Business activities of
LLP cannot CAN be Manufacturing or allied activities as per LLP Act
A Limited Liability Partnership (“LLP”) is a body corporate
formed and incorporated under the Limited Liability Partnership Act, 2008
(“Act”), and it is a legal entity separate from its partners, having perpetual
succession, and unlike sole proprietorship any change in the partners of the
LLP shall not affect the existence, rights or liabilities of the LLP.
Why one should go for LLP??
Benefits of LLP
1) Easy to register
2) Just like a PLC, LLP
is also a body corporate, which means it has its own existence as compared to
partnership firm
3) LLP exists as a
separate legal entity from its partners. Liability for repayment of debts and
lawsuits incurred by the LLP lies on the LLP itself
4) LLP has perpetual
succession and continue to exist till its wound up in accordance with the
provisions of the relevant law
5) LLP is flexible to
manage
6) LLPs are not subject
to Dividend Distribution Tax, so no taxes are applicable upon distribution of
profits among the partners, as is required in case of dividend distribution by
a PLC
7) LLP is not required to
get its accounts audited, which is a mandatory requirement for PLC
8) As compared to a PLC,
LLP has relatively lesser compliance requirements
They were majorly formed for small business purposes
specifically related to Service Sectors. But professionals have always faced
dilemma for the fact that whether ‘Manufacturing’ can be a part of
LLP Business or not?
For this MCA had issued internal
clarification dated 6th March, 2019 stating that the
Manufacturing Companies cannot carry on its business under the tag of LLP,
But the new news is
that MCA has withdrawn the clarification and with this, LLP’s can be
incorporated for the purpose of Manufacturing Activity,
Moreover if you are a
company engaged in manufacturing activity and willing to convert your company
into LLP then you may proceed with this.
If we go through the provisions of section 2(1)(e) of the LLP
Act, 2008 we see that “business includes every trade, profession, service and
occupation”,
Authors View:-
The Definition given under section 2(1)(e) is INCLUSIVE ONE, i.e. the terms such as
“Trade”, “Profession”, “Service”, “Occupation” are presented here as the
example of what Business includes, there
is no where mentioned that Manufacturing CANNOT be a Business undertaken by LLP,
All the Limited Liability Partnerships are registered with
Registrar of Companies (ROC) in India. It is type of business structure with
easy compliance as it is a mix of features of Partnership firm and Limited
Liability company.
Effect of this clarification:- the Central Registration Centre (“CRC”) can if all other
requirement are satisfied, allow the incorporation of LLP or Conversion to
LLP’s where proposed business is Manufacturing or allied activities. So if you
are a company engaged in manufacturing and wish to convert the company
structure to LLP, NOW YOU CAN PROCEED.
Other requirements for LLP Incorporation:
1. Designated Partner Identification Number (DPIN)
2. Digital Signatures (DSC)
3. Proposed Designated Partners
4. LLP Name
To know more about how
to select name, please go through our article as below;
5. Registered Office
6. LLP Agreement
Compliances required to be done for LLP
1. Annual ROC Compliances
of LLP
Every LLP registered have to file returns for the year
ending 31st March of the FY. Filings are mandatory whether
the LLP has done any business or not.
The following are the returns to be filed by
the LLP for the year ended 31st March of the FY
Form 11 (Annual Return) due date is 30th May
every year
Form 8 (Accounts) due date is 30th October every
year
2. Event based Compliances of LLP
i.
Appointment of
Designated Partner
ii.
Cessation of
Designated Partner
iii.
Amendment in Initial
LLP Agreement
iv.
Changes in Main
objects of LLP
v.
Changes in Profit
Sharing Ratio
vi.
Increase in
Contribution of LLP
This has diversified the business area
of LLP’s, opening up more opportunities for manufacturing industries
This comment has been removed by the author.
ReplyDeleteGet your Private limited Company registration in gurgaon with in 5 - 8 working days.
ReplyDeleteAn LLP structure is appropriate for enterprises with a small number of employees (if any) and a few partners, each of whom contributes equally to the company, have similar rights and obligations, and contribute a proportionate share of the income. There are various advantages to forming your company as a limited liability partnership (LLP). Please call +91 8929218091 if you have any questions regarding LLP company registration in Noida .
ReplyDelete