Taxmann's LLP Ready Reckoner

Chapter-Heads

PA GE

Contents I-7

Section Index I-21

CHAPTER 1 : OVE RVI E W OF LLP ACT 1

CHAPTER 2 : I NC ORP ORATI ON OF LLP 25

CHAPTER 3 : PA RT NE R A ND DESI GNAT E D PA RT NE R 58

CHAPTER 4 : LLP A GREE ME NT 84

CHAPTER 5 : ACC OUNTS , A UDI T A ND A NNUAL RET URNS OF LLP 110

CHAPTER 6 : ROUTI NE MA NA GE ME NT OF LLP 116

CHAPTER 7 : A D MI NI S T RATI VE C ONT ROL OVE R LLP 122

CHAPTER 8 : C O MP RO MI S E A ND A RRA NGE ME NT 135

CHAPTER 9 : W I NDI NG UP A ND S T RI KE OFF DEF UNCT LLP 146

CHAPTER 10 : I NVES TI GATI ON OF AFFAI RS OF LLP 151

CHAPTER 11 : OFF E NCES , P UNI S H ME NTS A ND P E NALTI ES 160

CHAPTER 12 : OT HE R P ROVI SI ONS I N RESP ECT OF LLP 178

CHAPTER 13 : TA XATI ON OF LLP 188

CHAPTER 14 : F OREI GN DI RECT I NVES T ME NT I N LLP 196

CHAPTER 15 : OVE RS EAS I NVES T ME NT BY LLP 200

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APPENDICES

Li m i t e d Li a bili t y Part ners hi p Act, 2008 207

Li m i t e d Li a bili t y Part ners hi p Rul es, 2009 265

Li m i t e d Li a bili t y Part ners hi p ( A me nd me nt) Act, 2021 306

SUBJECT INDEX 319

OVERVIEW OF LLP ACT

1.1 I nt r o d ucti o n 1 1.1-1

Ri gi di t y i n Co mpa ni es Act 2 1.1-2 LLP i s i de al bl e nd of part ners hi p a nd c o mpa ny 3 1.1-3 Bac kgr o und of LLP Act 3 1.1-4 Over vi e w of c o nt e nt s of LLP Act 4 1.1-5

H i g hli g ht s of LLP at a gl a nce 5 1.1-6 Appli c ati o n of ot her l a ws not barr e d 6 1.1-7 LLP Act a ppli es t o whol e of I ndi a 6 1.1-8 LLP Rul es 6 1.1-9 So me Pr ovi si o ns of Co mpa ni es Act a ppli c a bl e t o LLP 7 1.1-10 Rece nt maj or c ha nges i n LLP La w 7 1.1A Co nsti t uti o nal bac kgr o und of LLP 9

1.2 Basi c f e at ur es of LLP 9 1.2-1

Me a ni ng of per pet ual s uccessi o n 11 1.2-2 LLP c a n be c o nsti t ut e d f or pr of essi o n as well as t r a de / ma n uf act ur e 12 1.2-3

CA , C MA a nd CS c a n f or m LLP 12 1.2-4 Me a ni ng of ‘ e nti t y ’ 12

1.4

1.2-5

LLP i s a s e par at e ‘ pers o n ’ 12 1.2-6

The c as e of Sal o mo n a nd Sal o mo n 13 1.2-7 Bo dy Cor por at e 14 1.2-8

For mati o n of ‘ Bo dy Cor por at e ’ 16 1.2-9

J uri sti c pers o n 16 1.2-10

La ws t o f acili t at e f or mati on of ‘ c or por at e bodi es ’ 17 1.2-11

Adva nt ages of a ‘ bo dy c or por at e ’ 17 1.2-12

Li a bili t y of part ners a nd LLP of fir mt o pay GS T 18

1.3 S mall li m i t e d li a bili t y part ners hi p 19

Co mpari s o n of LLP w i t h fir m a nd c o mpa ny f or m of b usi ness or ga ni s ati o n 19 1.4-1

Co mpari s o n bet wee n t r a di ti o nal part ners hi p a nd LLP 19 1.4-2

Co mpari s o n bet wee n c o mpa ny a nd LLP 22 2

INCORPORATION OF LLP

2.1

I nt r o d ucti o n 25

2.1-1

I nc or por ati o n doc u me nt 25 2.1-2

Co nt e nt s of i nc or por ati o n doc u me nt 26 2.1-3

Puni s h me nt f or f al s e st at e me nt whil e i nc or por ati ng LLP 26

2.1-4

Pr oce d ur e f or I nc or por ati o n of LLP at a gl a nce 26

2.2 Na me of LLP 27

2.2-1

Res er vati o n of na me of LLP 27

Cri t eri a f or a ppr oval of na me 28 2.2-2A

2.2-2

Res er vati o n of na me 28 2.2-3

2.2-4

2.2-5

2.2-6

Cri t eri a f or a ppr oval of na me of a LLP 30

Obt ai ni ng c o ns e nt of ot her c o mpa ni es i n gr o up f or usi ng gr o up na me i n na me of a LLP 32

Fr ee na me s e ar c h f acili t y 33

Filli ng For m RUN- LLP - Appli c ati o n f or r es er - vati o n of na me of LLP 33

2.2-7

Encl os ur es t o f or m RUN- LLP 34

2.3 Cha nge of na me 35

2.3-1

Appli c ati o n f or c ha nge of na me by LLP/ bo dy c or por at e i f ot her LLP c o nsti t ut e d w i t h si mil ar na me 35

Recti fic ati o n of na me of LLP 36 2.3-3

2.3-2

Pe nal t y f or i mpr oper us e of wor ds “li m i t e d li a - bili t y part ners hi p” or “ LLP” 38 2.3-4

Publi c ati o n of na me a nd li m i t e d li a bili t y 38

2.3A I nc or por ati o n doc u me nt 39 2.3A-1 Pr oce d ur e wher e i nt e ndi ng part ner i s a bo dy c or por at e 39 2.3A-2

Fees paya bl e at t he i nc or por ati o n a nd f ees f or fili ng a ny doc u me nt 40 2.3A-3

I ncr e as e i n ‘ Co nt ri b uti o n ’ of LLP 40

2.4 Re gi st er e d of fice of li m i t e d li a bili t y part ners hi p a nd c ha nge t her ei n 40

2.5

2.6

2.4-1

Ser vi ng of doc u me nt o n LLP 41 2.4-2 Cha nge of r e gi st er e d of fice of LLP 41 2.4-3

Pe nal t y f or vi ol ati o n of pr ovi si o ns r el ati ng t o r e gi st er e d of fice 42

Obt ai ni ng DI N f or desi g nat e d part ners 43 2.5-1

Pr oce d ur e aft er a ppr oval of DI N 43 2.5-2

Post- a ppr oval c ha nges i n parti c ul ars of DI N 43 2.5-3

Pr ovi si o ns of Co mpa ni es Act, 2013 a ppl y 43 2.5-4

Pr oce d ur e f or o bt ai ni ng DI N a nd KYC 45 2.5-5

Fili ng DI R- 3- KYC or DI R- 3- KYC- WE B e ver y fina nci al ye ar by e ver y di r ect or 46

Di gi t al Si g nat ur e Certi fic at e ( DS C) 47

2.6-1

Certi f yi ng Age nci es a ut hori s e d t o i ss ue DS C 48 2.6-2

Re gi st r ati o n of DS C a nd r ol e- c hec k 48 2.6-3

Pr oce d ur e f or r e gi st r ati o n of DS C 48

2.7

Fili ng i nc or por ati o n doc u me nt 50

Re gi st r ati o n of us er 49 2.8

2.8-1

Det ail s r el ati ng t o part ners 50 2.8-2

I nf or mati o n i f part ner i s LLP , c o mpa ny, f or ei g n LLP or f or ei g n bo dy c or por at e 51

2.9 Busi ness of LLP 51

2.10 Nu mber of pers o ns t o i nc or por at e LLP 52

2.11 St at e me nt a bo ut c o mpli a nce 53

2.12 St a mp d ut y paya bl e o n LLP i nc or por ati o n doc u me nt 53 2.12-1 E- pay me nt of st a mp d ut y 53 2.12-2 Fili ng f ee f or i nc or por ati o n doc u me nt 53

2.13 Fili ng of i nc or por ati o n doc u me nt 54 2.13-1 Encl os ur es t o f or m Fi LLi P [ For m f or i nc or por ati o n of Li m i t e d Li a bili t y Part ners hi p] 55 2.13-2 Chec kli st of doc u me nt s t o be fil e d f or i nc or por ati o n of LLP 55

2.14

Certi fic at e of i nc or por ati o n w i t h LLPI N 55 2.14-1 I nc or por ati o n by r e gi st r ati o n 56 2.14-2 Me a ni ng of c o ncl usi ve e vi de nce 56 2.14-3

