and a Body Corporate as another Partner.

Appointment of at least two “Designated Partners” shall be mandatory for all LLPs. Every LLP shall be required to have at least two Designated Partners who shall be individuals and at least one of the Designated Partner shall be a resident of India. In case of an LLP 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 LLP or nominees of such bodies corporate shall act as designated partners.

9.What if, the number of Partners of an LLP exceeds 200

As per the Act, there is no restriction in the maximum number of partners for incorporation of LLP. However, while filing Form-2, it have the limit of entering 200 partner names only. In this case, Filing of addendum to Form 2 with Form 2 or addendum to Form 4 with Form 4 is required to be filed if the Total number of designated partners and partners for which the Form is filed exceed 200.

10. Is it mandatory to register LLP Agreement with RoC?

As per Section 2(0) & (q), 22 and 23 of the Act, it is mandatory to execute and file LLP Agreement. As per provisions of the LLP Act, in the absence of agreement as to any matter, the mutual rights and liabilities shall be as provided for under Schedule I to the Act. Therefore, in case any LLP proposes to exclude provisions/requirements of Schedule I to the Act, it would have to enter into an LLP Agreement, specifically excluding applicability of any or all paragraphs of Schedule I

11. What all documents an LLP is required to file annually?

LLP is required to file Statement of Account & Solvency and Annual Return annually on prescribed forms LLP Form 8 and Form 11 respectively. As per the norms, Annual Return has to be filed within 60 days of end of financial year and Statement of Accounts & Solvency to be filed within 30 days from the end of six months of the financial year to which it relates.

12. What is the term Statement of Accounts & Solvency related to

As per the Act, an LLP is required to file Statement of Accounts & Solvency in prescribed LLP Form 8. The Form consists of a declaration on the state of solvency of the LLP by the designated partners and also information related to statement of assets and liabilities and statement of income and expenditure of the LLP. This form has to be filed by the LLP on an annual basis.

Related Articles