Understanding the LLP Rules 2009: A Comprehensive Guide for Businesses

The Limited Liability Partnership Rules, 2009 (LLP Rules 2009) lay down the legal procedures and operational framework for Limited Liability Partnerships (LLPs) in India. Enacted under the Limited Liability Partnership Act, 2008, these rules ensure that LLPs maintain legal compliance from incorporation to dissolution.

Whether you’re setting up an LLP, managing regulatory filings, or advising clients, understanding these rules is essential. This article demystifies the LLP Rules 2009 in simple terms, helping founders, accountants, and professionals stay compliant.

What Is a Limited Liability Partnership (LLP)?

An LLP is a unique form of business structure that combines the operational flexibility of a partnership with the limited liability protection of a company. Introduced in India through the LLP Act, 2008, LLPs are now widely adopted, especially by professionals and small businesses.

Each LLP is governed by both the Act and the LLP Rules 2009, which prescribe the manner in which the LLP is to be registered, maintained, and regulated.

Key Provisions of LLP Rules 2009

1. Incorporation of LLP

• Form FiLLiP (Form for incorporation of LLP): This is the prescribed online form to register an LLP with the Ministry of Corporate Affairs (MCA).
• Designated Partners: Minimum of two partners is required, and at least one must be a resident in India.
• Digital Signature Certificate (DSC): Partners must obtain DSC for electronic filings.
• Name Reservation: A unique name must be approved by the Registrar before incorporation.

2. LLP Agreement

• Every LLP must execute an agreement among its partners detailing profit-sharing, management roles, and dispute resolution.
• The agreement must be filed within 30 days of incorporation using Form 3.

3. Partner Changes and Management

• Changes in partners (admission, resignation, or removal) must be reported via Form 4.
• LLPs must maintain updated records of designated partners and changes in management structure.

4. Registered Office and Communication

• Any change in the registered office must be intimated to the Registrar using Form 15.
• All official communication must bear the LLP’s name, address, and LLP Identification Number (LLPIN).

5. Annual Compliance Requirements

• Statement of Account & Solvency (Form 8): To be filed within 30 days from the end of six months of the financial year.
• Annual Return (Form 11): Must be filed within 60 days of the end of the financial year.
• Non-filing can lead to hefty late fees of ₹100 per day without any cap.

6. Audit Requirements

• Audit is not mandatory unless the LLP’s turnover exceeds ₹40 lakhs or contribution exceeds ₹25 lakhs.
• However, LLPs can voluntarily opt for audits for better transparency and creditworthiness.

7. Striking Off an LLP

• LLPs not carrying on business can apply for voluntary closure using Form 24.
• Before applying, all filings must be up to date and consent of all partners must be secured.

Applicability to Various Business Types

One Person Company (OPC), Private Limited, and Others:

• OPCs and Private Limited Companies are not governed by LLP Rules but by the Companies Act, 2013.
• However, any conversion from a private company to LLP must comply with LLP Rules 2009.

LLPs:

• All LLPs, whether formed by professionals (CAs, lawyers, etc.) or startups, must adhere strictly to these rules.
• No exemption is granted based on turnover or nature of business.

Penalties for Non-Compliance

Non-compliance with LLP Rules 2009 can lead to:

• Monetary penalties (₹100 per day for late filing)
• Striking off of LLP by the Registrar
• Disqualification of designated partners in serious cases

The MCA has recently increased scrutiny on defaulting LLPs, making timely compliance more crucial than ever.

Digital Filing and E-Governance

All forms under LLP Rules 2009 must be filed online through the MCA portal. Filing requires:

• Digital Signature of designated partners
• Professional certification (by CA/CS/CMA) for certain filings
• Strict adherence to prescribed formats and deadlines

Frequently Asked Questions (FAQs)

1. What is the LLP Rules 2009?
   It is a set of rules framed under the LLP Act, 2008 to regulate incorporation, management, and compliance of LLPs in India.
2. What forms are used for LLP registration?
   Form FiLLiP is used for incorporation and Form 3 for LLP Agreement.
3. Is it mandatory to file an LLP Agreement?
   Yes, the LLP Agreement must be filed within 30 days of incorporation.
4. Who is a designated partner?
   A designated partner is responsible for compliance and can be held legally accountable for non-compliance.
5. Are LLPs required to conduct an audit?
   Only if turnover exceeds ₹40 lakhs or contribution exceeds ₹25 lakhs.
6. What is Form 8 in LLP compliance?
   Form 8 is used to file the Statement of Account and Solvency.
7. Can a private company convert into an LLP?
   Yes, but it must comply with LLP Rules and file conversion forms accordingly.
8. What is the penalty for late filing of forms?
   ₹100 per day of delay, with no upper cap.
9. Is DIN required for LLP partners?
   Yes, Designated Partners must have a valid DIN.
10. How can an LLP be closed?
    By filing Form 24 after fulfilling all compliance obligations.

Need Help with LLP Compliance?

Let Tradeviser’s Expert Consultancy Services simplify it for you. From incorporation to annual filings and changes in partners or agreement, we handle it all. Avoid penalties and stay compliant effortlessly contact us today.