The Limited Liability Partnership Act, 2008
AI-assisted · review in progress · last updated 25 July 2026 · jump to quick revision
Contents
- How the chapter fits together
- Definitions — Section 2
- Partners, designated partners and incorporation — Sections 5–25
- Liability, contribution and transfer of interest — Sections 26–33 & 42
- Disclosures, conversion, restructuring and winding up — Sections 34–70
- Key timelines and penalties
- Quick revision cards
In 30 seconds
- An LLP is a hybrid — a company's limited liability plus a partnership's flexibility. The Act has 81 sections (Sec 81 omitted w.e.f. 1.4.2022) and 4 Schedules, extends to the whole of India, and the Indian Partnership Act, 1932 does NOT apply (Sec 4).
- Minimum 2 partners (no maximum) and 2 designated partners — individuals, at least one resident in India (≥120 days in the FY). HUF, co-operative society and corporation sole cannot be partners.
- Incorporation runs RUN-LLP (name) → FiLLiP (incorporation) → e-Form 3 (LLP Agreement, 30 days); the ROC's certificate, issued within 14 days, is conclusive evidence.
- Liability is limited to the agreed contribution except fraud (Sec 30 — unlimited) and a partner's own wrongful act (Sec 28); a partner is agent of the LLP, not of the other partners (Sec 26).
- Compliance spine: SAS within 6 months and Annual Return within 60 days of FY end; conversion via Schedules II–IV (listed companies barred); Tribunal winding up on the Sec 64 grounds.
Based on the Limited Liability Partnership Act, 2008, as amended by the LLP (Amendment) Act, 2021, per the May 2026 syllabus. Section numbers refer to the LLP Act, 2008 unless stated.
How the chapter fits together
The LLP is a hybrid vehicle: the limited liability of a company combined with the organisational flexibility of a partnership. The Act contains 81 sections (Section 81 omitted w.e.f. 1.4.2022) and 4 Schedules, extends to the whole of India, and is administered by the MCA through the ROC. Key dates: notified 9.1.2007, Bill passed 12.12.2008, Presidential assent 7.1.2009, amended by the LLP (Amendment) Act, 2021 (13.8.2021). Section 4 shuts the old door — the Indian Partnership Act, 1932 is NOT applicable to an LLP, “save as otherwise provided”. The four Schedules: I — mutual rights and duties (the default when the agreement is silent); II — firm to LLP; III — private company to LLP; IV — unlisted public company to LLP.
Learn the chapter as one pipeline — mnemonic BODY-CAP-MINC-FADS:
- Body corporate — Sec 3 separate legal entity, Sec 4 Partnership Act excluded →
- Contribution / CAP — Secs 32–33, liability capped at agreed contribution →
- Min 2 partners / DP — Secs 5–10 eligibility, designated partners, DPIN →
- Fraud unlimited — Secs 26–31 agency, liability shields and the Sec 30 exception →
- Disclosures — Secs 34–39 books, SAS, Annual Return, compounding →
- Schedules (conversion) — Secs 55–59 conversion, 60–62 compromise, 63–65 winding up, 66–70 misc.
Sixteen characteristics recur in exam questions: body corporate · perpetual succession · separate legal entity · mutual agency · LLP Agreement · artificial legal person · common seal (optional) · limited liability · minimum 2 partners and 2 DP (one resident) · no maximum partners · profit-only business · investigation · compromise · conversion · e-filing · foreign LLP.
| Compare | One-line distinction |
|---|---|
| LLP vs partnership firm | LLP: body corporate, separate legal entity, perpetual succession, registration mandatory, liability limited (except fraud), LLP Act 2008. Firm: no separate entity, registration voluntary, unlimited liability, Partnership Act 1932 |
| LLP vs company | LLP: internal governance by contract (the agreement); min 2 partners, no max; liability = agreed contribution (unlimited on fraud). Company: governed by statute (CA 2013); Pvt 2–200, Public min 7 no max; liability = unpaid amount on shares |
| Partner vs designated partner | All DP are partners; not all partners are DP. Only DP bear statutory compliance and penalties (Sec 8); DP must be individuals (min 2, ≥1 resident); DPIN needed for DP only |
The full LLP vs Partnership (15 bases) and LLP vs Company (8 bases) tables are high-frequency direct questions — revise basis-by-basis: regulating Act, body-corporate status, separate legal entity, creation, registration, perpetual succession, name, liability, mutual agency, designated partners, common seal, compliance responsibility, annual filing, foreign partner eligibility, minor as partner; and against a company: terminology (partner/member), governance (contract vs statute), name suffix, min/max numbers, liability, management, minimum directors vs DP.
