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THE LIMITED LIABILITY PARTNERSHIP ACT, 2008
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ARRANGEMENT OF SECTIONS
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CHAPTER I
PRELIMINARY
SECTIONS
- Short title, extent and commencement.
- Definitions.
CHAPTER II
NATURE OF LIMITED LIABILITY PARTNERSHIP
- Limited liability partnership to be body corporate.
- Non-applicability of the Indian Partnership Act, 1932.
- Partners.
- Minimum number of partners.
- Designated partners.
- Liabilities of designated partners.
- Changes in designated partners.
- Punishment for contravention of sections 7, 8 and 9.
CHAPTER III
INCORPORATION OF LIMITED LIABILITY PARTNERSHIP AND MATTERS INCIDENTAL THERETO
- Incorporation document.
- Incorporation by registration.
- Registered office of limited liability partnership and change therein.
- Effect of registration.
- Name.
- Reservation of name.
- Change of name of limited liability partnership.
- Application for direction to change name in certain circumstances.
- Change of registered name.
- Penalty for improper use of words “limited liability partnership” or “LLP”.
- Publication of name and limited liability.
CHAPTER IV
PARTNERS AND THEIR RELATIONS
SECTIONS
- Eligibility to be partners.
- Relationship of partners.
- Cessation of partnership interest.
- Registration of changes in partners.
CHAPTER V
EXTENT AND LIMITATION OF LIABILITY OF LIMITED LIABILITY PARTNERSHIP AND PARTNERS
- Partner as agent.
- Extent of liability of limited liability partnership.
- Extent of liability of partner.
- Holding out.
- Unlimited liability in case of fraud.
- Whistle blowing.
CHAPTER VI
CONTRIBUTIONS
- Form of contribution.
- Obligation to contribute.
CHAPTER VII
FINANCIAL DISCLOSURES
- Maintenance of books of account, other records and audit, etc.
- Annual return.
- Inspection of documents kept by Registrar.
- Penalty for false statement.
- Power of Registrar to obtain information.
- Compounding of offences.
- Destruction of old records.
- Enforcement of duty to make returns, etc.
CHAPTER VIII
ASSIGNMENT AND TRANSFER OF PARTNERSHIP RIGHTS
- Partner’s transferable interest.
CHAPTER XIV
MISCELLANEOUS
SECTIONS
- Business transactions of partner with limited liability partnership.
- Application of the provisions of the Companies Act.
- Electronic filing of documents.
- Payment of additional fee.
- Enhanced punishment.
- Application of other laws not barred.
- Jurisdiction of Tribunal and Appellate Tribunal.
- Penalty on non-compliance of any order passed by Tribunal.
- General penalties.
- Power of Registrar to strike defunct limited liability partnership off register.
- Offences to limited liability partnerships.
- Jurisdiction or Court.
- Power to alter Schedules.
- Power to make rules.
- Power to remove difficulties.
- Transitional provisions.
THE FIRST SCHEDULE.
THE SECOND SCHEDULE.
THE THIRD SCHEDULE.
THE FOURTH SCHEDULE.
THE LIMITED LIABILITY PARTNERSHIP ACT, 2008
ACT NO. 6 OF 2009
[7 th January , 2009.]
An Act to make provisions for the formation and regulation of limited liability partnerships and
for matters connected therewith or incidental thereto.
BE it enacted by Parliament in the Fifty-ninth Year of the Republic of India as follows: — CHAPTER I PRELIMINARY
1. Short title, extent and commencement.— ( 1 ) This Act may be called the Limited Liability Partnership Act, 2008.
( 2 ) It extends to the whole of India. ( 3 ) It shall come into force on such date^1 as the Central Government may, by notification in the Official Gazette, appoint:
Provided that different dates may be appointed for different provisions of this Act and any reference in any such provision to the commencement of this Act shall be construed as a reference to the coming into force of that provision.
