Exposure Draft of Standards on Auditing for Audits of Limited Liability Partnerships
Section 34A of the Limited Liability Partnership Act, 2008 (LLP Act, 2008) prescribes that the Central Government may, in consultation with the National Financial Reporting Authority constituted under section 132 of the Companies Act, 2013, prescribe the standards of auditing as recommended by the Institute of Chartered Accountants of India constituted under section 3 of the Chartered Accountants Act, 1949, for a class or classes of limited liability partnerships.
The MCA had directed ICAI to prepare and present a separate set of Standards on Auditing for LLPs (SAs for LLPs). The Auditing and Assurance Standards Board (AASB) of ICAI has developed this Exposure Draft of SAs for LLPs by adopting the “SAs as approved by the Council of ICAI for companies” after making relevant amendments as considered necessary.
The SAs for LLPs will be notified for the first time under the LLP Act, 2008. As a result, the word “Revised” has been removed from the titles of these SAs.
The categories of amendments made, and the relevant actions as required for the purpose of exposure is as below:
The Exposure Draft incorporates the necessary conforming amendments resulting from the finalisation of six standards (SQM 1, SQM 2, SA 220(Revised), SA 250(Revised), SA 315(Revised), and SA 540(Revised)) by ICAI. These amendments involve updates to the text, paragraph numbering, referencing, and footnotes within the various SAs.
The changes are marked in track change mode and highlighted in blue colour. Comments are not sought on these conforming amendments and no comments need to be furnished.
Changes made to make standards relevant for Audit of LLPs
Necessary terminology related changes have been made in the context of LLPs.Limited text has been re- worded / deleted at some places from the perspective of LLPs related transactions.Illustrative formats (such as formats of independent auditor’s report, format of engagement letter) in the SAs have been modified in the context of LLPs.
These limited changes made to the existing SAs in the context of LLPs are marked in track change mode and highlighted in yellow colour. Comments may be furnished for these changes.
AASB invites comments on the limited changes proposed in this Exposure Draft in the context of LLPs.
Comments are most helpful if they indicate the specific paragraph(s) to which they relate, contain a clear rationale and, where applicable, provide a suggestion for alternative wording.
How to Comment
Comments should be submitted using one of the following methods, so as to receive not later than 1st May 2025:
Secretary, Auditing and Assurance Standards Board, The Institute of Chartered Accountants of India, ICAI Bhawan, Post Box No. 7100, Indraprastha Marg, New Delhi-110002
An LLP is a sort of hybrid corporate business structure that involves the integration of the advantages of a limited liability company with the flexibility of a partnership. Even if the partners opt to leave, the LLP can persist. An LLP can even enter into contracts and own property in its own capacity.
This is because it is a separate legal entity having to bear the full liability for its assets, which makes it possible for partners’ liability to be limited to their agreed contribution to the LLP. Furthermore, no partner is held accountable for the independent or unapproved activity of other partners, thus partners are insulated from shared liability stemming from another partner’s illegal business decisions or malfeasance.
To sum up, because of its flexibility in structure and operation, an LLP is an excellent vehicle for seeking venture capital investment.
What is GST Registration?
GST registration is a multi-stage tax levied at every point of sale. It has replaced several indirect taxes, including service tax, value-added tax, central sales tax, excise duty, and extra customs charge. GST was implemented as a result of the Goods and Services Act, which went into effect on July 1, 2017.
While not all firms are expected to participate, there are several benefits to doing so. Firms that exceed a particular yearly turnover threshold however must mandatorily register.
Initially, the GST Act required LLPs with yearly revenue of more than ₹20 lakhs to register as taxable entities. As of April 1, 2019, the limit for LLPs dealing in goods was raised to ₹40 lakhs. For Limited Liability Partnership companies providing services, however, the threshold level remains at ₹20 lakhs.
A copy of the rental agreement on a stamp paper in the name of LLP.Any one of the following – Electricity BillLegal ownership documentMunicipal Khata CopyProperty Tax Receipt
NFRA Imposes Rs 2 Crore Penalty on Deloitte Haskins Over ZEEL Audit Issues
The National Financial Reporting Authority (NFRA) has imposed a hefty penalty of Rs 2 crore on Deloitte Haskins & Sells LLP due to professional misconduct linked to the audit of Zee Entertainment Enterprises (ZEEL) for the financial years FY19 and FY20. Additionally, two chartered accountants (CAs) involved in the audit received penalties totaling Rs 15 lakh.
