Page 154 - DMGT102_MERCANTILE_LAWS_I

Mercantile Laws-I

Notes omission. An obligation of the limited liability partnership is solely the obligation of the limited
liability partnership. The liabilities of the limited liability partnership shall be met out of the
property of the limited liability partnership. Accordingly, unlike the Texas first law, even liability

for debt is limited.

Right to Share Profi ts Transferable

Right of a partner to share profits is transferable (either wholly or in part) Transfer does not
imply that the transferor/assignor has ceased to be a partner. Transferee/ assignee not entitled
to participate in the management of the LLP. Transferee/assignee not entitled to any information
relating to transactions of LLP.
Statements of Accounts and Solvency: An LLP must prepare a ‘Statement of Accounts’ and

‘Solvency Statement’ within a period of 6 months from the end of the financial year to which the

statement or solvency relates - The statements must be filed with the Registrar.
Annual Return: Every LLP must file in Form 11 an annual return with the Registrar within 60

days of the end of the financial year – the annual return should be accompanied by a certifi cate

from a company secretary confirming the veracity of the particulars/statements contained in

such annual return.

Partnership Firm: An existing partnership firm may be converted into an LLP. The partners of

the LLP, on conversion, must comprise all the partners of the original partnership firm and no
one else.
Private Company: A private limited company registered under the Companies Act, 1956 can
convert itself into an LLP. A company may apply for conversion provided all the shareholders of
the Company and no one else shall be partners of the LLP.
Unlisted Public Company: An unlisted Public Company registered under the Companies Act, can
convert itself into an LLP. A company may apply for conversion provided all the shareholders of
the Company and no one else shall be partners of the LLP. A listed Public Ltd. Company cannot
convert into an LLP.
Foreign LLPs: The Act states that the Central Government may make Rules for establishment
of place of business for foreign LLPs in India and conduct of business by such foreign LLPs.
Provisions relating to setting up foreign LLP establishments in India are contained in the Rules
framed in this regard.

Compromise, arrangement and reconstruction: The Act provides for compromise and arrangement
between the LLP and its creditors/partners. The Act also provides for reconstruction of LLPs.
The Relevant provisions are contained in Chapter XII of the Act (Sections 60 – 65).

Defunct LLP: The Registrar has the power to strike off the name of an LLP from the register if
the LLP is not carrying any business or operation in accordance with the Act and the Rules. An
application can also be made in this regard in Form 24 to the Registrar. (Section 75 and Rule 37
of the Rules).

11.5 Summary

z A retiring partner continues to remain liable to third parties for all the acts of the fi rm until
public notice is given of his retirement.
z The relationship of partnership arises from an agreement between the persons concerned
not from status.

z Agreement as made between the persons must be valid and enforceable by law. This
agreement may be oral or written.

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