Definitions — Section 2
LLP [Sec 2(1)(n)]
A partnership formed AND registered under this Act. Registration is mandatory and definitional — unlike a partnership firm, where registration is voluntary.
Body corporate [Sec 2(1)(d)]
A company under s.2(20) of the Companies Act, 2013 + an LLP (Indian or foreign) + a foreign company — but excludes a corporation sole and a co-operative society. An HUF is not a body corporate, so it cannot be a partner.
Designated partner [Sec 2(1)(j)]
A partner designated pursuant to Sec 7. All DP are partners; NOT all partners are DP.
LLP Agreement [Sec 2(1)(o)]
A written agreement between the partners inter se, or between the LLP and its partners, on mutual rights and duties. The First Schedule fills the gaps where the agreement is silent or absent.
Small LLP [Sec 2(1)(ta)]
Contribution ≤ ₹25 lakh (prescribable up to ₹5 crore) and turnover in the preceding FY ≤ ₹40 lakh (prescribable up to ₹50 crore), plus prescribed conditions — relaxed compliance. The exact figures are MCQ-critical.
The remaining Section 2 terms, with their trap keywords:
| Term | Crisp meaning | Trap / keyword |
|---|---|---|
| Address [2(1)(a)] | Individual → usual residential address; body corporate → registered office | Two limbs tested together with “Name” |
| Business [2(1)(e)] | Trade, profession, service, occupation | Inclusive, not exhaustive; CG can exclude by notification |
| Chartered Accountant [2(1)(f)] | CA under the CA Act, 1949 holding a COP | Mere membership insufficient — COP mandatory (for the Sec 11 statement) |
| Entity [2(1)(k)] | Body corporate; includes a Partnership Act firm only for Secs 18, 46–50, 52, 53 | The “firm” inclusion is limited to those listed sections |
| Financial Year [2(1)(l)] | 1 Apr – 31 Mar; if incorporated after 30 Sep, FY may extend to 31 Mar of the year next following | First accounts period capped at 18 months; income-tax law needs a uniform Apr–Mar FY |
| Foreign LLP [2(1)(m)] | Formed/incorporated/registered outside India + place of business in India | Both limbs needed; can be a partner in an Indian LLP |
| Name [2(1)(p)] | Individual → forename/middle/surname; body corporate → registered name | Mirrors the “Address” definition |
| Partner [2(1)(q)] | Person who becomes a partner per the LLP Agreement | Status flows from agreement compliance, not mere investment |
| Regional Director [2(1)(ra)] | Appointed by the CG | Compounding authority |
| Registrar [2(1)(s)] | Registrar / Addl / Joint / Deputy / Asst Registrar appointed by the CG | — |
| Tribunal [2(1)(u)] | NCLT under s.408 of the Companies Act, 2013 | — |
| Undefined terms [2(2)] | Take their meaning from the Companies Act, 2013 | — |
Partners, designated partners and incorporation — Sections 5–25
Who can be a partner (Secs 5–6). Any individual or body corporate — but an individual is barred if of unsound mind (court finding in force), an undischarged insolvent, or with an insolvency application pending. HUF, co-operative society and corporation sole fall outside “body corporate”, so none of them can be a partner; a minor cannot be admitted to the benefits of an LLP (contrast the Partnership Act, which allows a minor with consent). At least 2 partners always (Sec 6), with no maximum; if partners fall below 2 for more than 6 months, the sole remaining partner who carries on business knowing this is personally liable for obligations of that period.
Designated partners (Secs 7–10). Minimum 2 DP, both individuals, at least one resident in India — resident means stayed ≥120 days in the FY (not the Companies Act’s 182). If all partners are bodies corporate (or a mix), nominee individuals of the body-corporate partners act as DP. DPIN is mandatory; consent is filed within 30 days. DP are responsible for compliance and liable to penalties (Sec 8). A DP vacancy must be filled within 30 days (Sec 9); if there is no DP, or only one, every partner is deemed a DP. Sec 10 sets the penalty structure (table in the timelines-and-penalties section).
Incorporation (Secs 11–14). The incorporation document needs 2+ subscribers, is filed with the ROC of the State, and carries a statement by a professional (advocate/CS/CA/CMA — a CA must hold a certificate of practice). The ROC registers it within 14 days and the certificate of incorporation is conclusive evidence. E-filing runs through the Central Registration Centre since 2.10.2018. A registered office is mandatory (Sec 13) and a change is effective only on filing (₹500/day penalty for contravention). On registration (Sec 14) the LLP can sue and be sued, hold property, and adopt a common seal — optional; if used, it is affixed in the presence of at least 2 DP.