In relation to another case concerning DB Realty, NFRA also levied a penalty of Rs 8 lakh on two CAs, along with a debarment period of five and three years for each, respectively.
Regarding the ZEEL audit, NFRA’s findings indicated that the auditors overlooked significant red flags and failed to consider vital elements such as the promoters’ roles, the foundation for fixed deposit appropriation, and transactions involving ZEEL and its associated companies.
The authority determined that ZEEL had engaged in misappropriation of funds and unauthorized dealings with related parties without the consent of the audit committee, board, or shareholders.
In its ruling, NFRA stated, “There are reasons to believe that the auditors did not exercise due diligence in ensuring the expected audit quality for a public interest entity and displayed gross negligence in their professional responsibilities by not complying with the established statutes.
In response to the ruling, a spokesperson from Deloitte remarked, “We are reviewing the NFRA’s order against our firm and two retired partners to decide on our next steps. Our commitment to maintaining the highest standards of audit quality remains steadfast.
NFRA Finalizes Inspection Reports for BSR & Co. LLP and Lodha & Co.
In its recent inspection report on BSR & Co. LLP, a subsidiary of KPMG, NFRA noted improvements made by the audit firm concerning auditor independence and documentation, among other areas. However, it cautioned that the effectiveness of these measures requires ongoing monitoring due to the limited period available for evaluation.
The report highlighted some deficiencies in verifying related party transactions across several audit engagements.
In its statement, BSR & Co. acknowledged the importance of the inspection process, emphasizing that it allows audit firms to constructively consider regulatory perspectives and enhance their systems and processes.
NFRA recognized that BSR & Co. had taken steps to document its leadership structure and record key decisions made by the audit leadership team, as recommended in last year’s inspection report.
Additionally, the authority’s inspection report for Lodha & Co., which audits more than 60 public interest entities, suggested enhancements in areas such as monitoring independence, audit documentation, and client acceptance and continuance procedures.
A Limited Liability Partnership (LLP) combines aspects of a corporation and a partnership, offering limited liability protection to its partners while allowing flexible management. It requires at least two partners, one of whom must be an Indian resident. The registration process involves obtaining a Digital Signature Certificate (DSC), Designated Partner Identification Number (DPIN), reserving a unique name, and filing relevant forms with the Ministry of Corporate Affairs.
Key advantages include personal asset protection, flexibility in operations, and a cost-effective setup, making it an ideal choice for small to medium enterprises.
A Limited Liability Partnership (LLP) is a corporate structure that combines the limited liability of a company with the flexibility of a partnership. As a separate legal entity, an LLP continues to exist regardless of changes in its partners. According to the Limited Liability Partnership Act of 2008, an LLP must have at least two partners, one of whom must be Indian, but there is no maximum limit on the number of partners.
The LLP agreement is a document that outlines the responsibilities and duties of each partner. However, no partner is held liable for the unauthorized actions of another; each partner is accountable for their own actions and obligations.
Tip: Limited Liability protects the personal assets of any business partner. The financial liability of a partner stands limited to the value of investment in the business.
Why is it Important to Get LLP Registered?
Through one single registration, one can avail the benefits of both, a partnership firm and a company.
LLP registration is important if the companies have two or more designated partners or
Once a LLP is registered, the company bears its own losses and financial debts which makes the partners not liable for any financial losses or obligations.
Advantages of LLP Registration
Following is a set of benefits you get once you register the LLP:
Limited liability: LLP provides a protection shield to the personal assets of the partners by limiting their liability equal to their investment in the business. No financial liability obligation and any business loss shall not be taken care of by the personal assets of any partner. LLP bears its own losses.
Control: LLP provides a higher control and flexibility to the partners to run the business and mutually decide the rules outlined in a LLP agreement. As per the needs, the operations can alter.
No Investment: Unlike alternatives, LLP does not require any initial investment which makes it an affordable option, especially for small businesses. LLP is also free from stamp duty charges and audit fees.
Credibility: If a business is registered it helps in gaining the consumer trust and building a credible brand reputation. An additional layer of authenticity is provided through registration.
Features of Limited Liability Partnership
Below are a few points that indicate the nature and features of a LLP
A LLP is a separate legal entity bearing all losses and enjoying its profits.
The minimum required designated partners are 2, one of which should be an Indian.
There is no limit on the maximum number of partners.