2. Definitions.— ( 1 ) In this Act, unless the context otherwise requires, — ( a ) "address", in relation to a partner of a limited liability partnership, means — ( i ) if an individual, his usual residential address; and ( ii ) if a body corporate, the address of its registered office; ( b ) "advocate" means an advocate as defined in clause ( a ) of sub-section ( 1 ) of section 2 of the Advocates Act, 1961 (25 of 1961); ( c ) "Appellate Tribunal" means the National Company Law Appellate Tribunal constituted under sub-section ( 1 ) of section 10FR of the Companies Act, 1956 (1 of 1956); ( d ) "body corporate" means a company as defined in section 3 of the Companies Act, 1956 (1 of
- and includes — ( i ) a limited liability partnership registered under this Act; ( ii ) a limited liability partnership incorporated outside India; and ( iii ) a company incorporated outside India, but does not include — ( i ) a corporation sole; ( ii ) a co-operative society registered under any law for the time being in force; and ( iii ) any other body corporate (not being a company as defined in section 3 of the Companies Act, 1956 (1 of 1956) or a limited liability partnership as defined in this Act), which the Central Government may, by notification in the Official Gazette, specify in this behalf; ( e ) "business" includes every trade, profession, service and occupation; ( f ) "chartered accountant" means a chartered accountant as defined in clause ( b ) of sub-section ( 1 ) of section 2 of the Chartered Accountants Act, 1949 (38 of 1949) and who has obtained a certificate of practice under sub-section ( 1 ) of section 6 of that Act;
- 31st March, 2009, vide notification No. S.O. 891 (E), dated 31st March, 2009, see Gazette of India, Extraordinary, Part II, Sec. 3( ii ).
4. Non-applicability of the Indian Partnership Act, 1932.— Save as otherwise provided, the provisions of the Indian Partnership Act, 1932 (9 of 1932) shall not apply to a limited liability partnership. 5. Partners.— Any individual or body corporate may be a partner in a limited liability partnership: Provided that an individual shall not be capable of becoming a partner of a limited liability partnership, if —
( a ) he has been found to be of unsound mind by a Court of competent jurisdiction and the finding is in force; ( b ) he is an undischarged insolvent; or ( c ) he has applied to be adjudicated as an insolvent and his application is pending.
6. Minimum number of partners.— ( 1 ) Every limited liability partnership shall have at least two partners.
( 2 ) If at any time the number of partners of a limited liability partnership is reduced below two and the limited liability partnership carries on business for more than six months while the number is so reduced, the person, who is the only partner of the limited liability partnership during the time that it so carries on business after those six months and has the knowledge of the fact that it is carrying on business with him alone, shall be liable personally for the obligations of the limited liability partnership incurred during that period.
7. Designated partners.— ( 1 ) Every limited liability partnership shall have at least two designated partners who are individuals and at least one of them shall be a resident in India:
Provided that in case of a limited liability partnership in which all the partners are bodies corporate or in which one or more partners are individuals and bodies corporate, at least two individuals who are partners of such limited liability partnership or nominees of such bodies corporate shall act as designated partners.
Explanation .— For the purposes of this section, the term "resident in India" means a person who has stayed in India for a period of not less than one hundred and eighty-two days during the immediately preceding one year.
( 2 ) Subject to the provisions of sub-section ( 1 ), — ( i ) if the incorporation document — ( a ) specifies who are to be designated partners, such persons shall be designated partners on incorporation; or ( b ) states that each of the partners from time to time of limited liability partnership is to be designated partner, every such partner shall be a designated partner; ( ii ) any partner may become a designated partner by and in accordance with the limited liability partnership agreement and a partner may cease to be a designated partner in accordance with limited liability partnership agreement. ( 3 ) An individual shall not become a designated partner in any limited liability partnership unless he has given his prior consent to act as such to the limited liability partnership in such form and manner as may be prescribed.
( 4 ) Every limited liability partnership shall file with the registrar the particulars of every individual who has given his consent to act as designated partner in such form and manner as may be prescribed within thirty days of his appointment.
( 5 ) An individual eligible to be a designated partner shall satisfy such conditions and requirements as may be prescribed.
( 6 ) Every designated partner of a limited liability partnership shall obtain a Designated Partner Identification Number (DPIN) from the Central Government and the provisions of sections 266A to 266G
(both inclusive) of the Companies Act, 1956 (1 of 1956) shall apply mutatis mutandis for the said purpose.
8. Liabilities of designated partners.— Unless expressly provided otherwise in this Act, a designated partner shall be —
( a ) responsible for the doing of all acts, matters and things as are required to be done by the limited liability partnership in respect of compliance of the provisions of this Act including filing of any document, return, statement and the like report pursuant to the provisions of this Act and as may be specified in the limited liability partnership agreement; and ( b ) liable to all penalties imposed on the limited liability partnership for any contravention of those provisions.
