- CA SUDHIR HALAKHANDI

E-mail – This e-mail address is being protected from spambots. You need JavaScript enabled to view it

The author of this article is a chartered accountant and widely published writer on the VAT, service Tax and Income tax and has written more than 300 articles on these three different subjects of Tax in almost all the top tax journals of the country including CTR, TAXMANN, CAPJ, Service Tax Today, Service Tax Journal and ICAI CA Journal. At present he is regular columnist for TAXMANN. The article of the author “Goods and service Tax – An Introductory Study” published in ICAI CA Journal in April 2007 is still considered to the only descriptive article available on the much talked subject of Goods and service Tax. The author can be reached at This e-mail address is being protected from spambots. You need JavaScript enabled to view it

1. The LLP shall be a body corporate and a legal entity separate from its partners. Any two or more persons, associated for carrying on a lawful business with a view to profit, may by subscribing their names to an incorporation document and filing the same with the Registrar, form a LLP. The LLP will have perpetual succession.

 

2. The mutual rights and duties of partners of an LLP inter seand those of the LLP and its partners shall be governed by an agreement between partners or between the LLP and the partners subject to the provisions of the proposed legislation. The Bill provides flexibility to devise the agreement as per their choice. In the absence of any such agreement, the provisions of law shall govern the mutual rights and duties.

 

3. The LLP will be a separate legal entity, liable to the full extent of its assets, with the liability of the partners being limited to their agreed contribution in the LLP, which may be of tangible or intangible nature or both tangible and intangible in nature. No partner would be liable on account of the independent or un-authorized actions of other partners or their misconduct.

4. Every LLP shall have at least two partners and shall have at least two individuals as Designated Partners, of whom at least one shall be resident in India. The duties and obligations of Designated Partners shall be as provided in the law.

5. The LLP shall be under an obligation to maintain annual accounts reflecting true and fair view of its state of affairs. A statement of accounts and solvency shall be filed by every LLP with the Registrar every year. The accounts of LLPs shall also be audited, subject to any class of LLPs being exempted from this requirement by the Central Government.

6. The Central Government shall have powers to investigate the affairs of an LLP, if required, by appointment of competent inspector for the purpose. 

7. The law would confer powers on the Central Government to apply such provisions of the Companies Act, 1956 to provide, inter-alia, for mergers, amalgamations, winding up and dissolutions of LLPs, as appropriate, by notification with such changes or modifications as deemed necessary. However, such notifications shall be laid in draft before each House of Parliament for a total period of 30 days and shall be subject to any modification as may be approved by both Houses.

8. The Indian Partnership Act, 1932 shall not be applicable to LLPs. Other entities may convert themselves to LLP in accordance with provisions of law.

9. The Central Government shall have powers to make rules for carrying out the provisions of the proposed legislation.