Each partner has a limited liability depending on their contribution in the business.
The existence of a LLP is perceptual.
LLP works on an agreement, includes profit ratio, capital ratio etc.
No initial investment or capital is required.
What is the Eligibility Criteria for LLP Registration?
In order to register an LLP in India, it is important to meet the following requirements:
There should be at least 2 partners, one of which should be an Indian.
The name should be unique and should not resemble an existing entity name.
Every partner needs to agree to contribute capital in LLP.
How to Register an LLP?
The Limited Liability Partnership Act 2008 has stated the procedure to register a LLP. Following are the steps you need to follow to register your LLP.
Step 2: Apply for DPIN (Designated partner identification number): Each designated partner needs to have an unique identification number. If there is a change in partners, form DIR-3 should be filled with all the asked documents and signature of company secretary and the Chartered accountant.
Step 3: Reserve a LLP Name: Finalize a unique name through Reserve Unique Name-Limited Liability Partnership form (RUN-LLP). The official MCA website helps you with instructions you need to follow and you can also check for any resembling existing company. To get the approval, the name should be distinct from any existing entity or trademark. You can also propose 2 names, however, once a name gets approved, the incorporation should be applied within 3 months of receiving the approval through MCA.
Step 4: Incorporation: For incorporation a form FiLLip should be filled and filed with the registrar having the jurisdiction of the state where you wish to situate the office. There is a fee as per Axenture ‘A’ that needs to be paid. Once the applied name gets approved, it now becomes the proposed name for the LLP.
Step 5: File for an LLP agreement: This agreement states the relationship between the LLP and its partners, the rules and regulations for partners. Within 30 days of LLP incorporation, Form 3 on the MCA portal should be filled. This agreement necessarily needs to be printed on stamp paper.
Documents Required for an LLP Registration
To register LLP online or offline, below are the documents one must have:
Annual Return: It is mandatory for LLP to file annual returns with MCA. The LLPs are required to submit 2 forms: Form 11 (Annual return) and Form 8 (Statement of account & solvency)
LLP Agreement: If there is any change in the LLP agreement including capital contribution, partner composition or other alterations, it should be intimated to the MCA.
Audits: Audits are conducted to maintain the accuracy and reliability of the financial statement. The audits are required to be submitted with MCA.
Tax Compliance: As per income tax department, it is mandatory for an LLP to file income tax returns and comply with GST regulations if turnover exceeds the threshold limit.
Penalties: If any LLP does not comply with the statutory requirements, MCA gets the authority to impose penalties. It may also result in dissolution of partnership.
LLP registration in India is a straightforward online process, typically completed within 15-20 working days, given the necessary documents and approvals. It suits small to medium enterprises, professionals, and startups by providing limited liability protection, flexibility, and tax advantages. However, consider potential drawbacks like limited fundraising options and higher risk of disputes. Evaluate these factors carefully before deciding on an LLP and share this information with colleagues for their benefit.
Who is eligible for LLP?
The requirements for LLP are: minimum 2 designated partners, an unique name and DSC & DPIN for registration of LLP.
What is the turnover limit for LLP?
The turnover limit for a LLP is Rs. 40 Lakhs. If the turnover exceeds the threshold limit, LLP shall get their books of accounts audited.
How many partners are required for LLP?
Minimum 2 partners are required to incorporate an LLP. The maximum amount of partners is not specified by the MCA (Ministry of corporate affairs)
It is mandatory for LLP to file annual returns with MCA. The LLPs are required to submit 2 forms: Form 11 (Annual return) and Form 8 (Statement of account & solvency)
In a recent development, Tridhaatu Asset Holdings LLP and its partners, Dhananjay Sandu, Govind Muthukumar, and Pritam Chivukula, have been convicted in a cheque bouncing case by the metropolitan magistrate’s court in Mazgaon. The court has ruled that they must pay the cheque amount of Rs 7.73 crores with nine percent interest, and undergo imprisonment for one year.
The complainant, Ramakrishnan Subramanian, former CEO of Shriram Capital Ltd., filed the case against the firm, alleging that he was offered to invest in Tridhaatu Group’s real estate development projects. The investment amounted to Rs 2.75 crores, against which he was allotted flats in Tridhaatu Bharadwaj Developers LLP and Tridhaatu Maruti Developers LLP. However, upon the expiry of the investment term, disputes arose regarding the repayment and security of the investment, leading to the issuance of post-dated cheques which subsequently bounced due to insufficient funds.
