Ministry of Company Affairs has placed a Concept Paper on Limited Liability Partnership (LLP) Law in the legislative model, alongwith explanatory notes on chapters, on the website of the Ministry at http://www.dca.nic.in so that all interested may not only express their opinions on the concepts involved but also suggest formulations for the consideration of the Ministry on various aspects of LLP Law.
In view of the increasing role of services sector in the national economy a wider range of disciplines in which such services can be offered and a growing number of professionals, a need has been recognized for a new corporate form, which will enable professional expertise to organize and provide a range of services to the corporate sector in a comprehensive and efficient manner.
This need has also been recognised for small businesses which may require a framework that provides flexibility and is more suited to requirements of service, knowledge and technology based enterprises, without imposing on them detailed legal and procedural requirements intended for large widely held companies.
Keeping in view international developments where a range of services is being offered by professionals/business etc. in the form of Limited Liability Partnerships, suggestions had been received by the Government from time to time to enable a legislation for LLPs.
In the background of the global economic trends which enable investment and services to flow across borders, the growing role of service & knowledge based enterprises and emerging international competition, it is felt necessary to enable Indian entities also to have the requisite choice in corporate organizations to compete internationally on level playing field.
Keeping the above trends in view it is felt desirable to initiate a wide based consultative process that will allow ideas, comments and suggestions to flow-in from all quarters on the proposals for a LLP Law. This exercise would enable the Ministry to work out appropriate legislative proposal on the LLPs that will meet the requirements of India's growing economy in the years to come.
The following are some of the features of the Concept Paper:-
LLP is proposed as a body corporate and separate Legal Entity under a new law. Indian Partnership Act is not applicable to LLPs.
Liability of partners shall be limited except in case of fraud;
Registration of LLP shall be with the Registrar of Companies
Contents of LLP Agreement, as may be prescribed, to be filed with ROC.
Conversion of firm, private company and unlisted public company into LLP allowed
2 minimum partners of LLP and no limit on maximum number of partners
Appointment of a manager must in all LLPs. Manager to be accountable for regulatory and legal compliances
Annual “Declaration of Solvency” to be filed by manager with the ROC
Annual Accounts to be maintained and preserved by LLP for such period as may be specified in rules.
ROC empowered to strike off defunct LLPs
Electronic filing of returns by LLPs would be allowed
Enabling provisions made for extension of Company Law to LLPs.
The views/suggestions/comments are solicited on e-mail at [email protected] or by post addressed to Shri B.M. Anand, Joint Director, M/o Company Affairs, Room No: 539, A Wing, Shastri Bhavan, New Delhi-110001. The comments may be sent latest by 31-12-2005.
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