Chapter VII of the limited liability partnership act, 2008, deals with the topic financial disclosures. Limited Liability Partnership in short (LLP) is an unusual type of commerce association. It is not just supplies the recompense of limited liability however too allows its members the elasticity of arranging their internal affairs as a partnership based on a commonly here conformity. Liability of the partners is not as inadequate as that of shareholder in a corporation. In this act:-
- No boundary on utmost amount of partners.
- Rights and duties of partners and mutual rights and duties among and also its partners are governed by the limited liability partnership Agreement among the partners
- Partners are agents of LLP however not the agents of other partners.
- An individual or else body corporate may turn into a partner in LLP.
Financial disclosures: – section (34-41)
Section 34:- maintenance of books of account, other records and audit, etc.
Each LLP shall retain its pertinent books of account on twice entry method of accounting; and shall be equipped moreover on
- Cash basic
- Accrual basic
All LLP shall remain books of account which are satisfactory to illustrate and give explanation about the LLP’s transaction
- Unveil with rational accurateness in the financial position of the LLP act.
- Elected partner to make certain that the purpose of any proclamation of description moreover solvency shall obey with the obligation of LLP.
Statement of account and solvency Statement of account
This is comprehensive synopsis of financial position of LLP. It consists:
- Statement of assets and liabilities
- period for grounding and Filing each LLP is needed to arrange a proclamation of account and solvency in a period of 6 months as of the end of financial year and shall file it in Form 8 with the Registrar of companies down with the specified fees of 1000 rupees contained by 60 days as of the end of six months of the financial year.
Example: In case financial year ends on 31st March, 2012 the LLP must prepare its annual statement by 30th September, 2012. The same statements must be filed with registrar of companies in form 8 till 30th November, 2012. The statements should also be signed by the Designated Partners.
Auditing of accounts of LLP
It means scrutiny of accounts by auditor. Audit under LLP Act:
Audit not binding each LLP whose takings does not surpass Rs.40 lakhs or whose involvement (involvement of a partner may consists of tangible, movable or immovable or intangible property or etc.) does not surpass Rs.25 lakhs in any financial year is excerpted from audit.
Audit requisite each LLP whose takings surpass Rs.40 lakhs or whose inputs surpass Rs.25 lakhs in any financial year has to acquire its accounts audited through a Chartered Accountant.
Qualification and Appointment of Auditors:
- An individual desires to be chartered accountant in organize to be eligible for rendezvous as an auditor of a LLP.
- The LLP whose takings/giving surpass the agreed bound shall hire a Chartered Accountant like its auditor for auditing its accounts.
- A nominated collaborator should select the auditor. In case, nominated partners fails after that the partners may choose the auditors.
- Auditors should be appointed preferably before the end of financial year.
Remuneration of Auditors:-
Recompense of an auditor is preset via chosen associates or else via subsequent the process as laid down in the LLP conformity.
Change of LLP Auditors: –
In this no definite rule for rendezvous – re-appointment of Auditors. The partners of LLP are gratis to modify the auditors from time to time.
Resignation of Auditors:-
An auditor of the LLP can quit at any time by sending a note to the registered office of the LLP through the basis for resigning. The partner of LLP, they can fill up the situation by assigning another auditor.
It means the section 34 contains-
- To reflect the accurate and fair-haired observation of state of affairs,
- Each LLP is requisite to preserve books of account. Every LLP is indispensable to expand the books of accounts on cash or accrual basis and also according to Double Entry System of secretarial. The books of accounts shall too be potted in the record office of the LLP for the specified period.
- Each LLP has to uphold uniform financial year ending on 31st March of a year.
The LLP rules supply that the books of account shall contain:
a) Essentials of every sums of money conventional and finished by the LLP and the matters with respect to which the proceeds and expenditures get rest
b) A trace of all the assets and liabilities of the LLP
c) Announcement of cost of goods purchased, inventories, work-in progress, complete goods and cost of goods sold
d) Any other meticulous as the partner may make a decision
Annual return 35
LLP annual return is essentially encompass:
- Name and address of registered office of LLP
- A synopsis of in sequence of Partners and elected Partners and changes in the midst of each year
- Date of closing of financial year etc.