- RUN-LLP — reserve the name (reservation valid 3 months) →
- FiLLiP — file the incorporation document (2+ subscribers, professional statement) →
- ROC registers within 14 days; certificate = conclusive evidence →
- e-Form 3 — file the LLP Agreement within 30 days of incorporation.
Name (Secs 15–17). The name must end with “LLP” or “limited liability partnership” and must not be undesirable or identical to an existing name. Reservation is valid 3 months from intimation (Sec 16). Rectification (Sec 17): the CG may direct a change within 3 months; a registered trademark’s proprietor may apply within 3 years of incorporation or change of name; after a CG order, notice goes to the Registrar within 15 days and the LLP Agreement is updated within 30 days. Rectification applies only to resemblance with an LLP, company or registered trademark — not a partnership firm’s name.
Partners’ relations (Secs 22–25). Subscribers become partners on incorporation (Sec 22). The LLP Agreement governs mutual rights and duties; a pre-incorporation agreement needs ratification; the First Schedule applies by default on silence (Sec 23). Cessation (Sec 24): 30 days’ notice where there is no agreement; automatic on death, unsoundness of mind or insolvency. A former partner is still deemed a partner vis-a-vis outsiders unless the third party has notice of the cessation or notice is delivered to the Registrar (Sec 24(3)). Changes (Sec 25): partner informs the LLP within 15 days; the LLP files with the Registrar within 30 days; where a ceasing partner files the notice himself, the Registrar seeks the LLP’s confirmation within 15 days.
Liability, contribution and transfer of interest — Sections 26–33 & 42
- Sec 26 — agent of the LLP only: a partner is an agent of the LLP, not of the other partners.
- Sec 27 — LLP’s liability: the LLP is NOT bound by an unauthorised act only if both limbs hold — the partner had no actual authority and the third party knew he had no authority or did not believe him to be a partner. Miss either limb and the LLP is bound. LLP obligations are solely the LLP’s, met out of LLP property.
- Sec 28 — partner’s shield: not personally liable merely for being a partner; liable only for his own wrongful act, never for other partners’ wrongful acts.
- Sec 29 — holding out: a non-partner who represents himself as a partner is liable to anyone who gave credit on the faith of that representation. Continued use of a deceased partner’s name does not make his legal representative or estate liable.
- Sec 30 — fraud: acts with intent to defraud creditors make the liability of the LLP and the fraudulent partners UNLIMITED; the LLP escapes only by proving the act was without its knowledge or authority. A knowing party faces imprisonment up to 5 years + fine ₹50,000–₹5,00,000 (Sec 30(2)); compensation is payable under Sec 30(3), but not by the LLP if the partner/DP/employee acted fraudulently without its knowledge.
- Sec 31 — whistle blowing: the Court/Tribunal may reduce or waive a penalty for a partner or employee who provides useful information.
Contribution (Secs 32–33). Contribution may be tangible or intangible property, money, services, or promissory notes. The obligation to contribute is as per the agreement — and a creditor who extended credit relying on the original obligation can enforce it.
Transferable interest (Sec 42). A partner’s share of profits and losses is transferable (wholly or partly), but the transferee gets no right to participate in management; the transfer by itself causes neither the partner’s dissociation nor the LLP’s dissolution.
Disclosures, conversion, restructuring and winding up — Sections 34–70
Financial disclosure (Secs 34–39). Books of account on the double-entry basis; Statement of Account & Solvency (SAS) within 6 months of FY end (Sec 34(2)); audit is required, though the CG may exempt any class of LLP (Sec 34(4)); accounting and auditing standards are prescribed by the CG in consultation with the NFRA, per ICAI recommendation (Sec 34A). Annual Return within 60 days of FY closure (Sec 35) — FY ending 31 Mar means due by 30 May. The incorporation document, partner details, SAS and Annual Return are open to public inspection (Sec 36). False statement in any return or document: imprisonment up to 2 years + fine ₹1,00,000–₹5,00,000 (Sec 37). The Registrar may summon information (Sec 38); non-compliance is punishable. Compounding (Sec 39): the Regional Director (or authorised officer) may compound fine-only offences; not available if a similar offence was compounded within the preceding 3 years (after 3 years it is treated as a first offence); intimation to the Registrar within 7 days.