9. Changes in designated partners.— A limited liability partnership may appoint a designated partner within thirty days of a vacancy arising for any reason and provisions of sub-section ( 4 ) and sub-section ( 5 ) of section 7 shall apply in respect of such new designated partner:
Provided that if no designated partner is appointed, or if at any time there is only one designated partner, each partner shall be deemed to be a designated partner.
10. Punishment for contravention of sections 7, 8 and 9.— ( 1 ) If the limited liability partnership contravenes the provisions of sub-section ( 1 ) of section 7, the limited liability partnership and its every partner shall be punishable with fine which shall not be less than ten thousand rupees but which may extend to five lakh rupees.
( 2 ) If the limited liability partnership contravenes the provisions of sub-section ( 4 ) and sub-section ( 5 ) of section 7, section 8 or section 9, the limited liability partnership and its every partner shall be punishable with fine which shall not be less than ten thousand rupees but which may extend to one lakh rupees.
CHAPTER III INCORPORATION OF LIMITED LIABILITY PARTNERSHIP AND MATTERS INCIDENTAL THERETO
11. Incorporation document.— ( 1 ) For a limited liability partnership to be incorporated, — ( a ) two or more persons associated for carrying on a lawful business with a view to profit shall subscribe their names to an incorporation document; ( b ) the incorporation document shall be filed in such manner and with such fees, as may be prescribed with the Registrar of the State in which the registered office of the limited liability partnership is to be situated; and ( c ) there shall be filed along with the incorporation document, a statement in the prescribed form, made by either an advocate, or a Company Secretary or a Chartered Accountant or a Cost Accountant, who is engaged in the formation of the limited liability partnership and by any one who subscribed his name to the incorporation document, that all the requirements of this Act and the rules made thereunder have been complied with, in respect of incorporation and matters precedent and incidental thereto. ( 2 ) The incorporation document shall — ( a ) be in a form as may be prescribed; ( b ) state the name of the limited liability partnership; ( c ) state the proposed business of the limited liability partnership; ( d ) state the address of the registered office of the limited liability partnership; ( e ) state the name and address of each of the persons who are to be partners of the limited liability partnership on incorporation;
( 2 ) No limited liability partnership shall be registered by a name which, in the opinion of the Central Government is —
( a ) undesirable; or ( b ) identical or too nearly resembles to that of any other partnership firm or limited liability partnership or body corporate or a registered trade mark, or a trade mark which is the subject matter of an application for registration of any other person under the Trade Marks Act, 1999 (47 of 1999).
16. Reservation of name.— ( 1 ) A person may apply in such form and manner and accompanied by such fee as may be prescribed to the Registrar for the reservation of a name set out in the application as —
( a ) the name of a proposed limited liability partnership; or ( b ) the name to which a limited liability partnership proposes to change its name. ( 2 ) Upon receipt of an application under sub-section ( 1 ) and on payment of the prescribed fee, the Registrar may, if he is satisfied, subject to the rules prescribed by the Central Government in the matter, that the name to be reserved is not one which may be rejected on any ground referred to in sub-section ( 2 ) of section 15, reserve the name for a period of three months from the date of intimation by the Registrar.
17. Change of name of limited liability partnership.— ( 1 ) Notwithstanding anything contained in sections 15 and 16, where the Central Government is satisfied that a limited liability partnership has been registered (whether through inadvertence or otherwise and whether originally or by a change of name) under a name which —
( a ) is a name referred to in sub-section ( 2 ) of section 15; or ( b ) is identical with or too nearly resembles the name of any other limited liability partnership or body corporate or other name as to be likely to be mistaken for it,
the Central Government may direct such limited liability partnership to change its name, and the limited liability partnership shall comply with the said direction within three months after the date of the direction or such longer period as the Central Government may allow.
( 2 ) Any limited liability partnership which fails to comply with a direction given under sub-section ( 1 ) shall be punishable with fine which shall not be less than ten thousand rupees but which may extend to five lakh rupees and the designated partner of such limited liability partnership shall be punishable with fine which shall not be less than ten thousand rupees but which may extend to one lakh rupees.
18. Application for direction to change name in certain circumstances.— ( 1 ) Any entity which already has a name similar to the name of a limited liability partnership which has been incorporated subsequently, may apply, in such manner as may be prescribed, to the Registrar to give a direction to any limited liability partnership, on a ground referred to in section 17 to change its name.