The defence argued that Tridhaatu Asset Holding LLP was not part of the agreement and that the complainant failed to establish the loan and the corresponding cheque issuance. However, the court dismissed this defence, pointing out the common partners involved and the agreement’s terms.
The court stated, “The complainant has established the fact that he advanced a loan to the partners of the firms for their business purpose. The accused failed to establish that they have allotted any of the flat given as security to the complainant.”
This ruling emphasizes the importance of upholding financial commitments in the commercial world and serves as a reminder of the legal consequences of cheque bouncing.
LLPs must file Form 11, regardless of whether or not they have conducted any business activities.
The due date for Form 11 is within 60 days of the end of the financial year, which is the 30th of May each year. For the financial year 2023-24, the due date is 30th May 2024.
Policy of Empanelment of CA Firms/LLPs and Selection of Auditors
A. Empanelment of CA firms/LLPs
Chartered Accountant firms (firms) and Limited Liability Partnerships (LLPs) in India with at least one full time [1] FCA Partner/FCA Sole Proprietor can apply for empanelment with this office for the purpose of appointment of auditors of Companies as per Section 139 (5) and 139(7) of the Companies Act 2013 and of Statutory Corporations/Autonomous Bodies as per the provisions of their respective Acts.
The criteria for empanelment and selection of statutory auditors have been arrived at after due consultation with the Institute of Chartered Accountants of India.
All the empanelled firms/LLPs are awarded points. The point score is calculated based on various parameters which are enumerated below. In addition, in certain circumstances, the firms/LLPs are not empaneled or empaneled but not considered for appointment as auditors which are also explained below:
B. Allotment of Audits
Selection of firms/LLPs for appointment as auditors where audit fee is up to Rs 5.00 lakh
The selection is made by correlating the point score of each firm/LLP with the audit fee of the auditee unit.
Selection of firms/LLPs for appointment as auditors where audit fee is more than Rs.5.00 lakh (Major Audits)
(a) Criteria for short-listing eligible firms/LLPs of CAs for allotment of Major Audits are as under:
(i) The firm/LLP should have at least 6 full time CAs (out of which 5 should be full time CA partners and one could be a full time paid CA employee), which is indicative of capacity to handle big audits .
(ii) At least one full time CA partner should have an association of 10 years or more with the firm/LLP and at least 3 full time CA partners of the firm/LLP should have an association of 5 years or more with the firm/LLP and the remaining two full time CA partners should have an association of one year or more with the firm/LLP, to demonstrate stability over time.
(iii) The firm/LLP itself should have been in existence for 10 years or more, to prove that it is a well established firm/LLP.
(iv) At least one of the full time CA partners of the firm/LLP must possess CISA qualification from ISACA, USA or DISA qualification from ICAI.
(v) The firm/LLP should have audit experience of five years of audits assigned by CAG.
(b) In addition to correlating the point score earned by each firm/LLP with the audit fee of the auditee unit, factors such as audit experience of the firm/LLP, capability of handling big audits, past performance, eligibility of the firm/LLP to conduct a particular audit, location of the firm’s/LLP’s branch offices etc. are also considered in selection of auditors for Major Audits.
Rotation of Audits
i. The total period of appointment of a firm/LLP as auditor shall be for three financial years provided the firm/LLP continues to be eligible for the said audit, its point score has not reduced by more than 25 per cent over the previous year’s point score and the firm/LLP has not been debarred from appointment in the year by this office.
ii. A firm/LLP who retires/surrenders from audit of a Maharatna Company, shall not be entitled for allotment of audit of any Maharatna Company for a period of four years after such retirement/surrender.
iii. In case of a Maharatna/ Navratna Company, a firm/LLP after retiring/surrendering is not considered for the same Company for a period of five years.
[1] Full time CA partner/sole-proprietor does not include a person who is
(a) a CA partner in other firms/LLPs or a sole proprietor
(b) Employed full time/part time elsewhere, practicing in their own name or engaged in practice otherwise or engaged in other activity which would be deemed to be in practice under Section 2(2) of the Chartered Accountants Act, 1949.
