Annual and Periodic Compliance Requirements for LLPs
Statutory Compliance after Incorporation of the LLP (Limited Liability Partnership)
After formation of Limited Liability Partnership, every LLP firm shall be required to comply with following statutory requirements as per LLP Act 2008 and LLP Rule
I. Periodic compliance requirements
An LLP must maintain books of account, either on cash basis or accrual basis, in accordance with accounting principles, to show the LLP’s transactions and disclose financial position. Books of accounts must be kept in such manner that they enable the designated partners to show that any Statement of Accounts and Solvency complies with the LLP Act. These books must contain particulars of:
a) All money received and expended by the LLP,
b) A record of assets and liabilities,
c) Statements of costs of goods purchased, inventories, finished goods and goods sold;
d) Any other particulars as may be decided by the partners. The decision to maintain records of any other particulars must be made by a resolution passed by the LLP in a meeting of the
partners (including Designated Partners).
II. Annual compliance requirements
Annual compliance for an LLP is much less compared that required for a company. An LLP is
required to maintain certain books of accounts for each year of business. For the purpose of closing its books of accounts, it may opt for either the end of the financial year (March 31), or the end of the calendar year (December 31).
An LLP must file the following forms electronically with the ROC through the LLP site
(http://llp.gov.in) for annual compliance:
1. Annual Return within sixty days of closure of its financial year in Form 11.
If the LLP has a turnover of less than 5 crore rupees, or capital contribution of less than 50 lakh rupees, the annual return must be accompanied by certificate from a designated partner (other than the signatory to the annual return), to the effect that annual return contains true and correct information.
If the annual turnover crosses 5 crore rupees or capital contribution above 50 lakh rupees, the
annual return must be accompanied with a certificate from a practicing Company Secretary
certifying that he has verified the particulars from the books and records of the LLP and found them to be true and correct.
2. Statement of Accounts and Solvency within 7 months in Form 8
As per the law, each LLP must also file a Statement of Accounts and Solvency (“SAS”) for every financial year within thirty days from the end of six months of that financial year (that is, seven months). The SAS must be signed by designated partners and each designated partner will be presumed to have approved the SAS. The SAS must be filed with the ROC in Form 8, available on the LLP site. Fees to be paid are mentioned in a separate file called the Ready Reckoner on “Government fees payable during Incorporation and at the time of Annual Compliance” (subject to future updates).
3. Requirement of audit
An audit is not required for an LLP (unless the partners willingly decide to carry it out) if all of the following requirements are met:
a) its turnover does not exceed 40 lakh rupees,
b) the capital contribution of the partners does not exceed 25 lakh rupees.
Where an audit is not conducted, the LLP shall include in the SAS a statement to the effect of
acknowledgment by the partners of their responsibilities must be made.
In all other instances, an audit must be conducted by a Chartered Accountant. The auditor must be appointed:
a) At least 30 days before the end of each financial year of the LLP,
b) Before the end of the financial year of the LLP.
The auditor will hold office in accordance with the terms of employment until new auditors are appointed or they are re-appointed.
A. To maintain financial affairs and file accounts :-
a) To maintain proper books of accounts relating to its affairs for each year on cash or accrual basis and according to the double entry system of accounting and shall maintain the same at the registered office of the company.
b) The accounts of LLP shall be audited by an auditor.
B. Returns and records required by LLP
|Books of Account||LLP should maintain proper books of account.|
|Minute Book||Minute book should be maintained to record minutes of meetings of partners and managing/executive committee of partners.|
|Change in partners||Any change in partner and designated partner (admission, resignation, cessation, death, expulsion) should be filed electronically in e-form 4 within 30 days of change with fees.|
|Supplementary LLP agreement||Such admission and cessation will alter mutual rights and duties of partner shall change. Hence, supplementary LLP agreement will be required which is also required to be filed in e-form 3 within 30 days of change with fees|
|Statement of Account and solvency||Statement of Account and Solvency (SAS) is to be filed annually in e-form 8 with required fees. It is to be filed within 30 days from expiry of 6 months from end of each financial year i.e. by 30th October.|
|Annual Return||Annual Return should be filed with ROC in e-form 11 with filing fees, within 60 days from close of financial year i.e. by 30th May.|
|Heavy penalty||Heavy penalty of Rs 100 per day for late filing of returns.|
|Inspection of documents||Incorporation document (form 2), Annual Return (form 11), Statement of Account and Solvency (SAS) (form 8 ) and Name of partners and changes, if any, made therein (form 4) are available for public inspection on payment of fees but LLP agreement is not available for public inspection].|
C. Compliance of Meetings of LLP as per LLP agreement:-
|Sr. No.||Nature of Meeting||Number of meetings||Period|
|1||First General Meeting||N.A.||Within 30 days of incorporation|
|2||General Meeting||1||In 1 Financial Year|
|3||Executive Committee||2||In 1 Financial Year|