( 2 ) The Registrar shall not consider any application under sub-section ( 1 ) to give a direction to a limited liability partnership on the ground referred to in clause ( b ) of sub-section ( 1 ) of section 17 unless the Registrar receives the application within twenty-four months from the date of registration of the limited liability partnership under that name.
19. Change of registered name.— Any limited liability partnership may change its name registered with the Registrar by filing with him a notice of such change in such form and manner and on payment of such fees as may be prescribed. 20. Penalty for improper use of words "limited liability partnership" or "LLP".— If any person or persons carry on business under any name or title of which the words "Limited Liability Partnership" or "LLP" or any contraction or imitation thereof is or are the last word or words, that person or each of those persons shall, unless duly incorporated as limited liability partnership, be punishable with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees.
21. Publication of name and limited liability.— ( 1 ) Every limited liability partnership shall ensure that its invoices, official correspondence and publications bear the following, namely: —
( a ) the name, address of its registered office and registration number of the limited liability partnership; and ( b ) a statement that it is registered with limited liability. ( 2 ) Any limited liability partnership which contravenes the provisions of sub-section ( 1 ) shall be punishable with fine which shall not be less than two thousand rupees but which may extend to twenty-five thousand rupees.
CHAPTER IV PARTNERS AND THEIR RELATIONS
22. Eligibility to be partners.— On the incorporation of a limited liability partnership, the persons who subscribed their names to the incorporation document shall be its partners and any other person may become a partner of the limited liability partnership by and in accordance with the limited liability partnership agreement. 23. Relationship of partners.— ( 1 ) Save as otherwise provided by this Act, the mutual rights and duties of the partners of a limited liability partnership, and the mutual rights and duties of a limited liability partnership and its partners, shall be governed by the limited liability partnership agreement between the partners, or between the limited liability partnership and its partners.
( 2 ) The limited liability partnership agreement and any changes, if any, made therein shall be filed with the Registrar in such form, manner and accompanied by such fees as may be prescribed.
( 3 ) An agreement in writing made before the incorporation of a limited liability partnership between the persons who subscribe their names to the incorporation document may impose obligations on the limited liability partnership, provided such agreement is ratified by all the partners after the incorporation of the limited liability partnership.
( 4 ) In the absence of agreement as to any matter, the mutual rights and duties of the partners and the mutual rights and duties of the limited liability partnership and the partners shall be determined by the provisions relating to that matter as are set-out in the First Schedule.
24. Cessation of partnership interest.— ( 1 ) A person may cease to be a partner of a limited liability partnership in accordance with an agreement with the other partners or, in the absence of agreement with the other partners as to cessation of being a partner, by giving a notice in writing of not less than thirty days to the other partners of his intention to resign as partner.
( 2 ) A person shall cease to be a partner of a limited liability partnership — ( a ) on his death or dissolution of the limited liability partnership; or ( b ) if he is declared to be of unsound mind by a competent court; or ( c ) if he has applied to be adjudged as an insolvent or declared as an insolvent. ( 3 ) Where a person has ceased to be a partner of a limited liability partnership (hereinafter referred to as "former partner"), the former partner is to be regarded (in relation to any person dealing with the limited liability partnership) as still being a partner of the limited liability partnership unless —
( a ) the person has notice that the former partner has ceased to be a partner of the limited liability partnership; or ( b ) notice that the former partner has ceased to be a partner of the limited liability partnership has been delivered to the Registrar.
27. Extent of liability of limited liability partnership.— ( 1 ) A limited liability partnership is not bound by anything done by a partner in dealing with a person if —
( a ) the partner in fact has no authority to act for the limited liability partnership in doing a particular act; and ( b ) the person knows that he has no authority or does not know or believe him to be a partner of the limited liability partnership. ( 2 ) The limited liability partnership is liable if a partner of a limited liability partnership is liable to any person as a result of a wrongful act or omission on his part in the course of the business of the limited liability partnership or with its authority.
( 3 ) An obligation of the limited liability partnership whether arising in contract or otherwise, shall be solely the obligation of the limited liability partnership.
( 4 ) The liabilities of the limited liability partnership shall be met out of the property of the limited liability partnership.
28. Extent of liability of partner.— ( 1 ) A partner is not personally liable, directly or indirectly for an obligation referred to in sub-section ( 3 ) of section 27 solely by reason of being a partner of the limited liability partnership.
