Ease of doing business through Limited Liability Partnership

1. Ease of doing business through LimitedLiability Partnership taxguru.in/corporate-law/ease-business-limited-liability-partnership.html May 21,2022 Concept of Limited LiabilityPartnership: “Limited Liability Partnership= Limited Liability + Partnership” Governing Statute: The Limited Liability Partnership Act,2008 The concept of Limited Liability in Partnership is arrived from the Companies where the shareholders are liable to the extent of amount unpaid towards the shares held by them, which came into existence in 1897 through a Landmark judgement: Salomon v Salomon & Co Ltd. The same kind of protection is also given to the Limited Liability Partnership wherein the designated partners are not personallyliable. Pros of Forming a Limited LiabilityPartnerships: Separate LegalEntity Perpetual Succession ( change in partners do not affect the rights and existenceof LLP) Minimum 2 Partners required ( one of whom should be resident inIndia) Lesser and simplicity in compliance compared toCompany Flexibility in operations ( as LLP is bound by the agreement , the partners haveright to choose the clauses in theagreement) Audit is not mandatory if threshold limits does not cross 40 lakh rupees inany financial year or contribution does not exceed 25 lakhrupees The Profit will be taxed to the LLP separately & not to the Partners whichavoids double taxationissues.

2. Small Limited Liability Partnership: Limited Liability Partnership (Amendment) Act, 2021 introduced the concept of Small Limited Liability Partnership (Section 2(1)(ta)) means a Limited Liability Partnership in which the total contribution does not exceed rupees twenty five lakhs ANDthe turnover as per the statement of Accounts and solvency for the immediately preceding yeardoes not exceed rupees fortylakhs. Noteworthy: To come under the ambit of Small Limited Liability Partnership, both contribution and turnover criteria has to besatisfied. Important Amendments under Limited Liability Partnership Amendment Act,2021 which brought ease in doing business: Limited Liability Partnership (Amendment) Act, 2021 dated 13th August,2021 which is effective from 1st day of April, 2022 brought in the following major provisions to facilitate the ease in doing business and promote forming of new Limited LiabilityPartnerships. 1. Decriminalization of Offences:Under the following sections, the offences are decriminalized, this is a welcome move and great boost to the start-ups and the small businesses to change their business set up from Sole proprietorship to LLP form. Such decriminalisation is aimed at removing fear of criminal prosecutions fornon-substantive and minoromissions. Section of Principal Description Act Section 10: Punishment for contravention of Sections 7, 8 and9 While completely omitting contravention under Section 8,the Amendment Act, decriminalizes punishments underSections 7 and 9 which deal with general obligations of designated partners Section 13:Registered office of LLP and changetherein Contravention pertaining to registered office of the LLPand changetherein Section 17: Changeof name ofLLP Failure to comply with the directions of theCentral Government in relation to change of name ofLLP Section 21:Publication of name and limited liability Failure to display basic information regarding LLPon invoices, official correspondences, andpublications Section 25 – Registration of changes inpartners Failure to notify the Registrar regarding changes inthe partners of the LLP within stipulatedtime

3. Section 34 – Maintenance of books of account, other records, and auditetc. Failure of compliance with respect to maintenance ofbooks of accounts as prescribed and filing of a Statement of Account and Solvency within a period of 6 months from the end of each financialyear Section 35 –Annual return Non-filing of Annual Return with the Registrar within 60days of closure of its financialyear Section 60 – Compromise, or arrangement ofLLPs Non-filing of the Order passed by the NCLT with theRegistrar within the prescribedtime Section 62 – Provisions for facilitating reconstruction or amalgamation ofLLPs Non-filing of the Order passed by the NCLT with theRegistrar within the prescribedtime Section 74 –General penalties General penal provision for instances where no penalty or punishment is provided for contravention under thePrincipal Act . Recognition to Start-up Limited Liability Partnerships: – Limited Liability Partnership (Amendment) Act, 2021 has given the power to Central Governmentto recognise certain LLPs as Start- upLLP. . Reduced Penal Fees for delay in filing of forms: To promote ease in doing business, the Ministry has reduced the penalty from Rs. 100 per day of delay to slab based system for all the forms except Form 8 and Form 11. Filing fee for Small LLP isRs. 50 and other LLPs is Rs.150. Form 8 and 11 LLPs the normal filing fees is determined based on the contribution ofthe LLP and in case of Small LLPs: For delay in filing Form 8 and Form 11 beyond 360days :- 15 times normal filing fees plus Rs. 10 per day for every day delay beyond 360days. In case of other LLPs: For delay in filing Form 8 and Form 11 beyond 360 days :- 30times normal filing fees plus Rs. 20 per day for every day delay beyond 360days Keeping in mind the small and growing business, this kind of reduced penalties and change in penalty rates will result in lot of savings for the entrepreneur in case theymiss out thetimelines. Conclusion: The article aims to highlight on advantages of forming a Limited Liability Partnershipand some important amendments which were brought out through the Limited Liability (Amendment) Act, 2021 towards ease of doingbusiness. Tags:LLP Kindly Refer to PrivacyPolicy& Complete Terms of Use andDisclaimer.

4. AuthorBio Name: KavithaJain Qualification: CS Company: N/A Location: CHENNAI, Tamil Nadu,India Member Since: 20 May 2022 | Total Posts:1 This is CS Kavitha Jain, Practising Company Secretary from Chennai, into CorporateLaw Practice and advisory since 2017. View FullProfile Join Taxguru’s Network for Latest updates on Income Tax, GST, Company Law, Corporate Laws and other related subjects. Join us onWhatsapp GROUPLINK Join us onWhatsapp GROUPLINK Join us onWhatsapp

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