Conversion into LLP (Secs 55–59).
| Converting entity | Route | Trap |
|---|---|---|
| Partnership firm | Second Schedule (Sec 55) | — |
| Private company | Third Schedule (Sec 56) | — |
| Unlisted public company | Fourth Schedule (Sec 57) | A listed company CANNOT convert into an LLP |
On conversion the Registrar issues a certificate, the LLP informs the old Registrar (of Firms or Companies) within 15 days, all property vests in the LLP, and the predecessor firm or company stands dissolved (Sec 58). Sec 59 empowers the CG to make rules for a foreign LLP’s place of business in India.
Compromise, arrangement, reconstruction (Secs 60–62). The Tribunal orders a meeting of creditors or partners; the scheme needs a 3/4th in value majority and the Tribunal’s order must be filed with the Registrar within 30 days (Sec 60). The Tribunal supervises enforcement and may order winding up, deemed under Sec 64 (Sec 61). Reconstruction or amalgamation (Sec 62) transfers the undertaking and permits dissolution without winding up — but an LLP shall NOT be amalgamated with a company (Explanation), no sanction issues for an LLP being wound up unless the Registrar reports no prejudice, and no dissolution order for the transferor issues unless the Official Liquidator reports no prejudice. The order is filed with the Registrar within 30 days.
Winding up and dissolution (Secs 63–65). Winding up may be voluntary or by the Tribunal; winding up is the process of bringing the LLP’s existence to an end, dissolution the final legal termination after it. Tribunal grounds (Sec 64): (a) the LLP itself decides; (b) partners below 2 for more than 6 months; (c) the sovereignty/security ground — omitted by the IBC, 2016 w.e.f. 15.11.2016; (d) default in filing SAS or Annual Return for 5 consecutive financial years; (e) just and equitable. The CG makes the winding-up rules (Sec 65).
Miscellaneous (Secs 66–70). A partner transacting with the LLP has the same rights as a non-partner lender (Sec 66). The CG may notify Companies Act provisions as applying to LLPs, the draft being laid before Parliament for 30 days (Sec 67). Late filing is allowed on additional fee (Sec 69). A second or subsequent offence attracts a DOUBLED fine, plus imprisonment where provided (Sec 70).
Key timelines and penalties
| Period | Event / action | Section |
|---|---|---|
| 120 days (in FY) | Threshold to qualify as “resident in India” (DP) | 7 |
| 14 days | ROC registers incorporation document, issues certificate | 12 |
| 30 days | LLP Agreement filing (e-Form 3) after incorporation | 23 (steps) |
| 3 months | Name reservation validity | 16 |
| 3 months | CG direction period to rectify/change name | 17(1) |
| 3 years | Trademark proprietor’s application window (from incorporation/name change) | 17(1) proviso |
| 15 days | Notice of name change to Registrar (after CG order) | 17(2) |
| 30 days | LLP changes name in the LLP Agreement (after name change) | 17(2) |
| 30 days | DP vacancy to be filled | 9 |
| 30 days (min) | Notice for resignation of a partner (absent agreement) | 24(1) |
| 15 days | Partner informs LLP of change in name/address | 25(1) |
| 30 days | LLP files notice of partner change with Registrar | 25(2) |
| 15 days | Registrar confirmation window (self-filed cessation notice) | 25(6) |
| 6 months | SAS filed after FY end | 34(2) |
| 60 days | Annual Return filed after FY closure | 35(1) |
| More than 6 months | Business continued with fewer than 2 partners → personal liability | 6(2) |
| More than 6 months | Partners below 2 → Tribunal winding-up ground | 64(b) |
| 5 consecutive FYs | SAS/Annual Return default → Tribunal winding-up ground | 64(d) |
| 3/4th value majority | Approval needed for compromise/arrangement | 60(2) |
| 30 days | Tribunal order (compromise/arrangement) filed with Registrar | 60(3) |
| 30 days | Reconstruction/amalgamation order filed with Registrar | 62(3) |
| 15 days | LLP informs old ROC (Firms/Companies) after conversion | 58 |
| 30 days | Draft notification (Companies Act provisions) before Parliament | 67(2) |
| 7 days | Intimation of compounding to Registrar | 39(4) |
| 18 months (max) | First accounting period cap | 2(1)(l) |
Every penalty in the Act follows one pattern: base amount + ₹100/day of continuing default, capped — and the LLP’s cap is always DOUBLE the individual/DP cap (₹1,00,000 vs ₹50,000; ₹50,000 vs ₹25,000).
