The Hindu Business Line : Govt releases concept paper on limited liability partnership law

THE Ministry of Company Affairs has released a concept paper on limited liability partnership (LLP) law. The paper has proposed LLP as a body corporate and separate legal entity under a new law. The paper does not restrict the LLP form to the services sector alone, but has also recognised it for small businesses.

According to the paper, the concept has been extended to small business, which may require a framework that provides flexibility and is more suited to the requirements of service, knowledge, and technology-based enterprises, without imposing on them detailed legal and procedural requirements intended for large widely held companies.

It has also suggested that liability of partners would be limited except in case of fraud. The LLP would be registered with the Registrar of Companies (RoCs), the paper suggests, adding that contents of the LLP agreement, as may be prescribed, would be filed with the RoC.

Further, the paper also allows conversion of firm, private company, and unlisted public company into LLP.

As per the paper, an LLP would comprise a minimum of two partners. However, it does not propose any cap on maximum number of partners.

While mandating the appointment of a manager for LLPs, the paper suggests that the manager would be accountable for regulatory and legal compliances.

It also envisages that the annual `declaration of solvency' of an LLP would be filed by the manager with the RoC and the annual accounts are to be maintained and preserved by LLPs for such period as may be specified in the rules.

The concept paper also empowers the RoC to strike off defunct LLPs. It allows electronic filing of returns by LLPs and suggests that enabling provisions be made for extension of Company Law to LLPs.

The paper has been put up at the Ministry's Web site (www.dca.nic.in) so that all interested may express their opinions and also suggest formulations for the consideration of the Ministry on various aspects of LLP law, an official release said. The comments may be sent latest by December 31.

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