Guidance Note on LLP Compliances under the LLP Act, 2008

Introduction

Limited Liability Partnerships (LLPs) in India must comply with several statutory requirements under the Limited Liability Partnership (LLP) Act, 2008. These annual compliances, including the filing of Form 8 (Statement of Accounts and Solvency), are essential for ensuring the LLP’s financial health and transparency. Additionally, LLPs must get their accounts audited if certain thresholds are exceeded. This guidance note provides a comprehensive view of the compliance requirements for LLPs, with a focus on auditor’s reports and other statutory obligations.

1. Key Annual Compliance Requirements for LLPs

Every LLP is required to file two major forms annually with the Registrar of Companies (ROC):

1. Form 11 – Annual Return.
2. Form 8 – Statement of Accounts and Solvency (audited if applicable).

1.1 Filing of Annual Return (Form 11)

• Applicability: Every LLP, regardless of its turnover, must file an annual return in Form 11.

• Due Date: May 30, 2024 (within 60 days from the end of the financial year, i.e., March 31).

• Key Information Required:

  • Names of all partners along with their contributions.
  • Any changes in the designated partners or partners during the year.

• Penalty for Late Filing: Rs. 100 per day of delay.

1.2 Filing of Statement of Accounts and Solvency (Form 8)

• Applicability: All LLPs must file Form 8 to declare their solvency and financial status.

• Due Date: October 30, 2024 (within 6 months from the end of the financial year).

Components of Form 8:

1. Part A - Statement of Solvency:

   • Declaration of Solvency: The designated partners declare that the LLP is solvent and capable of meeting its liabilities.
   • Financial Standing: Confirmation that the LLP’s assets exceed liabilities.

2. Part B - Statement of Accounts:

   • Financial Statements:
     • Balance Sheet: Detailed disclosure of assets, liabilities, and equity.
     • Profit and Loss Account: Breakdown of income, expenses, and net profit/loss.

3. Certification by Auditor (if applicable):

   • If the LLP’s turnover exceeds Rs. 40 lakhs or its contribution exceeds Rs. 25 lakhs, the accounts must be audited by a Chartered Accountant.

2. Auditor’s Report and Its Requirements

2.1 Applicability of Audit:

The requirement for auditing the accounts of an LLP applies under the following circumstances:

• When the annual turnover exceeds Rs. 40 lakhs.
• When the LLP’s contribution exceeds Rs. 25 lakhs.

2.2 Auditor’s Responsibilities:

The auditor’s role is to examine the financial statements of the LLP to ensure their accuracy and fairness. The audit report must:

• Verify the correctness of the Balance Sheet and Profit and Loss Account.
• Certify the solvency of the LLP as declared in Form 8.
• Check compliance with accounting standards.

2.3 Contents of Auditor’s Report:

The Auditor’s Report should contain the following key points:

• Auditor’s Opinion: A statement on whether the financial statements reflect a true and fair view of the LLP’s financial position.
• Financial Compliance: Confirmation that the LLP has adhered to statutory requirements and that the financial records are in order.
• Observations (if any): Any discrepancies or issues found during the audit must be mentioned.

Documents Required for the Audit:

• Complete Books of Accounts for the financial year.
• Bank Statements and Receipts/Invoices.
• Trial Balance and Ledger Reports.
• Previous Year’s Financial Statements (for comparison and consistency checks).

3. Other Important Compliance Requirements for LLPs

3.1 Designated Partner’s KYC (DIR-3 KYC)

• Applicability: Every designated partner with a valid DPIN must file their KYC details annually.

• Due Date: September 30, 2024.

• Penalty for Late Filing: Rs. 5,000 per designated partner for non-filing.

3.2 Statutory Registers and Minute Books

LLPs must maintain various statutory registers and minute books to ensure proper record-keeping:

• Register of Partners:

  • Should record the details of all partners, their contribution, and changes, if any.

• Minute Book:

  • Record all resolutions and decisions made during partner meetings.

3.3 Changes in LLP Agreement (Form 3)

• Applicability: Any changes to the LLP Agreement (e.g., capital, profit-sharing ratio, or business activity) must be filed with the ROC using Form 3.

• Due Date: Within 30 days of the change.

• Penalty for Late Filing: Rs. 100 per day of delay.

3.4 Voluntary Closure of LLP (Form 24)

• Applicability: LLPs can voluntarily wind up by filing Form 24 if they cease operations.

• Procedure:

  • Obtain consent from partners.
  • File Form 24 along with the necessary financial statements and resolutions.

4. Summary of LLP Compliances

The table below provides a comprehensive view of the LLP compliances under the LLP Act, 2008, along with the due dates, penalties, and key requirements:

Compliance	Form	Due Date	Penalty for Delay	Key Information Required
Annual Return Filing	Form 11	May 30, 2024	Rs. 100 per day	DPINs, Contribution Details, Partner Changes
Statement of Accounts & Solvency	Form 8	October 30, 2024	Rs. 100 per day	Financial Statements, Solvency Declaration
Audit Report (If applicable)	NA	To be attached with Form 8	Rs. 100 per day	Certified Auditor’s Report, Balance Sheet, P&L
KYC of Designated Partners	DIR-3 KYC	September 30, 2024	Rs. 5,000 per DPIN	Aadhaar, PAN, Mobile, Email ID
Changes in LLP Agreement	Form 3	Within 30 days of change	Rs. 100 per day	Amended Agreement, Partner Resolution
Voluntary Closure of LLP	Form 24	NA	No specific penalty	Financials, No-Objection from Creditors

5. Penalties and Consequences for Non-Compliance

Non-compliance with LLP filing requirements can result in significant penalties and other consequences:

• Penalty for Non-Filing: Rs. 100 per day for delayed filing, with no maximum cap.
• Disqualification of Partners: If designated partners fail to file DIR-3 KYC for two consecutive years, their DPIN will be deactivated.
• Additional Penalties: If an LLP consistently fails to comply with ROC filings, it may face compounding penalties, and the partners may face legal action, including disqualification from being appointed as directors in other LLPs or companies.

Conclusion

To maintain compliance, LLPs must adhere to the annual filing deadlines and ensure that their financial records are accurate and transparent. Filing Form 8 with the required auditor’s report, if applicable, is essential to avoid penalties. Regular maintenance of statutory registers and timely updates of the LLP Agreement, if there are any changes, will ensure that the LLP operates smoothly without any legal hindrances.

Staying compliant with the LLP Act, 2008 not only avoids financial penalties but also enhances the credibility of the LLP in the eyes of stakeholders, partners, and regulators.