( 2 ) The provisions of sub-section ( 3 ) of section 27 and sub-section ( 1 ) of this section shall not affect the personal liability of a partner for his own wrongful act or omission, but a partner shall not be personally liable for the wrongful act or omission of any other partner of the limited liability partnership.
29. Holding out.— ( 1 ) Any person, who by words spoken or written or by conduct, represents himself, or knowingly permits himself to be represented to be a partner in a limited liability partnership is liable to any person who has on the faith of any such representation given credit to the limited liability partnership, whether the person representing himself or represented to be a partner does or does not know that the representation has reached the person so giving credit:
Provided that where any credit is received by the limited liability partnership as a result of such representation, the limited liability partnership shall, without prejudice to the liability of the person so representing himself or represented to be a partner, be liable to the extent of credit received by it or any financial benefit derived thereon.
( 2 ) Where after a partner's death the business is continued in the same limited liability partnership name, the continued use of that name or of the deceased partner's name as a part thereof shall not of itself make his legal representative or his estate liable for any act of the limited liability partnership done after his death.
30. Unlimited liability in case of fraud.— ( 1 ) In the event of an act carried out by a limited liability partnership, or any of its partners, with intent to defraud creditors of the limited liability partnership or any other person, or for any fraudulent purpose, the liability of the limited liability partnership and partners who acted with intent to defraud creditors or for any fraudulent purpose shall be unlimited for all or any of the debts or other liabilities of the limited liability partnership:
Provided that in case any such act is carried out by a partner, the limited liability partnership is liable to the same extent as the partner unless it is established by the limited liability partnership that such act was without the knowledge or the authority of the limited liability partnership.
( 2 ) Where any business is carried on with such intent or for such purpose as mentioned in sub-section ( 1 ), every person who was knowingly a party to the carrying on of the business in the manner aforesaid shall be punishable with imprisonment for a term which may extend to two years and with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees.
( 3 ) Where a limited liability partnership or any partner or designated partner or employee of such limited liability partnership has conducted the affairs of the limited liability partnership in a fraudulent manner, then without prejudice to any criminal proceedings which may arise under any law for the time being in force, the limited liability partnership and any such partner or designated partner or employee
shall be liable to pay compensation to any person who has suffered any loss or damage by reason of such conduct:
Provided that such limited liability partnership shall not be liable if any such partner or designated partner or employee has acted fraudulently without knowledge of the limited liability partnership.
31. Whistle blowing.— ( 1 ) The Court or Tribunal may reduce or waive any penalty leviable against any partner or employee of a limited liability partnership, if it is satisfied that —
( a ) such partner or employee of a limited liability partnership has provided useful information during investigation of such limited liability partnership; or ( b ) when any information given by any partner or employee (whether or not during investigation) leads to limited liability partnership or any partner or employee of such limited liability partnership being convicted under this Act or any other Act. ( 2 ) No partner or employee of any limited liability partnership may be discharged, demoted, suspended, threatened, harassed or in any other manner discriminated against the terms and conditions of his limited liability partnership or employment merely because of his providing information or causing information to be provided pursuant to sub-section ( 1 ).
CHAPTER VI CONTRIBUTIONS
32. Form of contribution.— ( 1 ) A contribution of a partner may consist of tangible, movable or immovable or intangible property or other benefit to the limited liability partnership, including money, promissory notes, other agreements to contribute cash or property, and contracts for services performed or to be performed.
( 2 ) The monetary value of contribution of each partner shall be accounted for and disclosed in the accounts of the limited liability partnership in the manner as may be prescribed.
33. Obligation to contribute.— ( 1 ) The obligation of a partner to contribute money or other property or other benefit or to perform services for a limited liability partnership shall be as per the limited liability partnership agreement.
( 2 ) A creditor of a limited liability partnership, which extends credit or otherwise acts in reliance on an obligation described in that agreement, without notice of any compromise between partners, may enforce the original obligation against such partner.
CHAPTER VII FINANCIAL DISCLOSURES
34. Maintenance of books of account, other records and audit, etc.— ( 1 ) The limited liability partnership shall maintain such proper books of account as may be prescribed relating to its affairs for each year of its existence on cash basis or accrual basis and according to double entry system of accounting and shall maintain the same at its registered office for such period as may be prescribed.