(c) i) A CA Partner/sole-proprietor whose compensation $ from the firm/LLP during previous financial year is below the following limit:
$ Compensation will be sum total of share of profit, remuneration and interest on capital received by the CA partner/sole-proprietor from the firm/LLP. Compensation received by the CA partners who join during the previous financial year, will be extrapolated to arrive at the deemed compensation for the complete financial year. Compensation criteria of FCA will apply on CA partners/sole-proprietor who becomes an FCA during the previous financial year or thereafter till 1st January of year of filing application for empanelment.
(c) ii) A CA partner whose individual percentage share in the total compensation@ during the previous financial year is less than:
Firms/LLPs having more than 14 CA partners 1%
Firms/LLPs having 10 to 14 CA partners 3%
Firms/LLPs having 5 to 9 CA partners 5%
Firms/LLPs having less than 5 CA partners 8%
@Total compensation will be sum total of share of profit, remuneration and interest on capital from the firm/LLP. Compensation received by the CA partners who joins during the previous financial year, will be extrapolated to arrive at the deemed compensation for the complete financial year and then will be added to the compensation of other CA partners to arrive at total compensation.
(d) A CA partner/sole-proprietor whose professional income from sources other than the firm/LLP (except as permitted by ICAI) is more than the compensation (sum total of share of profit, remuneration and interest on capital) from the firm/LLP.
Full time CA employee does not include a person who is:
(a) a partner in other firms/LLPs or is a sole-proprietor
(b) Employed full time/part time elsewhere, practicing in their own name or engaged in practice otherwise or engaged in other activity which would be deemed to be in practice under Section 2(2) of the Chartered Accountants Act, 1949.
[2] Sole proprietors/CA partners/CA employees will get points if they were exclusively associated with the firm/LLP throughout the calendar year immediately preceding the year of empanelment. Association with the firm/LLP prior to Formation Date will not be considered for any purpose.
[3] In case of merger, the proprietor/CA partners of the merging firm/firms/LLP/LLPs will be assigned points after one calendar year of merger. For the first five calendar years after merger, the merging CA partner/s would be deemed to have joined the firm/LLP from the date of merger. The benefit of earlier association of the merging CA partners with the merging firm/LLP will be accorded to the merged firm/LLP only after five calendar years from the date of merger.
[4] Basis of points for Turnover of the firm/LLP from Audit Services only (as distinct from other activities e.g. consultancy):
Sr No.
Head office of the firm/LLP located in Mumbai, Delhi, Chennai, Kolkata, Bangalore, Hyderabad
Head office of the firm/LLP located at other Places
Rs. in crore
Points
Rs. in crore
Points
1
Upto 1.00
No points
Upto 0.60
No points
2
>1.00 —-2.00
1
>0.60 —1.20
1
3
>2.00 —-3.00
2
>1.20 —1.80
2
4
>3.00 —-4.00
3
>1.80 —2.40
3
5
>4.00 —-5.00
4
>2.40 —3.00
4
6
>5.00 —-6.00
5
>3.00 —3.60
5
7
>6.00 —-7.00
6
>3.60 —4.20
6
8
>7.00 —-8.00
7
>4.20 —4.80
7
9
>8.00 —-9.00
8
>4.80 —5.40
8
10
>9.00 —-10.00
9
>5.40 —6.00
9
11
Above 10.00
10
Above 6.00
10
[5] Basis of points for Peer Review Certificate from ICAI:
Sr. No.
Firm/LLP holding valid peer review certificate from ICAI on
Points
1
1st January of the year of filing of online application
5
2
1st January of the year preceding to year referred in sr. no. 1
4
3
1st January of the year preceding to year referred in sr. no. 2
4
4
1st January of the year preceding to year referred in sr. no. 3
3
5
1st January of the year preceding to year referred in sr. no. 4
3
6
1st January of the year preceding to year referred in sr. no. 5
2
7
1st January of the year preceding to year referred in sr. no. 6
2
8
1st January of the year preceding to year referred in sr. no. 7
1
9
1st January of the year preceding to year referred in sr. no. 8
Before Limited Liability Partnership (Amendment) Rules, 2017 LLP was required to file all pending annual returns before making an application for strike off of LLP in form-24 But the Central Government hereby makes the following rules further to amend the Limited Liability Partnership Rules, 2009, namely:—
(1) These rules called the Limited Liability Partnership (Amendment) Rules, 2017.
(2) They came into force with effect from 20th May, 2017.