Certi fic at e of i nc or por ati o n does not me a n all o bj ect s ar e l e gal 57 2.14-4 Eff ect of r e gi st r ati o n of LLP 57

3

PARTNER AND DESIGNATED PARTNER

3.1

Ma nage me nt of LLP 58 3.1-1

Part ner c a n bi nd LLP b ut not ot her part ners 59 3.1-2

Busi ness t r a ns acti o n bet wee n part ner a nd LLP 59 3.1-3

Busi ness t r a ns acti o ns of part ner w i t h li m i t e d li a bili t y part ners hi p 59 3.1-4 Assi g n me nt a nd t r a nsf er of part ners hi p ri g ht s 59 3.1-5 Part ner ’ s t r a nsf er a bl e i nt er est 60

3.2 Co nt ri b uti o n a nd l oa ns by e ac h part ner 60 3.2-1 Co nt ri b uti o n i n mo ne y or i n ot her f or m 61

3.2-2

Obli gati o n t o c o nt ri b ut e 61

3.3 Part ner i n LLP 61

3.4

3.3-1

M i ni mu m n u mber of part ners 62 3.3-2

Part ner by s ubs cri pti o n t o i nc or por ati o n doc ume nt or l at er by a d m i ssi o n 62

Bo dy c or por at e c a n be part ner i n LLP 62 3.3-4

3.3-3

For ei g n LLP or f or ei g n c o mpa ny c a n be part ner 63 3.3-5 Co mpa ny as me mber 63 3.3-6 Part ners hi p fir m or HUF c a nnot be part ner 63 3.3-7 Re gi st er e d Cooper ati ve Soci et y c a n be part ner 63 3.3-8 Tr ust c a nnot be a part ner 64

Cha nge i n part ner 64

3.4-1 Ad m i ssi o n of part ner 65 3.4-2 Cess ati o n as part ner 65 3.4-3 I nti mati o n of r esi g nati o n as part ner ot hers a nd t o Re gi st r ar 66 3.4-4 No r est ri cti o n o n part ner o n c o mpeti ng b usi ness aft er he r eti r es, unl ess LLP agr ee me nt pr ovi des 67 3.4-5 Ex p ul si o n of part ner 67

3.5 Cha nge i n na me or a ddr ess of part ner 67 3.5-1

Noti ce of c ha nge i n part ners t o Re gi st r ar 67 3.5-2 Pr oce d ur e f or fili ng of c ha nge w i t h Re gi st r ar 68 3.5-3 Pe nal t y f or c o nt r ave nti o n of pr ovi si o ns r el ati ng t o c ha nge of part ner 68

3.6

Ext e nt of li a bili t y of li m i t e d li a bili t y part ners hi p f or act s of part ners 68 3.6-1

Part ner li a bl e t o ot her part ners f or hi s wr o ngf ul act s 69 3.6-2 Pr oper pr ovi si o n LLP Agr ee me nt f or a d m i ssi o n or cess ati o n of part ner 69

I nde mni t y t o a nd by part ner 70 3.8 Li a bili t y of part ner by hol di ng o ut 70

3.7

3.9

Unli m i t e d li a bili t y of part ners a nd LLP i n c as e of f r a ud 71 3.9-1 Whi stl e bl o w i ng 72 3.10

Desi g nat e d part ners a nd t hei r r ol e 73 3.10-1

Desi g nat e d part ner must have DI N a nd fil e c o ns e nt 74 3.10-2

Li a bili ti es of desi g nat e d part ners 75 3.10-3 Vac a nc y t o be fill e d w i t hi n 30 days 75 3.10-4 No i mpli e d a ut hori t y t o desi g nat e d part ners 75 3.10-5 Di s q uali fic ati o n as desi g nat e d part ner 76 3.10-6 Rest ri cti o n o n n u mber of LLPs i n whi c h pers o n c a n be desi g nat e d part ner 78 3.10-7 Vac ati o n of of fice of desi g nat e d part ner 79 3.11 Puni s h me nt f or c o nt r ave nti o n of pr ovi si o ns of s ecti o ns 7, 8 a nd 9 r el ati ng t o desi g nat e d part ners 80 3.12 Re gi st er of si g ni fic a nt be ne fici al o wners i n LLP 81

4

LLP AGREEMENT

4.1

Agr ee me nt a mo ng part ners 84 4.1-1 Rel ati o ns hi p of part ners as s peci fie d i n LLP Agr ee me nt 84 4.1-2

Fili ng of LLP Agr ee me nt a nd c ha nges 85 4.1-3 Pr e-i nc or por ati o n c o nt r act s 85 4.2 St a ndar d c o ndi ti o ns of LLP 86 4.3 Whe n t o e xec ut e agr ee me nt 87 4.3-1 St a mp d ut y paya bl e o n LLP agr ee me nt 87 4.4 Ge ner al c o mme nt s o n LLP agr ee me nt 88

4.4-1

Ty pes of part ners 88 4.4-2

Exe c uti ve / Ma na gi ng Co m m i t t e e i n c as e of l ar ge LLP 89 4.4-3 Nu mber of part ners t o e xec ut e LLP Agr ee me nt 89 4.5 Vari o us cl a us es of agr ee me nt 89 4.5-1 Mai n cl a us es of LLP agr ee me nt i n For m 3 89

5.1

Mo del LLP Agr ee me nt 89 4.5-3

4.5-2

Annex 4.1

Sa mpl e a me nd me nt t o LLP Agr ee me nt t o a d m i t part ner 89

Mo del Dr aft of LLP Agr ee me nt 90

Annex 4.2 Sa mpl e a me nd me nt t o LLP Agr ee me nt t o a d m i t part ner 108

5

ACCOUNTS, AUDIT AND ANNUAL RETURNS OF LLP

Pr oce d ur al r e q ui r e me nt s t o be f oll o we d by LLP 110

5.2 Mai nt e na nce of books of acc o unt, ot her r ec or ds a nd a udi t 111

5.3

5.4

5.2-1

Audi t of acc o unt s of LLP 112 5.2-2 Appoi nt me nt a nd r e muner ati o n of a udi t or 113 5.2-3 Re moval of a udi t or 113

Pe nal t y f or f ail ur e t o c o mpl y w i t h pr ovi si o ns of fina nci al di s cl os ur es a nd a udi t 114

Acc o unti ng a nd a udi ti ng st a ndar ds by NF RA 114

5.5 Ann ual r et ur n by LLP 114

6.1

5.5-1

Certi fic ati o n of a nn ual r et ur n by pr acti si ng Co mpa ny Secr et ar y 115 5.5-2 Pe nal t y f or f ail ur e t o fil e a nn ual r et ur n 115 6

ROUTINE MANAGEMENT OF LLP

Fr ee do mi n day t o day ma nage me nt of LLP 116

6.1-1

Co mpli a nce of r et ur ns w i t h ROC 116

6.2 Meeti ngs of part ners a nd exec uti ve/ ma nagi ng c o mm i tt ee 117

6.2-1 Fi rst meeti ng of all part ners 117

6.3 Subs e q ue nt meeti ngs of exec uti ve/ ma nagi ng c o mm i tt ees or all part ners 118

6.4 So me dr aft r es ol uti o ns 119

7.1

7.2

7.3

ADMINISTRATIVE CONTROL OVER LLP

M i ni st r y of c or por at e aff ai rs as a d m i ni st r ati ng a ut hori t y 122

Re gi o nal di r ect ors 123

Re gi st r ar a nd r e gi st r ati o n of fices 123

7.4

7.5

7.6

7.3-1

Po wer of Re gi st r ar t o o bt ai n i nf or mati o n 124 7.3-2

Enf or ce me nt of d ut y t o ma ke r et ur ns, et c.Po wers t o NCLT 125

7.3-3

I ns pecti o n of doc u me nt s fil e d w i t h Re gi st r ar 126

Dest r ucti o n of ol d r ec or ds w i t h Re gi st r ar 125 7.3-4

Fili ng of doc u me nt s a nd r et ur ns w i t h r eg ul ati ng a ut hori t y 126

7.4-1

El ect r o ni c fili ng of doc u me nt s 126 7.4-2

Copy certi fie d by Re gi st r ar t o be e vi de nce 127 7.4-3

Ce nt r ali s e d pr ocessi ng of cert ai n f or ms of LLP 127 7.4-4 Pe nal t y f or f al s e st at e me nt i n r et ur n or st at e me nt 128

Pay me nt of f ees f or vari o us p ur pos es under LLP Act 128

7.5-1

Fees f or r egi st r ati on of LLP or c onversi ont o LLP 129 7.5-2

Fees f or i ncr e asi ng c o nt ri b uti o n 129 7.5-3

Fees f or fili ng vari o us doc u me nt s 129 7.5-4

Fees f or fili ng det ail s of c ha nges of part ner or desi g nat e d part ner a nd hi s c o ns e nt 130