( 2 ) Every limited liability partnership shall, within a period of six months from the end of each financial year, prepare a Statement of Account and Solvency for the said financial year as at the last day of the said financial year in such form as may be prescribed, and such statement shall be signed by the designated partners of the limited liability partnership.
( 3 ) Every limited liability partnership shall file within the prescribed time, the Statement of Account and Solvency prepared pursuant to sub-section ( 2 ) with the Registrar every year in such form and manner and accompanied by such fees as may be prescribed.
( 4 ) The accounts of limited liability partnerships shall be audited in accordance with such rules as may be prescribed:
Provided that the Central Government may, by notification in the Official Gazette, exempt any class or classes of limited liability partnerships from the requirements of this sub-section.
( b ) any request of the Registrar to amend or complete and resubmit any document or to submit a fresh document,
and fails to make good the default within fourteen days after the service on the limited liability partnership of a notice requiring it to be done, the Tribunal may, on application by the Registrar, make an order directing that limited liability partnership or its designated partners or its partners to make good the default within such time as specified in the order.
( 2 ) Any such order may provide that all the costs of and incidental to the application shall be borne by that limited liability partnership.
( 3 ) Nothing in this section shall limit the operation of any other provision of this Act or any other law imposing penalties in respect of any default referred to in this section on that limited liability partnership.
CHAPTER VIII ASSIGNMENT AND TRANSFER OF PARTNERSHIP RIGHTS
42. Partner's transferable interest.— ( 1 ) The rights of a partner to a share of the profits and losses of the limited liability partnership and to receive distributions in accordance with the limited liability partnership agreement are transferable either wholly or in part.
( 2 ) The transfer of any right by any partner pursuant to sub-section ( 1 ) does not by itself cause the disassociation of the partner or a dissolution and winding up of the limited liability partnership.
( 3 ) The transfer of right pursuant to this section does not, by itself, entitle the transferee or assignee to participate in the management or conduct of the activities of the limited liability partnership, or access information concerning the transactions of the limited liability partnership.
CHAPTER IX INVESTIGATION
43. Investigation of the affairs of limited liability partnership.— ( 1 ) The Central Government shall appoint one or more competent persons as inspectors to investigate the affairs of a limited liability partnership and to report thereon in such manner as it may direct if —
( a ) the Tribunal, either suo motu , or on an application received from not less than one-fifth of the total number of partners of limited liability partnership, by order, declares that the affairs of the limited liability partnership ought to be investigated; or ( b ) any Court, by order, declares that the affairs of a limited liability partnership ought to be investigated. ( 2 ) The Central Government may appoint one or more competent persons as inspectors to investigate the affairs of a limited liability partnership and to report on them in such manner as it may direct.
( 3 ) The appointment of inspectors pursuant to sub-section ( 2 ) may be made, — ( a ) if not less than one-fifth of the total number of partners of the limited liability partnership make an application along with supporting evidence and security amount as may be prescribed; or ( b ) if the limited liability partnership makes an application that the affairs of the limited liability partnership ought to be investigated; or ( c ) if, in the opinion of the Central Government, there are circumstances suggesting — ( i ) that the business of the limited liability partnership is being or has been conducted with an intent to defraud its creditors, partners or any other person, or otherwise for a fraudulent or unlawful purpose, or in a manner oppressive or unfairly prejudicial to some or any of its partners, or that the limited liability partnership was formed for any fraudulent or unlawful purpose; or ( ii ) that the affairs of the limited liability partnership are not being conducted in accordance with the provisions of this Act; or
( iii ) that, on receipt of a report of the Registrar or any other investigating or regulatory agency, there are sufficient reasons that the affairs of the limited liability partnership ought to be investigated.
44. Application by partners for investigation.— An application by partners of the limited liability partnership under clause ( a ) of sub-section ( 1 ) of section 43 shall be supported by such evidence as the Tribunal may require for the purpose of showing that the applicants have good reason for requiring the investigation and the Central Government may, before appointing an inspector, require the applicants to give security, of such amount as may be prescribed, for payment of costs of the investigation. 45. Firm, body corporate or association not to be appointed as inspector.— No firm, body corporate or other association shall be appointed as an inspector. 46. Power of inspectors to carry out investigation into affairs of related entities, etc.— ( 1 ) If an inspector appointed by the Central Government to investigate the affairs of a limited liability partnership thinks it necessary for the purposes of his investigation to investigate also the affairs of an entity which has been associated in the past or is presently associated with the limited liability partnership or any present or former partner or designated partner of the limited liability partnership, the inspector shall have the power to do so and shall report on the affairs of the other entity or partner or designated partner, so far as he thinks that the results of his investigation thereof are relevant to the investigation of the affairs of the limited liability partnership.