| Default | Liable | Penalty (exact) | Section |
|---|---|---|---|
| Sec 7(1) — DP below 2 or none resident | LLP & every partner | ₹10,000 + ₹100/day; max ₹1,00,000 (LLP) / ₹50,000 (partner) | 10(1) |
| Sec 7(4) — DP consent not filed in 30 days | LLP & every DP | ₹5,000 + ₹100/day; max ₹50,000 (LLP) / ₹25,000 (DP) | 10(2) |
| Sec 7(5) / Sec 9 contravention | LLP & every partner | ₹10,000 + ₹100/day; max ₹1,00,000 (LLP) / ₹50,000 (partner) | 10(3) |
| False statement in incorporation document | Person making it | Imprisonment ≤2 yrs + fine ₹10,000–₹5,00,000 | 11(3) |
| Registered office contravention | LLP & every partner | ₹500/day, max ₹50,000 | 13(4) |
| Sec 25(2) — LLP fails to file partner change | LLP & every DP | ₹10,000 | 25(4) |
| Sec 25(1) — partner fails to inform LLP | Partner | ₹10,000 | 25(5) |
| Fraud (knowing party) | Person | Imprisonment ≤5 yrs + fine ₹50,000–₹5,00,000 | 30(2) |
| Fraudulent conduct | LLP + partner/DP/employee | Compensation for loss/damage | 30(3) |
| SAS filing default (Sec 34(3)) | LLP / every DP | ₹100/day; max ₹1,00,000 (LLP) / ₹50,000 (DP) | 34(5) |
| Books/SAS/audit default (Sec 34(1), (2), (4)) | LLP / every DP | ₹25,000–₹5,00,000 (LLP); ₹10,000–₹1,00,000 (DP) | 34(6) |
| Non-filing of Annual Return | LLP / every DP | ₹100/day; max ₹1,00,000 (LLP) / ₹50,000 (DP) | 35(2) |
| False statement in return/document | Person | Imprisonment ≤2 yrs + fine ₹1,00,000–₹5,00,000 | 37 |
| Non-compliance with Registrar summons | Person | Fine ₹2,000–₹25,000 | 38(3) |
| Non-compliance with compounding order | Partner/DP/employee | Max fine = 2x the original | 39(8) |
| Default in filing compromise order | LLP & every DP | ₹10,000 + ₹100/day; max ₹1,00,000 (LLP) / ₹50,000 (DP) | 60(4) |
| Default in filing reconstruction order | LLP & every DP | ₹10,000 + ₹100/day; max ₹1,00,000 (LLP) / ₹50,000 (DP) | 62(4) |
| Second/subsequent offence (any) | LLP / partner / DP | Fine DOUBLED (+ imprisonment as provided) | 70 |
- Using the Companies Act’s 182 days for DP residency — the LLP Act test is ≥120 days in the FY (“120-not-182”); 180/181/182 are the classic MCQ distractors.
- Making an HUF, co-operative society or corporation sole a partner — none is a “body corporate”, so none can be a partner; and a minor cannot be admitted to benefits (unlike the Partnership Act).
- Mixing holding out (Sec 29) — a non-partner representing himself, liable to those who gave credit on that faith — with fraud (Sec 30) — an actual partner/LLP acting with intent to defraud, bringing unlimited liability plus imprisonment.
- Reading the Sec 27(1) defence as OR — the LLP escapes only if the partner had no actual authority AND the third party knew of it / did not believe him a partner; miss either limb and the LLP is bound.
- Letting a listed company convert into an LLP (only firms, private and unlisted public companies can) — or letting an LLP amalgamate with a company (Sec 62 Explanation bars it).
- Mixing the two false-statement fine ranges — Sec 11(3) (incorporation document) ₹10,000–₹5,00,000 vs Sec 37 (general) ₹1,00,000–₹5,00,000.
- Treating the First Schedule as overriding the LLP Agreement — the agreement is the primary source; the Schedule is only the statutory default on silence or absence.
- Equating winding up with dissolution — winding up is the process of ending the LLP’s existence; dissolution is the final legal termination after it.
Quick revision cards
Structure and extent of the LLP Act?
Minimum partners and designated partners?
Who cannot be an LLP partner?
Incorporation steps and timelines?
Name reservation and rectification windows?
Fraud under Sec 30?
SAS and Annual Return deadlines?
Penalty pattern of the Act?
Conversion routes into LLP?
Tribunal winding-up grounds (Sec 64)?
Compounding under Sec 39?
Small LLP thresholds?