If a LLP is not carrying on any business or operation for a period of one year or more and wants to make an application in Form 24 to the Registrar as per clause b of sub rule 1 of rule 37 in The Limited Liability Partnership Rules, 2009, for striking off its name from the register, then LLP can make application in form -24 and need to:-
(I) file overdue returns in Form 8 and Form 11 up to the end of the financial year in which the limited liability partnership ceased to carry on its business or commercial operations.
It means if LLP have business then LLP needs to file returns upto end of financial year till LLP ceased to carry on commercial operations and if LLP does not have any business since incorporation then LLP needs not to file annual return and can proceed for strike off by filing form-24.
Explanation.—The date of cessation of commercial operation is the date from which the Limited Liability Partnership ceased to carry on its revenue generating business and the transactions such as receipt of money from debtors or payment of money to creditors, subsequent to such cessation will not form part of revenue generating business.”
(II) enclose along with Form 24,—
(a) a statement of account disclosing nil assets and nil liabilities, certified by a Chartered Accountant in practice made up to a date not earlier than thirty days of the date of filing of Form 24;
(b) an affidavit signed by the designated partners, either jointly or severally, to the effect,—
(i) that the Limited Liability Partnership has not commenced business or where it commenced business, it ceased to carry on such business from ………….(dd/mm/yyyy);
(ii) that the limited liability partnership has no liabilities and indemnifying any liability that may arise even after striking off its name from the Register;
(iii) that the Limited Liability Partnership has not opened any Bank Account and where it had opened, the said bank account has since been closed together with certificate(s) or statement from the respective bank demonstrating closure of Bank Account;
(iv) that the Limited Liability Partnership has not filed any Income-tax return where it has not carried on any business since its incorporation, if applicable.
(c) a copy of the acknowledgement of the latest Income-tax return filed under the Income-tax Act,1961 (43 of 1961) and the rules made there under for the time being in force, where the limited liability partnership has carried out any business and has filed such return.
(d) copy of the initial limited liability partnership agreement, if entered into and not filed, along with changes thereof in cases where the Limited Liability Partnership has not commenced business or commercial operations since its incorporation
Disclaimer:- The entire contents of this document have been prepared on the basis of relevant provisions and rules and as per the information existing at the time of the preparation. Although care has been taken to ensure the accuracy, completeness and reliability of the information provided, I assume no responsibility therefore. Users of this information are expected to refer to the relevant existing provisions of applicable Laws. The user of the information agrees that the information is not a professional advice and is subject to change without notice. I assume no responsibility for the consequences of use of such information.
Q1. Can an existing partnership firm be converted to LLP?
Yes, an existing partnership firm can be converted into LLP by complying with the Provisions of clause 58 and Schedule II of the LLP Act.
ROC – Filings:Form 17 needs to be filed along with Form 2 for such conversion and incorporation of LLP.
Q 2. Can an existing company be converted to LLP?
Yes, any existing private company or existing unlisted public company can be converted into LLP by complying with the Provisions of clause 58 and Schedule III and IV of the LLP Act.
ROC- Filings:Form 18 needs to be filed with the registrar along with Form 2 for such conversion.
Q 3. Can an existing company be converted to LLP?
No, only private / unlisted public company can be converted into LLP.
Q 4. Financial Year of LLP
Every LLP has to maintain uniform financial year (April to March) ending on 31st March of a year.
Q 5. Is it mandatory to file the charge details to the registrar office?
it is not mandatory to file the charge details with the office of Registrar but the stakeholders can voluntarily file the same.
ROC – Filing: The charge details i.e. creation, modification or satisfaction of charge, can be filed through Appendix to e-Form 8 (Interim).
Q 6. Can we incorporate a LLP with words like ‘Limited’ or ‘Pvt. Limited’ at the end?
No, name of the LLP shall end with either ‘Limited Liability Partnership’ or ‘LLP’.
Q 7. What is the due date for Filing Form 8 for FY 2020-21?
Ministry of Corporate Affairs (MCA) vide General Circular No. 16/2021 dated 26.10.2021 has issued notification / circular and provided Relaxations in paying additional fees in case of delay in filing Form 8 (the Statement of Account and Solvency) by Limited Liability Partnerships upto 30th December, 2021.
Q8. Can a HUF be treated as a body corporate for the purposes of LLP Act, 2008?
An HUF cannot be treated as a body corporate for the purposes of LLP Act, 2008. Therefore, a HUF or its Karta cannot become a partner or designated partner in LLP.