( 2 ) In the case of any entity or partner or designated partner referred to in sub-section ( 1 ), the inspector shall not exercise his power of investigating into, and reporting on, its or his affairs without obtaining the prior approval of the Central Government thereto:
Provided that before according approval under this sub-section, the Central Government shall give the entity or partner or designated partner a reasonable opportunity to show cause why such approval should not be accorded.
47. Production of documents and evidence.— ( 1 ) It shall be the duty of the designated partner and partners of the limited liability partnership —
( a ) to preserve and to produce before an inspector or any person authorised by him in this behalf with the previous approval of the Central Government, all books and papers of, or relating to, the limited liability partnership or, as the case may be, the other entity, which are in their custody or power; and ( b ) otherwise to give to the inspector all assistance in connection with the investigation which they are reasonably able to give. ( 2 ) The inspector may, with the previous approval of the Central Government, require any entity other than an entity referred to in sub-section ( 1 ) to furnish such information to, or produce such books and papers before him or any person authorised by him in this behalf, with the previous approval of that Government, as he may consider necessary, if the furnishing of such information or the production of such books and papers is relevant or necessary for the purposes of his investigation.
( 3 ) The inspector may keep in his custody any books and papers produced under sub-section ( 1 ) or sub-section ( 2 ) for thirty days and thereafter shall return the same to the limited liability partnership, other entity or individual by whom or on whose behalf the books and papers are produced:
Provided that the inspector may call for the books and papers if they are needed again: Provided further that if certified copies of the books and papers produced under sub-section ( 2 ) are furnished to the inspector, he shall return those books and papers to the entity or person concerned.
( 4 ) An inspector may examine on oath — ( a ) any of the persons referred to in sub-section ( 1 ); ( b ) with the previous approval of the Central Government, any other person in relation to the affairs of the limited liability partnership or any other entity, as the case may be; and
( 2 ) The Central Government — ( a ) shall forward a copy of any report (other than an interim report) made by the inspectors to the limited liability partnership at its registered office, and also to any other entity or person dealt with or related to the report; and ( b ) may, if it thinks fit, furnish a copy thereof, on request and on payment of the prescribed fee, to any person or entity related to or affected by the report.
50. Prosecution.— If, from the report under section 49, it appears to the Central Government that any person in relation to the limited liability partnership or in relation to any other entity whose affairs have been investigated, has been guilty of any offence for which he is liable, the Central Government may prosecute such person for the offence; and it shall be the duty of all partners, designated partners and other employees and agents of the limited liability partnership or other entity, as the case may be, to give the Central Government all assistance in connection with the prosecution which they are reasonably able to give. 51. Application for winding up of limited liability partnership.— If any such limited liability partnership is liable to be wound up under this Act or any other law for the time being in force, and it appears to the Central Government from any such report under section 49 that it is expedient to do so by reason of any such circumstances as are referred to in sub-clause ( i ) or sub-clause ( ii ) of clause ( c ) of sub-section ( 3 ) of section 43, the Central Government may, unless the limited liability partnership is already being wound up by the Tribunal, cause to be presented to the Tribunal by any person authorised by the Central Government in this behalf, a petition for the winding up of the limited liability partnership on the ground that it is just and equitable that it should be wound up. 52. Proceedings for recovery of damages or property.— If, from any report under section 49, it appears to the Central Government that proceedings ought, in the public interest, to be brought by the limited liability partnership or any entity whose affairs have been investigated, —
( a ) for the recovery of damages in respect of any fraud, misfeasance or other misconduct in connection with the promotion or formation, or the management of the affairs, of such limited liability partnership or such other entity; or ( b ) for the recovery of any property of such limited liability partnership or such other entity, which has been misapplied or wrongfully retained,
the Central Government may itself bring proceedings for that purpose.