Fees f or c onversi on of appli cati onf or r es er vati on of na me or c ha nge of na me 130 7.5-6

7.5-5

Fees f or a ppli c ati o n under r ul e 18( 3) of LLP Rul es f or r es er vati o n or r e ne wal of na me 130 7.5-7

Fees f or i ns pecti o n of doc u me nt s or o bt ai ni ng certi fie d c opy 131

7.5-8

Fees f or fili ng of doc u me nt s by For ei g n LLP 131

Addi ti o nal f ees f or del aye d fili ng of doc u me nt s 131

7.7 Co ndo nati o n of del ay i n ma ki ng a ppli c ati o n a nd fili ng doc u me nt s 132

7.8

For ms under LLP r ul es 132

8.1

COMPROMISE AND ARRANGEMENT

Co mpr o m i s e, or arr a nge me nt of LLP 135 8.1-1 What i s ‘ c o mpr o m i s e ’ 135

8.2 Rec o nst r ucti o n a nd a mal ga mati o n 136

8.2-1 Obj ecti ves of a mal ga mati o n 137 8.2-1A

LLP c a nnot be a mal ga mat e d w i t h a c o mpa ny 138 8.2-2 Val uati o n of s har es a nd e xc ha nge r ati o 138 8.2-3 Co urt’ s d uti es i n s a ncti o ni ng a s c he me 138

8.3 Meeti ng of cr e di t ors or part ners t o a ppr ove c o mpr o m i s e or arr a nge me nt 140

8.4 Po wer of t ri bunal t o e nf or ce c o mpr o m i s e or arr a nge me nt 142

8.5 Pr ovi si o ns f or f acili t ati ng r ec o nst r ucti o n or a mal ga ma - ti o n of LLP 142

8.5-1

8.5-2

NCLT c a n pass or der o nl y aft er r ecei pt of s at - i sf act or y r e port f r o m Re gi st r ar, i f LLP under w i ndi ng up 143

NCLT s hall not pass or der of di ss ol uti o n unl ess s ati sf act or y r e port r ecei ve d f r o m Of fici al Li q - ui dat or 143

Pr opert y t o be t r a nsf err e d f r ee f r o ma ny c har ge 144 8.5-4 Li a bili t y of st a mp d ut y o nt r a nsf er of ass et s aft er a mal ga mati o n 144

8.5-3

8.5-5

Pe nal t y i f or der of NCLT not fil e d w i t h Re gi st r ar 144

8.6 Pr ocee di ngs under i ns ol ve nc y c o de 145 9

WINDING UP AND STRIKE OFF DEFUNCT LLP

9.1

LLP i n t r o ubl e d ti mes 146

9.1-1

Basi c pr ovi si o ns f or w i ndi ng up 146

9.2 W i ndi ng up a nd di ss ol uti o n of LLP 147

9.2-1

Ci r c u mst a nces i n whi c hli m i t e dli a bili t y part ners hi p may be wo und up by Tri b unal 147

9.3

Rul es f or w i ndi ng up a nd di ss ol uti o n 148 9.4 St ri ke off def unct LLP 148 9.4-1

Appe al bef or e NCLT agai nst or der of r e moval of na me of LLP 149 10

INVESTIGATION OF AFFAIRS OF LLP

10.1

M i s ma nage me nt i n LLP 151 10.1-1

Appoi nt me nt of i ns pect ors by Ce nt r al Gover nme nt 152 10.1-2 Whe n i nvesti gati o n s ho ul d be or der e d 152 10.2 Ci r c u mst a nces wher e i nvesti gati o n c a n be or der e d 152 10.2-1

Appoi nt me nt of i ns pect ors i f Co urt or NCLT or ders i nvesti gati o n 152 10.2-2

Appoi nt me nt of i ns pect ors i f at l e ast 20 % of part ners ma ke a ppli c ati o n 153 10.2-3 Appoi nt me nt of i ns pect ors i f LLP i t s el f a ppli es 153 10.2-4 Suo motu a ppoi nt me nt of i ns pect ors by Ce nt r al Gover n me nt i t s el f 153

10.3

10.4

Po wer of i ns pect ors t o c arr y o ut i nvesti gati o ni nt o aff ai rs of r el at e d e nti ti es, et c. 154

Pr o d ucti o n of doc u me nt s a nd e vi de nce d uri ng i nvesti - gati o n 154 10.4-1

I ns pect or c a n e xa m i ne under oat h 155 10.4-2

I mposi ti o n of fine i f books not pr o d uce d or pers o n does not a ppe ar 155

Not es of e xa m i nati o n c a n be us e d as e vi de nce 156 10.5

10.4-3

Sei z ur e of doc u me nt s byi ns pect or o n or der of magi st r at e 156 10.6

10.7

I ns pect or ’ s r e port 157

Pr os ec uti o n o n basi s of i ns pecti o n r e port 157

10.8 Appli c ati o n f or w i ndi ng up of LLP o n basi s of i ns pecti o n r e port 157

Pr ocee di ngs f or r ec over y of da mages or pr opert y 158 10.10 Ex pe ns es of i nvesti gati o n 158 10.11 I ns pect or ’ s r e port t o be e vi de nce 159

10.9

11.1

11.2

OFFENCES, PUNISHMENTS AND PENALTIES

Pe nal t y, fines a nd i mpri s o n me nt 160

Pe nal t y f or c o nt r ave nti o n of pr ovi si o ns of LLP Act 160 11.2-1

Resi d ual Pe nal t y wher e s peci fic pe nal t y not pr ovi de d i n LLP Act 161 11.2-2 Adj udi c ati o n of Pe nal t y 161 11.2-3

I mposi ti o n of pe nal t y by a dj udi c ati ng of ficer 161 11.2-4

Di r ecti o n t o r ecti f y t he def a ul t 162 11.2-5 Opport uni t y of pers o nal he ari ng 162 11.2-6 Pr oce d ur e f or Adj udi c ati o n of pe nal ti es 162 11.2-7

Appe al t o Re gi o nal Di r ect or agai nst or der of Re gi st r ar 166 11.2-8

Pr oce d ur e f or a ppe al bef or e Re gi o nal Di r ect or 166 11.2-9

I mposi ti o n of fine o n LLP i f or der of Re gi st r ar or RD not c o mpli e d w i t h 169 11.2-10

P u ni s h me nt of i mpri s o n me nt a n d fi ne t o p art ner, i f or der of Re gi st r ar or R D n ot c o mpli e d w i t h 169

11.3

Co mpo undi ng of off e nces 169 11.3-1

What i s c o mpo undi ng 169 11.3-2 Re gi o nal di r ect or c a n c o mpo und off e nces p un - i s ha bl e o nl y fine 171 11.3-3

Co mpo undi ng c a n be o nl y o nce i n t hr ee ye ars f or si mil ar off e nce 171 11.3-4 Appli c ati o n f or c o mpo undi ng a n off e nce 171 11.3-5

I nti mati o n t o Re gi st r ar i f off e nce c o mpo unde d by RD 171 11.3-6 No pr os ec uti o n i f off e nce i s c o mpo unde d 172 11.3-7

W i t hdr a wal of pr os ec uti o n i f c o mpo undi ng do ne aft er fili ng of c o mpl ai nt 172 11.3-8

Di r ecti o n t o fil e doc u me nt s w i t h r e q ui si t e f ees e ve n i f off e nce c o mpo unde d 172

11.3-9

11.4

Do ubl e fine i f or der of Re gi o nal Di r ect or not c o mpli e d w i t h 172

Cri m i nal Co urt a nd Speci al Co urt 173 11.4-1

Speci al c o urt s 173 11.4-2 Speci al Co urt wher e r e gi st er e d of fice of LLP i s si t uat e d has j uri s di cti o n 174 11.4-3

Speci al Co urt c a n t r y ot her off e nce al o ng w i t h off e nce under LLP Act 174 11.4-4

Speci al Co urt c a n t r y off e nce i n a s u mmar y way 174 11.4-5 Cog ni z a nce of off e nce o nl y o n c o mpl ai nt of Re gi st r ar 174 11.4-6

Cog ni z a nce of off e nces 175 11.4-7

Pe ndi ng c as es t o be t r a nsf err e d t o Speci al Co urt o n i t s c o nsti t uti o n 176 11.4-8

H i g h Co urt c a n e xer ci s e po wers of Co urt of Sessi o ns w i t hi n i t s l oc al j uri s di cti o n 176 11.4-9

J oi nt li a bili t y of LLP a nd t he g uil t y part ner 176 11.4-10 Enha nce d fine f or r e pe at off e nce 177 12

OTHER PROVISIONS IN RESPECT OF LLP

12.1

For ei g n LLP 179

Pr oce d ur e bef or e NCL AT 179 12.2

12.3

Co nversi o n f r o m LLP t o c o mpa ny 181 12.4 Co nversi o n of e xi sti ng fir ms a nd c o mpa ni es i nt o LLP 181