Q9: What are the Governing Laws for a LLP:
Act – Limited Liability Partnership Act, 2008 and
Rules – Limited Liability Partnership Rules, 2009
Q10: What are the Fixed Mandatory LLP ROC Compliances?
Sl. No.
E-Form
Due Date
1.
Annual Return (Form 11)
within 60 days of closer of financial year
2.
Statement of Account & Solvency (Form 8)
on or before 30th October every year (due date extended for this year)
3
DIR 3 KYC DPIN KYC through DIR 3 KYC Form is an Annual Exercise.
For every DPIN holder – on or before 30th September
LLP Form- 8 due date extended till 30.12.2021
Ministry of Corporate Affairs (MCA) vide General Circular No. 16/2021 dated 26.10.2021 has issued notification / circular and provided Relaxations in paying additional fees in case of delay in filing Form 8 (the Statement of Account and Solvency) by Limited Liability Partnerships upto 30.12.2021.
Disclaimer:Every effort has been made to avoid errors or omissions in this material. In spite of this, errors may creep in. Any mistake, error or discrepancy noted may be brought to our notice which shall be taken care of in the next edition. In no event the author shall be liable for any direct, indirect, special or incidental damage resulting from or arising out of or in connection with the use of this information.In case of any query, you may please connect with the author @ cslalitrajput@gmail.com // +91 9625483520
Ministry of Corporate Affairs (MCA) vide General Circular No. 16/2021 dated 26.10.2021 has issued notification / circular and provided Relaxations in paying additional fees in case of delay in filing Form 8 (the Statement of Account and Solvency) by Limited Liability Partnerships upto 30th December, 2021.
Notification text:
This Ministry has received a representation seeking extension of timeline for filing the Statement of Account and Solvency without paying additional fees by LLPs on account of challenges faced by the LLPs due to COVID-19 pandemic. As part of the Government’s constant efforts to promote ease of living and compliances for Micro, Medium and Small Enterprises doing business through the vehicle of LLP, it has been decided to allow LLPs to file Form 8 (the Statement of Account and Solvency) for the Financial Year 2020-2021 without paying additional fees upto 30th December, 2021.
The amendment to the Limited Liability Partnership (LLP) Act was approved on Wednesday. In this, removal of provisions of criminal action for non-compliance of certain rules is prominent.
At present the turnover of LLP is 40 lakhs and partner’s participation is limited to Rs 25 lakhs. After the amendment, the turnover limit will increase to Rs 50 crore and partner’s participation will also reach up to Rs 5 crore.
Giving information, Finance Minister Nirmala Sitharaman said that at present there are total 24 provisions of punishment in the LLP Act. We have put half of these in the default category. Which has now become 22 provisions of punishment in the LLP Act.
Twelve types of violations have been decriminalized in the LLP case. A lot of startups will also benefit from the amendments: Nirmala Sitharaman, Finance Minister
Limited Liability Partnership Profit & Loss Account
Notes to the Financial Statements
LLP’S PARTNERS’ REPORT
The Partners present their ………..st/rd Annual Report on the affairs of the LLP together with the Auditor’s Report and Financial Statements for the Financial Year ended 31st March, …….
LLP’S STRUCTURE
XYZ ……….. LLP is a Limited Liability Partnership, registered & incorporated in India under the Limited Liability Partnership Act, 2008, on ………. Day of …….., ……Year
List of Partners’ names, and who are designated as partners, is available for inspection at our registered office: ……………………………….. which is also the principal place of business of XYZ…………… LLP. Further details, and copies of the Auditor’s Report and Financial Statements, can be obtained in the normal working hours from the registered office of XYZ……………. LLP.
PRINCIPAL ACTIVITY
XYZ ………….. LLP is principally engaged in the Buisness of …………………………..
REVIEW OF THE BUSINESS AND FUTURE DEVELOPMENTS[VS1]
The LLP’s business plan is to continue to invest and grow in in the Real Estate Sector particular in its existing locations and key sectors while retaining appropriate profitability. The results for the year are set out and annexed as well as furnished in our Audited Financial Statements. The Partners regard the results and future prospects to be satisfactory.
If one looks at the trend in economic growth, it is seen that gross value added in the economy has been slowing down with 7.9% in 2015-16, 6.6% in 2016-17 and just 5.6% in Q1 of 2017-18. On the same lines, industrial capacity utilization as well as industrial production has been slipping. Not only this, fiscal deficit and interest rates have also been declining. While all this was happening, demonetization and GST came along with added to disruption of economy.