53. Expenses of investigation.— ( 1 ) The expenses of, and incidental to, an investigation by an inspector appointed by the Central Government under this Act shall be defrayed in the first instance by the Central Government; but the following persons shall, to the extent mentioned below, be liable to reimburse the Central Government in respect of such expenses, namely: —
( a ) any person who is convicted on a prosecution, or who is ordered to pay damages or restore any property in proceedings brought by virtue of section 52, may, in the same proceedings, be ordered to pay the said expenses to such extent as may be specified by the court convicting such person, or ordering him to pay such damages or restore such property, as the case may be; ( b ) any entity in whose name proceedings are brought as aforesaid shall be liable, to the extent of the amount or value of any sums or property recovered by it as a result of the proceedings; and ( c ) unless, as a result of the investigation, a prosecution is instituted in pursuance of section 50, — ( i ) any entity, a partner or designated partner or any other person dealt with by the report of the inspector shall be liable to reimburse the Central Government in respect of the whole of the expenses, unless and except in so far as, the Central Government otherwise directs; and ( ii ) the applicants for the investigation, where the inspector was appointed in pursuance of the provisions of clause ( a ) of sub-section ( 1 ) of section 43, shall be liable to such extent, if any, as the Central Government may direct.
( 2 ) Any amount for which a limited liability partnership or other entity is liable by virtue of clause ( b ) of sub-section ( 1 ) shall be a first charge on the sums or property mentioned in that clause.
( 3 ) The amount of expenses in respect of which any limited liability partnership, other entity, a partner or designated partner or any other person is liable under sub-clause ( i ) of clause ( c ) of sub-section ( 1 ) to reimburse the Central Government shall be recoverable as arrears of land revenue.
( 4 ) For the purposes of this section, any costs or expenses incurred by the Central Government or in connection with the proceedings brought by virtue of section 52 shall be treated as expenses of the investigation giving rise to the proceedings.
54. Inspector's report to be evidence.— A copy of any report of any inspector or inspectors appointed under the provisions of this Act, authenticated in such manner, if any, as may be prescribed, shall be admissible in any legal proceeding as evidence in relation to any matter contained in the report.
CHAPTER X CONVERSION INTO LIMITED LIABILITY PARTNERSHIP
55. Conversion from firm into limited liability partnership.— A firm may convert into a limited liability partnership in accordance with the provisions of this Chapter and the Second Schedule. 56. Conversion from private company into limited liability partnership.— A private company may convert into a limited liability partnership in accordance with the provisions of this Chapter and the Third Schedule. 57. Conversion from unlisted public company into limited liability partnership.— An unlisted public company may convert into a limited liability partnership in accordance with the provisions of this Chapter and the Fourth Schedule. 58. Registration and effect of conversion.— ( 1 ) The Registrar, on satisfying that a firm, private company or an unlisted public company, as the case may be, has complied with the provisions of the Second Schedule, the Third Schedule or the Fourth Schedule, as the case may be, shall, subject to the provisions of this Act and the rules made thereunder, register the documents submitted under such Schedule and issue a certificate of registration in such form as the Registrar may determine stating that the limited liability partnership is, on and from the date specified in the certificate, registered under this Act:
Provided that the limited liability partnership shall, within fifteen days of the date of registration, inform the concerned Registrar of Firms or Registrar of Companies, as the case may be, with which it was registered under the provisions of the Indian Partnership Act, 1932 (9 of 1932) or the Companies Act, 1956 (1 of 1956) as the case may be, about the conversion and of the particulars of the limited liability partnership in such form and manner as may be prescribed.
( 2 ) Upon such conversion, the partners of the firm, the shareholders of private company or unlisted public company, as the case may be, the limited liability partnership to which such firm or such company has converted, and the partners of the limited liability partnership shall be bound by the provisions of the Second Schedule, the Third Schedule or the Fourth Schedule, as the case may be, applicable to them.
( 3 ) Upon such conversion, on and from the date of certificate of registration, the effects of the conversion shall be such as specified in the Second Schedule, the Third Schedule or the Fourth Schedule, as the case may be.
( 4 ) Notwithstanding anything contained in any other law for the time being in force, on and from the date of registration specified in the certificate of registration issued under the Second Schedule, the Third Schedule or the Fourth Schedule, as the case may be, —
( a ) there shall be a limited liability partnership by the name specified in the certificate of registration registered under this Act; ( b ) all tangible (movable or immovable) and intangible property vested in the firm or the company, as the case may be, all assets, interests, rights, privileges, liabilities, obligations relating to the firm or the company, as the case may be, and the whole of the undertaking of the firm or the