12.4-1

12.4-2

Re gi st r ati o n aft er c o nversi o n f r o mfir mor c o mpa ny t o LLP a nd eff ect of c o nversi o n 182

Eff ect of c o nversi o n f r o m fir m or c o mpa ny i nt o LLP 182

All pr opert y vest s i n LLP aft er c o nversi o n a nd e arli er fir m or c o mpa ny get s di ss ol ve d 183 12.4-4

12.4-3

Co mpa ny c a n c o nvert i nt o LLP o nl y i f t her e i s no ‘ s ec uri t y i nt er est’ i n i t s ass et s s ubsi sti ng 183

12.4-5

12.4-6

12.4-7

Ot her pr ovi si o ns r el ati ng t o c o nversi o n f r o m c o mpa ny or fir mt o LLP 184

I nc o me- t ax as pect s of Co nversi o n of pri vat e or unli st e d c o mpa ny t o LLP 184

I nc o me-t ax as pect s of Conversi on of part ners hi p fir mi nt o LLP 186

LLP as part ner i n a Part ners hi p Fi r m 186 12.6 Re moval of di f fic ul ti es 187 13

12.5

TAXATION OF LLP

I nc o me- t ax as pect s of LLP 188 13.2 Resi de nti al st at us of LLP 188

13.1

13.2-1 Pl ace of Eff ecti ve Ma nage me nt of LLP 189 13.3 Re muner ati o n t o part ners 189 13.3-1 Co ndi ti o ns f or all o w i ng de d ucti o n of r e muner - ati o n 190

13.4

Re q ui r e me nt s of LLP agr ee me nt f or all o w i ng de d ucti o n 190

13.4-1

Re muner ati o n pai d a bove li m i t s of s ecti o n 40(b ) will be e xe mpt at ha nds of part ner of LLP 190 13.5

Re muner ati o n t o no m i nee of part ner 191 13.5-1 Re muner ati o n t o part ner i n r e pr es e nt ati ve c a paci t y 191 13.6

I nt er est t o part ners 191 13.7 Di s all o wa nce of r e muner ati o n a nd i nt er est u/s 40 A( 2) 192 13.8 Pr oce d ur al r e q ui r e me nt s t o be c o mpli e d by LLP 192

13.8-1

Veri fic ati o n of I T r et ur n 192 13.8-2 I nc o me- t ax r at e f or LLP 193

13.9 LLP r ec og ni z e d as st art- up 193 13.10 A MT i nst e a d of MAT 194 13.11 No pr es u mpti ve t axati o n s c he me 194 13.12 Li a bili t y of part ner t o war ds li a bili t y of i nc o me- t ax of LLP 195

14.1

14

FOREIGN DIRECT INVESTMENT IN LLP

I nvest me nt by a pers o n r esi de nt o ut si de I ndi a i n LLP 196

14.2 I nvest me nt i n a Li m i t e d Li a bili t y Part ners hi p ( LLP) 196

14.3 RBI i nst r ucti o ns o n mo de of pay me nt, r e m i tt a nce of s al e pr ocee ds a nd r e porti ng f or i nvest me nt i n LLP 198

14.3-1 Re porti ng r e q ui r e me nt s s peci fie d by RBI f or i nvest me nt i n LLP 199 15

OVERSEAS INVESTMENT BY LLP

15.1

LLPi s body c or por at e a nd ca n make Overs eas I nvest me nt 200 15.1-1 Overs e as I nvest me nt – Me a ni ng 200

15.2 Pr ovi si o ns f or Overs e as I nvest me nt by LLP 201

15.3 H i g hli g ht s of 2022 Rul es, Re g ul ati o ns a nd Di r ecti o ns 202

15.4 Ad m i ni st r ati on of F E M( Overs eas I nvest me nt) Rul es, 2022 203

APPENDICES

Li m i t e d Li a bili t y Part ners hi p Act, 2008 207 u

u

Li m i t e d Li a bili t y Part ners hi p Rul es, 2009 265 u

Li m i t e d Li a bili t y Part ners hi p ( A me nd me nt) Act, 2021 306

SUBJECT INDEX 319

SECTION INDEX

Section No. Description

Para No.

1( 2) LLP Act a ppli es t o whol e of I ndi a 1.1-7

2(1 )( a ) Addr ess - Defi ni ti o n 3.4-1 2(1 )( e ) Defi ni ti o n of b usi ness 1.2-2 2(1 )(f ) Bo dy Cor por at e - Defi ni ti o n 1.2 2(1 )(k ) Enti t y - Defi ni ti o n 1.2-4 2(1 )(l ) Fi na nci al ye ar 5.2 2(1 )( m ) For ei g n LLP - Defi ni ti o n 12.2

2(1 )( o ) Li m i t e d li a bili t y part ners hi p agr ee me nt 4.1 2(1 )( p ) Na me - Defi ni ti o n 3.5 2(1 )( q ) Part ner - Defi ni ti o n 3.3 2(1 )( ra ) Re gi o nal Di r ect or - Defi ni ti o n 7.2 2(1 )( s ) Re gi st r ar - Defi ni ti o n 7.3 2(1 )( ta ) S mall Li m i t e d Li a bili t y Part ners hi p 1.3 3 Li m i t e d li a bili t y a nd per pet ual s uccessi o n 1.2 4 I ndi a n Part ners hi p Act does not a ppl y t o LLP 1.2 5 Part ner i n LLP 3.3 6 M i ni mu m n u mber of part ners 3.3-1 7 Desi g nat e d Part ner 3.10 8 Desi g nat e d part ners - Li a bili ti es 3.10-2 9 Vac a nc y as desi g nat e d di r ect or t o be fill e d w i t hi n 30 days 3.10-3 10

Puni s h me nt f or c o nt r ave nti o n of pr ovi si o ns of s ecti o ns 7, 8 a nd 9 r el ati ng t o desi g nat e d part ners 3.11 11

I nc or por ati o n Doc u me nt 2.1-1 12 I nc or por ati o n by r e gi st r ati o n 2.14-1 13 Re gi st er e d offi ce of li m i t e d li a bili t y part ners hi p a nd c ha nge t her ei n 2.4

Section No. Description

Para No.

14 Eff ect of r e gi st r ati o n of LLP 2.14-4 15 Na me of LLP 2.2 16 Res er vati o n of na me 2.2-1 17 Recti fi c ati o n of na me of LLP 2.3-2 18 O m i tt e d vi de A me nd me nt Act, 2021 2.3-1 19 Cha nge of na me 2.3 20 Pe nal t y f or i mpr oper us e of wor ds “li m i t e d li a bili t y part ners hi p” or “ LLP” 2.3-3 21 Publi c ati o n of na me a nd li m i t e d li a bili t y 2.3-4 22 Part ner by s ubs cri pti ont oi nc or por ati on doc u me nt or l at er by a d m i ssi o n 3.3-2 23 LLP Agr ee me nt 4.1 24 Cha nge i n part ner 3.4 25 Cha nge i n part ner 3.5 26 Part ner as age nt 3.1-1 27 Ext e nt of li a bili t y of li m i t e dli a bili t y part ners hi p f or act s of part ners 3.6 28 Part ner li a bl e t o ot her part ners f or hi s wr ongf ul act s 3.6-1 29 Hol di ng o ut 3.8 30 Unli m i t e d li a bili t y of part ners a nd LLP i n c as e of f r a ud 3.9 31 Whi stl e bl o wer 3.9-1 32 Co nt ri b uti o n by part ner 3.2-1 33 Obli gati o n t o c o nt ri b ut e by part ner 3.2-2 34 Mai nt e na nce of books of acc o unt, ot her r ec or ds a nd a udi t 5.2 34 A Acc o unti ng a nd a udi ti ng st a ndar ds by NF RA 5.4 35 Ann ual r et ur n by LLP 5.5 36 I ns pecti o n of doc u me nt s fil e d w i t h Re gi st r ar 7.3-4 37 Pe nal t y f or f al s e st at e me nt i n r et ur n or st at e me nt 7.4-4 38 Re gi st r ar - Po wer t o o bt ai n i nf or mati o n a nd i ss ue s u mmo ns 7.3-1 39 Co mpo undi ng of Off e nces 11.3 40 Dest r ucti o n of ol d r ec or ds w i t h Re gi st r ar 7.3-3

Section No. Description

Para No. 41

Enf or ce me nt of d ut y t o ma ke r et ur ns, et c - Po wers t o NCLT 7.3-2 42

Assi g n me nt a nd t r a nsf er of part ners hi p ri g ht s 3.1-4 43 Appoi nt me nt of i ns pect ors by Ce nt r al Gover n me nt 10.1-1 44 Appli c ati o n by part ners f or i nvesti gati o n 10.2-1 45 Fi r m , bo dy c or por at e or ass oci ati o n not t o be a p - poi nt e d as i ns pect or 10.1-1 46