Post demonetization in 2016 which resulted in return of 99 percent of the banned currency notes, Indian GDP growth has recorded a three year low @ 5.7% in first quarter of financial year 2016-17. Apart from demonetization, it is understood that uncertainty over GST roll out in Q1 and related de-stocking, holding back plans by manufacturers and wait & watch policy adopted by large consuming masses, it has so happened. During the same period in financial year 2016-17, GDP growth was 7.9%. This is due to industrial performance.
Post GST, what will be the trend? It is too early to predict or comment on Q2 performance but if recent indirect tax collection for July 2017 (first month of GST) is any indications, the figure should be much higher than 5.9%. Tax collection alone cannot indicate economic growth and as such Government should also not be happy with increased tax collection. However, it would be wrong to say that it may be a trend, as just one-month tax figures cannot be said to setting up of trend. Sales in current Q2 would be higher owing to dealers and manufactures being compelled to clear old stocks as on 30th June, 2017, including various sales schemes used.
Government should make all out efforts to ensure flexible and easy GST Compliances (which presently is not) and also ensure that we do not land up in a pool of confusions and mess-up getting created by too frequent changes or amendments in tax procedures which only indicates bad foresight and planning. This is important as we need to allow businesses to do business rather than being busy with mere compliances. Today compliances are taking a toll on everything else.
The benefits of GST in terms of lower cost and input tax credit will start get translating in next 1-2 months, besides the transitional issues which may not be there after next quarter on wards.
Hoping that everything will be better- GST compliances, industrial output, consumption and of course, Tax Governance.
PARTNERS’ REPORT
The firm remains committed to embracing different ways of working through investing in its IT systems and infrastructure, with additional resources allocated to innovation in order to improve efficiency and deliver even greater value to its clients.
The firm has gradually introduces some new partners for bringing funds in the LLP to meets its working capital requirements.
The firm continues to manage its costs very carefully. However the firm is focused on developing its profile to support its clients and their business through these uncertain times.
FINANCING AND CAPITAL
The firm is financed primarily through revolving capital loans, structured in the form of a joint facility provided by banks as well as from body corporates and Individuals made available to the LLP, with guaranteed recourse to the Lenders, and through undistributed profits. There is also a capital accumulation scheme, whereby a fixed amount of capital is provided by partners through retained earnings. Although this capital is classified as a liability it does not constitute money borrowed from a financial institution.
PRINCIPAL RISKS AND UNCERTAINTIES
The principal risks and uncertainties that affect the financial results of the LLP relate to the variability of the ups and down in the market. Management seeks to match the LLP’s resources to the expected demand while taking up opportunities to expand market share.
The firm is committed to developing a high performance culture where talent can thrive regardless of background, religion, sexual orientation or gender.
DISCLOSURE OF INFORMATION TO AUDITORS
In so far as the Partners are aware:
There is no relevant audit information of which the LLP’s auditors are not aware; and
The Partners have taken the necessary steps that they ought to have taken to make them aware of any relevant audit information and to establish that the auditors are aware of that information.
INDEPENDENT AUDITORS
The independent auditors of XYZ……… LLP are …………………………….. who will be proposed for reappointment.
Approved by the Board of LLP and signed on its behalf by
Designated Partner (DPIN – ………)
Place: ……………….
Date: ……………..
PARTNERS’ RESPONSIBILITIES STATEMENT
The Partners are responsible for preparing the Annual Report and the Financial Statements in accordance with applicable law and regulations.
The Limited Liability Partnerships Act, 2008 require the Partners to prepare Financial Statements for each Financial Year. Under that law the Partners have elected to prepare the financial statements in accordance with Limited Liability Act, 2008. Under the act as applied to Limited Liability Partnerships, the Partners must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the LLP and of the profit or loss of the LLP for that year. In preparing these financial statements, the Partners are required to:
Select suitable accounting policies and then apply them consistently;
Make judgments and accounting estimates that are reasonable and prudent;
Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Partnership will continue in business.
The Partners are responsible for keeping adequate accounting records that disclose with reasonable accuracy at any time the financial position of the LLP and enable them to ensure that the financial statements comply with the LLP Act 2008 as applicable to Limited Liability Partnerships. They are also responsible for safeguarding the assets of the LLP and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
These responsibilities are exercised by the Board of LLP on behalf of the Partners.
Approved by the Board of LLP and signed on its behalf by