Each LLP have to file a yearly revisit suitably authentic through the registrar inside 60 days of closing of its financial year i.e. by 30th May in appearance 11 down by the prearranged fees. A penalty of Rs. 100 per day is appropriate for late filing of income.
Section-36 deals with the inspection of documents kept by Registrar.
This section deals about the amalgamation manuscript like names of partners and changes, and complete in that, proclamation of Account and Solvency and annual revisit filed by equally limited liability partnership via the Registrar shall be accessible intended for scrutiny by any person in such approach and on payment of such fee as may be approved.
Section 37:- The Penalty for forged statement.
It deals with revisit, proclamation or other file mandatory through or used for the purposes of any of the provisions of this Act:-
(a) It is false in any material fastidious, significant it to be false
(b) its omits any material actuality significant it to be material, he shall hoard as or else specifically make available in this Act, be liable to be punished by with imprisonment for a term which may expand to two years, and also shall be legally responsible to fine which may expand to five lakh rupees except which shall not be below one lakh rupees.
38. Power of Registrar to obtain information
- In order to obtain such information as the Registrar may consider necessary for the purposes of running the provisions of LLP Act afterward the Registrar possibly will necessitate any individual as well as any present or ex-partner or selected partner of a LLP to respond any inquiry or formulate any assertion or else bring in any details in inscription or writing to him within a rational time.
- In this matter, the person submitted to in sub-section:
- The sub-section says that it does not respond such inquiry or else create such announcement before provide such information or specifics solicit intended for via the Registrar in a rational time or time known by the Registrar or else when the Registrar is not fulfilled through the respond provided by such individual then the Registrar shall have authority toward the summon that individual to become noticeable ahead of him otherwise an inspector or public officer whom the Registrar may authorize, to respond inquiry or else formulate such announcement or else bring in details, as the matter conceivably.
- The people who, with no legally recognized justification, not succeed to fulfill by any summons or any demand of the Registrar under section 38 shall be liable to be punished by with fine which is not be under two thousand rupees except which may extend to twenty-five thousand rupees also.
Section 39 deals with the compounding of offences.
Section 39 of the LLP act defines about the Central Government may compound any offence under this LLP which is liable to be punished by with fine solitary, on recompense of a sum which may inflate to the quantity of the upper limit fine approved for such offence.
The application intended for compounding shall be through in form 31 to the ROC who shall frontward the equivalent, alongside in the midst of his observation, to the Central Government.
And offence is compounded under the section 39of LLP, insinuation consequently shall be agreed by the LLP to the Registrar in form 22 inside 7 days from the date on which the offence is so compounded.
Section 40 :- the destruction of old records.
The section 40 of LLC act deals with Registrar may obliterate any document filed or inventory through him in physical variety or in electronic form in harmony with such rules as may be arranged.
Section 41: – the enforcement of duty to make returns etc.
In this section, limited liability partnership is in evasion in obeying with:
- whichever provisions of sec 41 or else of any other law which necessitate the filing in any demeanor with the Registrar of any return, account or other document or the generous of notice to him of any issue
- The any-type of the request of the Registrar to regulate and re-submit any file or to present a new file, and fails to create good the defaulting inside fourteen days later than the service on the limited liability partnership of a notice entailing it to be accomplished, the Tribunal may, on application by the Registrar, create an order unswerving that limited liability partnership or else its selected partners or else its partners to create good the defaulting inside such time while particular in the organize.
- Any kind of categorize may produce accessible subsequently while to every the costs of and in the direction of the application shall be put up with by that LLP.
- not anything in section 41 shall bound the procedure of any other provision of this Act otherwise any other law having presence penalties in admiration of any defaulting referred to in section 41 on that LLP
According to the chapter VII of this LLP act, 2008 who are the topic financial disclosures which talk about in the section (34 – 41). It is the fundamental nature who plays the role in the law which is limited liability partnership act.