Po wer of i ns pect ors t o c arr y o ut i nvesti gati o n i nt o aff ai rs of r el at e d e nti ti es, et c 10.3 47

Pr o d ucti o n of doc u me nt s a nd e vi de nce d uri ng i nvesti gati o n 10.4 48 Sei z ur e of doc u me nt s by i ns pect or o n or der of Magi st r at e 10.5 49 I ns pect or ’ s r e port 10.6 50 Pr os ec uti o n o n basi s of i ns pecti o n r e port 10.7 51 Appli c ati o n f or w i ndi ng up of LLP o n basi s of I ns pecti o n Re port 10.8 52 Pr ocee di ngs f or r ec over y of da mages or pr opert y 10.9 53 Ex pe ns es of i nvesti gati o n 10.10 54

I ns pect or ’ s r e port t o be e vi de nce 10.11 55 Co nversi o n of e xi sti ng fi r ms i nt o LLP 12.4 56 Co nversi o n of pri vat e c o mpa ny i nt o LLP 12.4 57 Co nversi o n of unli st e d p ubli c c o mpa ny i nt o LLP 12.4 58 Regi st r ati on aft er c onversi onf r o mfi r mor c o mpa ny t o LLP a nd eff ect of c o nversi o n 12.4-1 59

For ei g n LLP 12.2 60

Meeti ng of cr e di t ors or part ners t o a ppr ove c o mpr o m i s e or arr a nge me nt 8.3 61 Po wer of Tri b unal t o e nf or ce c o mpr o m i s e or arr a nge me nt 8.4 62

Pr ovi si o ns f or f acili t ati ng r ec o nst r ucti o n or a malga mati o n of LLP 8.5 63 W i ndi ng up a nd di ss ol uti o n of LLP 9.2 64

Ci r c u mst a nces i n whi c hli m i t e dli a bili t y part ners hi p may be wo und up by Tri b unal 9.2-1

Section No. Description

Para No.

Rul es f or w i ndi ng up a nd di ss ol uti o n 9.3 66 Busi ness t r a ns acti o n bet wee n part ner a nd LLP 3.1-3 67 Pr ovi si ons of Co mpa ni es Act ca n be ma de appli ca bl e 7.1 67 A Speci al Co urt s 11.4-1 67 B Pr oce d ur es a nd po wers of Speci al Co urt 11.4-1 67 C H i g h Co urt ca n exer ci s e po wers of Co urt of Sessi ons w i t hi n i t s l oc al j uri s di cti o n 11.4-6 68 El ect r o ni c fili ng of doc u me nt s 7.4-1 68 A Re gi st r ati o n Offi ces 7.3 69 Pay me nt of a ddi ti o nal f ees f or l at e fili ng of a ny doc u me nt 7.5-1 70 Enha nce d fi ne f or r e pe at off e nce 11.4-8 71 Appli c ati o n of ot her l a ws not barr e d 1.1-6 72 Tri b unal a nd Appell at e Tri b unal 12.1 73 O m i tt e d vi de A me nd me nt Act, 202174 Resi d ual Pe nal t y wher e s peci fi c pe nal t y not pr o - vi de d i n LLP Act 11.2-1

65

75 St ri ke off def unct LLP 9.4 76 J oi nt li a bili t y of LLP a nd t he g uil t y part ner 11.4-7 76( 3)( a ) Lo wer pe nal t y t o s mall LLP 1.3 76 A Adj udi c ati o n of Pe nal t y 11.2-2 77 J uri s di cti o n of Speci al Co urt 11.4-5 77 A Cog ni z a nce of off e nce o nl y o n c o mpl ai nt of Re g - i st r ar 11.4-4 78 Po wers t o a me nd s c he d ul es 12.4 80( 1 A) Re moval of di ffi c ul ti es 12.5

2 CHAPTER

INCORPORATION OF LLP

2.1 INTRODUCTION

T wo or mor e pers o ns c a n ass oci at e f or c arr yi ng o ut a ny l a wf ul b usi ness w i t h a vi e wt o pr ofi t. The y have t o fil e ‘ i nc or por ati o n doc u me nt’ [ si mil ar t o Me mor a nd u m of Ass oci ati o n of a c o mpa ny], c o nt ai ni ng pr es cri be d det ail s li ke na me, pr opos e d b usi ness, a ddr ess of r e gi st er e d offi ce, na me a nd a ddr ess of part ners, na me a nd a ddr ess of desi g nat e d part ners a nd ot her i nf or mati o n as may be pr es cri be d by r ul es [ Secti o n 11( 2) of LLP Act, 2008].

The i nc or por ati o n doc u me nt s ho ul d be fil e d el ect r o ni c all y w i t h Re gi s - t r ar havi ng j uri s di cti o n over t he r e gi st er e d offi ce of LLP i n f or m Fi LLi P [ For m f or i nc or por ati o n of Li m i t e d Li a bili t y Part ners hi p] [ Rul e 11 of LLP Rul es, 2009].

2.1-1 Incorporation document

For a li m i t e d li a bili t y part ners hi p t o be i nc or por at e d - ( a ) t wo or mor e pers o ns ass oci at e d f or c arr yi ng o n a l a wf ul b usi ness w i t h a vi e w t o pr ofi t s hall s ubs cri be t hei r na mes t o a ni nc or por ati o n doc u me nt (b ) t he i nc or por ati o n doc u me nt s hall be fil e d i n s uc h ma nner a nd w i t h s uc h f ees, as may be pr es cri be d w i t h t he Re gi st r ar of t he St at e i n whi c h t he r e gi st er e d offi ce of t he li m i t e d li a bili t y part ners hi p i s t o be si t uat e d; a nd ( c ) t her e s hall be fil e d al o ng w i t h t he i nc or por ati o n doc u me nt, a st at e me nt i n t he pr es cri be d f or m , ma de by ei t her a n a dv oc at e, or a Co mpa ny Secr et ar y or a Chart er e d Acc o unt a nt or a Cost Acc o unt a nt, who i s e ngage d i n t he f or mati o n of t he li m i t e d li a bili t y part ners hi p a nd by a ny o ne who s ubs cri be d hi s na me t o t he i nc or por ati o n doc u me nt, t hat all t he r e q ui r e me nt s of t he LLP Act a nd t he r ul es ma de t her e under

have bee n c o mpli e d w i t h, i n r es pect of i nc or por ati o n a nd matt ers pr ece de nt a nd i nci de nt al t her et o – s ecti o n 11( 1) of LLP Act.

2.1-2 Contents of incorporation document

The i nc or por ati o n doc u me nt s hall ( a ) be i n a f or m as may be pr es cri be d (b ) st at e t he na me of t he li m i t e d li a bili t y part ners hi p ( c ) st at e t he pr opos e d b usi ness of t he li m i t e d li a bili t y part ners hi p (d ) st at e t he a ddr ess of t he r e gi st er e d offi ce of t he li m i t e d li a bili t y part ners hi p ( e ) st at e t he na me a nd a ddr ess of e ac h of t he pers o ns who ar e t o be partners of t he li m i t e d li a bili t y part ners hi p o n i nc or por ati o n (f ) st at e t he na me a nd a ddr ess of t he pers o ns who ar e t o be desi g nat e d part ners of t he li m i t e d li a bili t y part ners hi p o n i nc or por ati o n ( g ) c o nt ai n s uc h ot her i nf or mati o n c o ncer ni ng t he pr opos e d li m i t e d li a bili t y part ners hi p as may be pr es cri be d – s ecti o n 11( 2) of LLP Act.

2.1-3 Punishment for false statement while incorporating LLP

I f a pers o n ma kes a st at e me nt under s ecti o n 11( 1)( c ) whi c h he ( a ) k no ws t o be f al s e; or (b ) does not beli e ve t o be t r ue, s hall be p uni s ha bl e w i t h i mpri s o n me nt f or a t er m whi c h may e xt e nd t o t wo ye ars a nd w i t h fi ne whi c h s hall not be l ess t ha n t e n t ho us a nd r upees b ut whi c h may e xt e nd t o fi ve l a k h r upees – s ecti o n 11( 3) of LLP Act.

2.1-4 Procedure for Incorporation of LLP at a glance

Pr oce d ur e at gl a nce i s as f oll o ws:

u

T wo part ners t o be desi g nat e d as ‘ desi g nat e d part ners ’ s ho ul d a ppl y a nd get DI N( Di r ect or I de nti fi c ati o n Nu mber) f r o m Ce nt r al Gover n me nt by a ppl yi ng el ect r o ni c all y i n f or m No. 7 a nd s ubs eq ue ntl y s e ndi ng p hysi c al f or ms.

u

The desi g nat e d part ners s ho ul d obt ai n D i gi t al Si g nat ur e Certi fi cat e ( DS C) Cl ass II or a bove f r o m a Certi fi c ati o n Age nc y ( CA).

u

u

u

Us er r e gi st r ati o n - Re gi st er DI N a nd DS C w i t h LLP by vi si ti ng www . ll p. g ov. i n.

Chec k na me avail a bili t y whi c hi s avail a bl e ont he af or es ai d we bsi t e

Appl y f or r es er vati o n of na me i n f or m RUN- LLP . Al t er nati vel y, a ppli c ati o n f or r es er vati o n of na me c a n be ma de al o ng w i t h i nc or por ati o n doc u me nt i n f or m Fi LLi P [ For mf or i nc or por ati o n of Li m i t e d Li a bili t y Part ners hi p]

u

Aft er o bt ai ni ng r es er vati o n of na me, fill up f or m Fi LLi P [ For m f or i nc or por ati o n of Li m i t e d Li a bili t y Part ners hi p] It has t o be

di gi t all y si g ne d by desi g nat e d part ner a nd a pr of essi o nal ( a dv oc at e / pr acti si ng CA/ CS/I C WA). Upl oa d t he f or m a nd pay f ees el ect r o ni c all y.

u LLP will be i nc or por at e d by ROC a nd r e gi st r ati o n certi fi c at e will be gr a nt e d by Re gi st r ar of Co mpa ni es ( ROC) i n f or m No. 16

u Fil e f or m3 ( I nf or mati o n w i t h r e gar d t o LLP Agr ee me nt) a nd f or m 4 ( Noti ce of a ppoi nt me nt of part ner / desi g nat e d part ner) el ect r o n - i c all y w i t h f ees. The det ail s c a n be s ub m i tt e d ei t her w i t h f or m Fi LLi P [ For mf or i nc or por ati o n of Li m i t e d Li a bili t y Part ners hi p] i t s el f or w i t hi n 30 days of dat e of i nc or por ati o n. I f not s ub m i tt e d w i t hi n 30 days, a ddi ti o nal f ees wo ul d be paya bl e.

u

Se nd ori gi nal c opy of LLP Agr ee me nt whi c h i s d ul y st a mpe d. u LLP i s no w r e a dy f or c o mme nci ng b usi ness.

2.2 NAME OF LLP

Fi rst st e p i s o bt ai ni ng na me a ppr oval. Sec o nd st e p i s t o fil e doc u me nt s f or i nc or por ati o n.

Last wor ds of na me s hall be LLP or ‘ Li m i t e d Li a bili t y Part ners hi p ’ .

Ever y li m i t e d li a bili t y part ners hi p s hall have ei t her t he wor ds “li m i t e d li a bili t y part ners hi p” or t he acr o ny m“ LLP” as t he l ast wor ds of i t s na me – s ecti o n 15( 1) of LLP Act.

LLP s ho ul d have na me whi c h s ho ul d not be si mil ar t o na me of ot her e nti t y or t r a de mar k of ot her pers o n.

Na me s ho ul d not be undesi r a bl e. [ Secti o n 15( 2)( a ) of LLP Act, 2008].

Na me s ho ul d not i de nti c al or t oo ne arl y r es e mbli ng t o t hat of a ny ot her li m i t e d li a bili t y part ners hi p or a c o mpa ny or a r e gi st er e d t r a de mar k of a ny ot her pers o n under t he Tr a de Mar ks Act, 1999 – Secti o n 15( 2)(b ) of LLP Act, a me nde d vide LLP ( A me nd me nt) Act, 2021 w . e. f. 1- 4- 2022.

2.2-1 Reservation of name of LLP

Na me s ho ul d be g ot r es er ve d f r o m ROC under s ecti o n 16 of LLP Act, by s ub m i tti ng a ppli c ati o n i n f or m RUN- LLP ( Res er ve Uni q ue Na me – LLP) w i t h pr es cri be d f ees ( f ee i s as s peci fi e d i n Anne x ur e A of LLP Rul es, 2009) [ f or m c ha nge d w . e. f. 2- 10- 2018]

Al t er nati vel y, a ppli c ati o n f or r es er vati o n of na me c a n be ma de al o ng w i t h i nc or por ati o n doc u me nt i n f or m Fi LLi P [ For mf or i nc or por ati o n of Li m i t e d Li a bili t y Part ners hi p]

Procedure prescribed for reservation of name - A pers o n may a ppl y i n s uc h f or m a nd ma nner a nd acc o mpa ni e d by s uc h f ee as may be pr es cri be d t o t he Re gi st r ar f or t he r es er vati o n of a na me s et o ut i n t he a ppli c ati o n as ( a ) t he na me of a pr opos e d li m i t e d li a bili t y part ners hi p; or (b ) t he na me t o whi c h a li m i t e d li a bili t y part ners hi p pr opos es t o c ha nge i t s na me – s ecti o n 16( 1) of LLP Act. Upo n r ecei pt of a n a ppli c ati o n under s ecti o n 16( 1) a nd o n pay me nt of t he pr es cri be d f ee, t he Re gi st r ar may, i f he i s s ati sfi e d, s ubj ect t o t he r ul es pr es cri be d by t he Ce nt r al Gover n me nt i n t he matt er, t hat t he na me t o be r es er ve d i s not o ne whi c h may be r ej ect e d o n a ny gr o und r ef err e d t o i n s ecti o n 15( 2) of LLP Act, r es er ve t he na me f or a peri o d of t hr ee mo nt hs f r o mt he dat e of i nti mati o n by t he Re gi st r ar – s ecti o n 16( 2) of LLP Act.

The r es er vati o n of na me will be c o mmuni c at e d by ROC w i t hi n s e ve n days. I f s uggest e d na me i s r ej ect e d, o ne opport uni t y f or s ub m i ssi o n s hall be gi ve n f or r ecti fi c ati o n of def ect s w i t hi n 15 days [ Rul e 18( 5) of LLP Rul es, 2009 a me nde d w . e. f. 2- 10- 2018].

Name reserved for three months - Na me a ppr ove d will be r es er ve d f or a peri o d of t hr ee mo nt hs f r o m dat e of i nti mati o n by ROC [ Rul e 18( 6) of LLP Rul es, 2009].

2.2-2 Criteria for approval of name

The na me s ho ul d not be i n vi ol ati o n of E mbl e ms a nd Na me ( Pr e ve nti o n of i mpr oper us e) Act, 1950 [ Rul e 18( 1) of LLP Rul es, 2009]. Na me s ho ul d not be off e nsi ve, si mil ar t o e xi sti ng LLP , na me of r e gi st er e d t r a de mar k et c. Na mes li ke Cooper ati ve, Nati o nal, Uni o n, Ce nt r al, Fe der al, Re p ubli c, Pr esi de nt, Ras ht r a pati, Co ns ul at e, Muni ci pal, Pa nc hayat, l oc al a ut hori t y et c. ar e not all o we d. Na mes li ke Ba nk, I ns ur a nce, Co mpa ny Secr et ar - i es, Chart er e d Acc o unt a nt, Adv oc at e et c. will not be all o we d w i t ho ut a ppr oval of t he r e g ul at or y a ut hori t y [ Rul e 18( 2) of LLP Rul es, 2009]

Approval of concerned regulatory authority

- Wher e o ne of t he o bj ect s i s t o c arr y o n b usi ness of ba nki ng, i ns ur a nce or t o pr acti ce pr of essi o n of CA , CS , C MA or Ar c hi t ect, t he c o mpa ny/ LLP c a n be i nc or por at e d o nl y o n pr o d ucti o n of i n- pri nci pl e a ppr oval / NOC f r o mt he c o ncer ne d r e g ul at or / pr of essi o nal I nsti t ut e - MCA ci r c ul ar No. 2/2012 dat e d 1- 32012 a nd proviso t o r ul e 18( 2)(xvi ) of LLP Rul es, 2009.

2.2-2A Reservation of name

The na me s ho ul d not be i n vi ol ati o n of E mbl e ms a nd Na me ( Pr e ve nti o n of i mpr oper us e) Act, 1950 [ Rul e 18( 1) of LLP Rul es, 2009]. Na me s ho ul d

not be off e nsi ve, si mil ar t o e xi sti ng LLP , na me of r e gi st er e d t r a de mar k et c. Na mes li ke Cooper ati ve, Nati o nal, Uni o n, Ce nt r al, Fe der al, Re p ubli c, Pr esi de nt, Ras ht r a pati, Co ns ul at e, Muni ci pal, Pa nc hayat, l oc al a ut hori t y et c. ar e not all o we d. Na mes li ke Ba nk, I ns ur a nce, Co mpa ny Secr et ar - i es, Chart er e d Acc o unt a nt, Adv oc at e et c. will not be all o we d w i t ho ut a ppr oval of t he r e g ul at or y a ut hori t y [ Rul e 18( 2) of LLP Rul es, 2009] Pr ovi si o ns as c o nt ai ne d i n r ul es ar e as f oll o ws.

Rule 18(1) - The na me of t he li m i t e d li a bili t y part ners hi p s hall not be o ne pr o hi bi t e d under t he E mbl e ms a nd Na mes ( Pr e ve nti o n of i mpr oper us e) Act, 1950.

Rule 18(2) - A na me whi c h f all s w i t hi n t he c at e g ori es me nti o ne d bel o w will not ge ner all y be r es er ve d:

(i ) I f i t i ncl udes a ny wor d or wor ds whi c h ar e off e nsi ve t o a ny s ecti o n of t he pe opl e.

(ii ) I f t he pr opos e d na me i s t he e xact H i ndi t r a nsl ati o n of t he na me of a n e xi sti ng li m i t e d li a bili t y part ners hi p i n Engli s h or H i ndi of a n e xi sti ng li m i t e d li a bili t y part ners hi p.

(iii ) I f t he pr opos e d na me has a cl os e p ho neti c r es e mbl a nce t o t he na me of a LLP i n e xi st e nce, f or e xa mpl e, J. K . LLP., J ay Kay.

(iv ) I f i t i ncl udes t he wor d Co- oper ati ve, Sa ha kari or t he e q ui val e nt of wor d ‘ c o- oper ati ve ’ i n t he r e gi o nal l a ng uages of t he c o unt r y.

( v ) I f i t c o nnot es t he parti ci pati o n or pat r o nage of t he Ce nt r al or St at e Gover n me nt, unl ess ci r c u mst a nces j usti f y t o, e. g., a na me may be dee me d undesi r a bl e i n cert ai n c o nt e xt i f i t i ncl udes a ny of t he wor ds s uc h as Nati o nal, Uni o n, Ce nt r al, Fe der al, Re p ubli c, Pr esi de nt, Ras ht r a pati, et c.

(vi ) I f t he pr opos e d na me c o nt ai ns t he wor ds ‘ Bri ti s h I ndi a ’ .

(vii ) I f t he pr opos e d na me i mpli es ass oci ati o n or c o nnecti o n w i t h a ny E mbass y or Co ns ul at e or of a f or ei g n g over n me nt whi c h s uggest s c o nnecti o n w i t h l oc al a ut hori ti es s uc h as Muni ci pal, Pa nc hayat, Zil a Pari s ha d or a ny ot her bo dy c o nnect e d w i t h t he Uni o n or St at e Gover n me nt.

(viii ) O m i tt e d.

(ix ) I f i t i s di ff er e nt f r o mt he na me / na mes of t he e xi sti ng li m i t e d li a - bili t y part ners hi p o nl y t o t he e xt e nt of havi ng t he na me of a pl ace w i t hi n br ac ket s bef or e t he wor ds ‘ li m i t e dli a bili t y part ners hi p ’ , f or e xa mpl e, I ndi a n Pr ess ( Del hi ) li m i t e d li a bili t y part ners hi p s ho ul d not be all o we d i n vi e w of t he e xi st e nce of t he LLP na me d I ndi a n

Pr ess Li m i t e d Li a bili t y Part ners hi p. However, if NOC is received from LLP or company, name can be reserved.

( x ) I f i t i ncl udes na me of r e gi st er e d Tr a de mar k, unl ess t he c o ns e nt of t he o wner of t he t r a de mar k has bee n pr o d uce d.

(xi ) the proposed name is identical with or too nearly resembles the name of any other limited liability partnership or a company [amended w.e.f. 1-4-2022]

[ The e arli er wor ds wer e as f oll o ws - I n c as e t he pr opos e d na me i s i de nti c al w i t h or t oo ne arl y r es e mbl es t he na me of a fi r m or LLP i ncor por at e d out si de I ndi a and r es er ve d by s uc h fi r m , LLP or co mpany w i t h t he r egi st r ar i n acc or da nce w i t h t hes e r ul es].

(xii ) I f i t i s i de nti c al w i t h or t oo ne arl y r es e mbl es t he na me of t he li m i t e d li a bili t y part ners hi p or a c o mpa ny i n li q ui dati o n.

(xiii ) I f i t i ncl udes wor ds li ke ‘ Ba nk’, ‘ I ns ur a nce ’ a nd‘ Ba nki ng ’ , ‘ ve nt ur e c a pi t al’ or ‘ mut ual f und’ or b usi ness acti vi t y i ncl udes t he wor ds li ke ‘ Ba nk’, ‘ I ns ur a nce ’ a nd‘ Ba nki ng ’ , ‘ Ve nt ur e Ca pi t al’ or ‘ mut ual f und’ or s uc h si mil ar na me w i t ho ut t he a ppr oval of t he r e g ul at or y a ut hori t y. Appr oval of r e g ul at or y a ut hori t y s hall be o bt ai ne d at t he ti me of a ppli c ati o n f or i nc or por ati o n or c ha nge of na me of e xi sti ng LLP .

(xiv ) O m i tt e d ( xv ) I f t he pr opos e d na me i ncl udes wor ds li ke Fr e nc h, Bri ti s h, Ger ma n et c., unl ess t he part ners s ati sf y t hat t her e i s s o me f or m of c ol - l a bor ati o n a nd c o nnecti o n w i t h t he f or ei g ners of t hat parti c ul ar c o unt r y or pl ace, t he na me of whi c h i s i nc or por at e d i n t he na me. (xvi ) t he pr opos e d na me of li m i t e d li a bili t y part ners hi p i ncl udes t he wor ds c o mpa ny s ecr et ar y, c hart er e d acc o unt a nt, a dv oc at es or s uc h si mil ar wor ds as i ndi c ati ve of a pr of essi o n, as part of t he pr opos e d na me, t he s a me s hall be all o we d o nl y aft er o bt ai ni ng a ppr oval f r o mt he Co uncil of t he g over ni ng I nsti t ut e or s uc h a u - t hori t y as may be no m i nat e d by t he Gover n me nt, i n t hi s be hal f. Appr oval of c o uncil g over ni ng t he pr of essi o n s hall be o bt ai ne d at t he ti me of a ppli c ati o n f or i nc or por ati o n or c ha nge of na me of e xi sti ng LLP .

2.2-3 Criteria for approval of name of a LLP

Foll o w i ng pri nci pl es ar e ke pt i n m i nd whil e s el ecti ng/a ppr ovi ng a na me [ bas e d o n ci r c ul ars i ss ue d by DCA a nd MCA f r o mti me t o ti me]

Name Should not be similar to other names - Na me s ho ul d not be i de nti c al or s ho ul d not t oo ne arl y r es e mbl e t he na me of a not her r e g - i st er e d c o mpa ny.

Name Should not be undesirable - Na me s ho ul d not be c o nsi der e d undesi r a bl e by Ce nt r al Gover n me nt.

Offensive names - Off e nsi ve na me or na me s uggesti ng unl a wf ul acti vi t y i s not per m i ssi bl e.

No violation of Emblems Act - Na me s ho ul d not vi ol at e pr ovi si o ns of E mbl e ms a nd Na mes ( Pr e ve nti o n of I mpr oper Us e) Act, 1950. ( I nst r uc - ti o ns r ei t er at e d i n ci r c ul ar No. 24/2001 dat e d 21- 11- 2001). - - The Act pr o hi bi t s us e of na mes of UNO , WHO , I ndi a n nati o nal Fl ag, Gover n me nt or i t s de part me nt, Pr esi de nt, Gover nor or Uni o n of I ndi a, Ras ht r a pati, Ras ht r a pati Bhava n, Raj Bhava n, Ma hat ma Ga ndhi, Pri me M i ni st er of I ndi a, Na mes, whe nt he c o mpa ny me dal s & ba dges us e d by Gover n me nt, na me of I nt er nati o nal Ci vil Or ga ni s ati o n or I nt er nati o nal Cri me Poli ce Or ga ni s ati o n, Worl d Met e or ol ogi c al Or ga ni s ati o n, na me a nd s y mbol of Sri Sat hya Sai Ce nt r al Tr ust, Log o/e mbl e m of N HRC ( Nati o nal Hu ma n Ri g ht s Co mm i ssi o n).

Us e of t he e mbl e ms or s e al s of t hes e or ga ni s ati o ns or i nsti t uti o ns i s al s o pr o hi bi t e d.

Misleading name not permissible

- Na me m i sl e a di ng i. e. ke y wor d s uggesti ng a gr e at s c al e whil e c o mpa ny i s w i t h s mall r es o ur ces. Th us, f oll o w i ng ar e r est ri cti o ns - wor d ‘ Cor por ati o n ’ per m i tt e d whe n a ut ho - ri s e d c a pi t al i s Rs. 5 cr or es. Wor ds li ke I nt er nati o nal, Gl o bal, Asi a et c. i s per m i tt e d i f a ut hori s e d c a pi t al i s Rs. 1 cr or e. Wor ds li ke H i nd ust a n, I ndi a, Bhar at per m i tt e d whe n a ut hori s e d c a pi t al Rs. 50 l a k hs. Wor ds li ke I nd ust ri es / Udy og per m i tt e d i f c a pi t al i s Rs. 1 cr or e. Wor ds li ke ‘ Ent er - pri s e ’ , ‘ Busi ness ’ ‘ Ma n uf act uri ng ’ per m i tt e d whe n c a pi t al i s Rs. 10 l a k hs.

Abbreviated names only for established company - Abbr e vi at e d na mes ar e not all o we d i n t he fi rst i nst a nce. Ho we ver, a n est a bli s he d c o mpa ny may c ha nge i t s na me t o a bbr e vi at e d f or mby s ho w i ng t hat i t has bec o me well k no wn i n i t s fi el d under a bbr e vi ati o n [ DCA ci r c ul ar No. 4/93 dat e d 31. 3. 1993] - e. g. Del hi Cl ot h Mill s Lt d. was per m i tt e d t o c ha nge i t s na me t o DC M Lt d. I ndi a n To bacc o Co. Lt d. was c ha nge d t o I T C Lt d.

Names starting with small letters

- Na me st arti ng w i t h s mall l ett ers or havi ng s mall l ett ers (li ke ‘ i 2 Tec hnol ogi es Lt d.’ c a n be per m i tt e dDe part me nt ci r c ul ar No. 6/99 dat e d 13. 5. 1999.

Stand alone genetic name not permitted

- Us e of st a nd al o ne ge neti c na me e. g. ‘ Y2 K ’ i s not per m i tt e d. It s ho ul d be w i t h ot her pr oper no un pr ece di ng / s uccee di ngi t - De part me nt ci r c ul ar No. 6/99 dat e d 13. 5. 1999.

Words like bank, trust, investment etc. - Wor ds li ke ba nk, ba nki ng, i nvest me nt a nd t r ust s hall not be all o we d unl ess ci r c u mst a nces j usti f yi t.

Names including word ‘insurance’ - Si nce i ns ur a nce s ect or i s bei ng ope ne d f or e nt r y t o pri vat e s ect or, na me w i t h t he wor d ‘ i ns ur a nce ’ or ‘ ri s k c or por ati o n ’ as part of t he na me will be all o we d o nl y aft er c o ns ul ti ng w i t h RBI a nd I ns ur a nce Re g ul at or y Aut hori t y, J ee va n Bharti Buil di ng, To wer 1, Co nna ug ht Ci r c us, Ne w Del hi 110 001. - De part me nt ci r c ul ar No. 6/99 dat e d 13. 5. 1999. - - Si mil arl y, na me may i ndi c ati ng ‘ i ns ur a nce br oker’ b usi ness s ho ul d be per m i tt e d – DCA ci r c ul ar No. 19/2003 dat e d 25- 4- 2003.

Name of mutual fund - Na me c ont ai ni ng wor d‘ mut ual f und’ s hall not be per m i tt e d unl ess s uc h c o mpa ni es ar e act uall y g oi ng t o be i nc or por at e d as mut ual f unds. It has bee n cl ari fi e d t hat NBF Cs / Ni dhi s u/s 620 A ar e not mut ual f unds. – PI B Pr ess r el e as e dat e d 14. 2. 2000.

Change of name reflecting software business - Cha nge of na me of c o mpa ny t o r efl ect b usi ness of s oft war e ( e. g. na me c o nt ai ni ng wor ds li ke I nf os ys, Soft war e, Cy ber, Cy bers pace, Co mp ut ers et c. ) will be per m i t - t e d o nl y i f a s ubst a nti al porti o n of i t s i nc o me i s deri ve d f r o m s oft war e b usi ness. - PI B pr ess r el e as e dat e d 16- 8- 1999.

I f a LLP i nt e nds t o us e gr o up na me as part of i t s na me ( e. g. Ki rl os kar, Bi rl a, Tat a et c. ) i t i s st a ndar d pr acti ce of ROC t o o bt ai n no o bj ecti o n l ett ers f r o m ot her gr o up c o mpa ni es.

I n Kilburn Electricals Ltd. v. Regional Director ( 1999) 22 S CL 272 = 99 Co mp Cas 243 ( Ma d. ), i t was hel d t hat i f s uc h NOC i s gi ve n i n r es pect of o ne c o mpa ny, s uc h per m i ssi o n i s r est ri ct e d t o t hat c o mpa ny o nl y a nd does not a ut o mati c all y a ppl y i n r es pect of s ubsi di ar y or a not her c o mpa ny f urt her fl oat e d by s uc h c o mpa ny (i.e. by c o mpa ny t o whi c h NOC was gr a nt e d t o us e gr o up na me).

I n Kirloskar Diesel Recan Ltd. v. Kirloskar Proprietary Ltd. - AI R 1996 Bo m HC 149 = 1997 P T C 17 ( Bo m HC), i t was hel d t hat t r a de mar k i ncl udes t r a de na me or b usi ness na me. The na me ‘ Ki rl os kar’ i s us e d by Ki rl os kar gr o up of c o mpa ni es a nd has e ar ne d r e p ut ati o n. That na me c a nnot be us e d by a ny ot her c o mpa ny. [ Ge ner all y, t her e i s no c opyri g ht i n a na me. The na me ‘ Mo nt ari’ i s a n i nve nt e d na me. Ho we ver, Khosl a,

2.2-4 Obtaining consent of other companies in group for using group name in name of a LLP

Ki rl os kar or Pr a kas h ar e ge ner al na mes. Eve n t he n, ‘ passi ng off’ acti o n was up hel d. One r e as o n i s t hat na me of a c o mpa ny i s s el ect e d by c hoi ce a nd he nce acti o n of ‘ passi ng off’ i s possi bl e. A s ur na me or pers o nal na me i s not by c hoi ce a nd he nce i n s uc h c as es, ‘ passi ng off’ i s not per m i ssi bl e. ].

I n Essel Packaging Ltd. v. Essel Tea Exports ( 1998) 3 Bo m C R 767 = 19 P T C 521 ( Bo m HC), i nj uncti o n was gr a nt e d whe n ‘ Ess el gr o up of c o mpa ni es ’ o bj ect e d t o t he us e of wor d ‘ Ess el’ by a t e a e x port c o mpa ny. It was hel d t hat e ve n i f b usi ness of def e nda nt a nd pl ai nti ff i s di ff er e nt, i n passi ng off acti o n, what has t o be c o nsi der e d whet her us e of t he s a me wo ul d c a us e c o nf usi o n. [ I n t hi s c as e, i t was s ho wn t hat s o me pe opl e i ndee d t ho ug ht t hat ‘ Ess el’ gr o up has st art e d t e a e x port b usi ness a nd i n f act, c o ngr at ul at e d t he m o n ne w b usi ness].

I n Hira Lal & Sons (Export) P Ltd. v. UOI ( 2005) 64 S CL 385 ( Del HC), H i r a Lal & So ns ( Ex port) P Lt d. was e xi sti ng si nce 1973. One gr a nds o n of H i r a Lal f or me d a not her c o mpa ny w i t h na me H i r a Lal & So ns ( I) P . Lt d. Re gi o nal Di r ect or di r ect e d t he c o mpa ny t o a dd pr efi x ‘ An upa m ’ . The or der was c o nt est e d. It was hel d t hat si nce H i r a Lal i s na me of gr a ndf at her a nd f a mil y na me, i t s us e c a nnot be de ni e d t o a not her f a mil y me mber.

2.2-5 Free name search facility

Fr ee na me s e ar c h f acili t y ( of e xi sti ng c o mpa ni es / LLPs) i s avail a bl e o n MCA port al www . mc a. g ov. i n ( hy per li nk avail a bl e o n LLP port al ). The s yst e m will pr ovi de t he li st of si mil ar /cl os el y r es e mbli ng na mes of e xi sti ng c o mpa ni es / LLPs bas e d o n t he s e ar c h cri t eri a fill e d up. Th us, o nce na mes of e xi sti ng c o mpa ni es ar e k no w , o ne c a n s el ect a na me whi c h does not cl os el y r es e mbl e a ny e xi sti ng na me.

2.2-6 Filling Form RUN-LLP - Application for reservation of name of LLP

Foll o w i ng ar e i mport a nt poi nt s i n c o nnecti o n w i t h fili ng of f or m 1:

Sr. No. of form 1

Guideline for filling the column

2(i )( a ) Appli c ati o n c a n be di gi t all y si g ne d ei t her by i ndi vi d ual part ner or no m i nee of a bo dy c or por at e as part ner

2(i )(b ) Appli c a nt ( desi g nat e d part ner) nee d not have DI N at t hat st age b ut a dvi s a bl e t o have DI N , si nce w i t ho ut t hat, i nc or por ati o n of LLP will not be possi bl e