Conversion of Partnership Firm into Limited Liability Partnership (LLP)

⇒ Conditions for conversion of a firm into LLP:

• DSC of Partners
• DPIN number of partners
• Name Approval from ROC
• LLP Form 17 with LLP form Fillip
• LLP form 3

⇒ Further note:

1. All the partners of the existing firm should compulsorily become the partners of LLP.
2. Minimum 2 partners as Designated Partners and one of them should be Resident in India.
3. Digital Signature Certificate for the Designated Partners.
4. LLP (Limited Liability Partnership) Name.
5. LLP (Limited Liability Partnership) Agreement.
6. Registered Office for the existing partnership firm.

⇒ Filing LLP Form 17:

Application and a Statement of the Conversion of Partnership Firm into LLP (Limited Liability Partnership) i.e., Form 17  should be filed along with the incorporation application. The subscriber’s sheet should also be filed while converting a partnership firm into an LLP. After filling the form 17 the mentioned documents should be mandatorily attached with it:

• Statement of consent of partners of the firm;
• Statement of assets and liabilities of the firm duly certified as true and correct by the Chartered Accountant in practice;
• Copy of acknowledgment of latest income tax return (Mandatory);
• Approval from any regulatory body/ authority (Mandatory, in case applicable approvals from the concerned body/ authority or authorities is required and have been obtained);
• List of all the secured creditors along with their consent to the conversion (Mandatory in case consent of all the secured creditors for conversion of the firm into limited liability partnership has been);
• Clearance or No Objection Certificate from Tax Authorities;

Prepare a list of all the secured creditors along with their consent to the conversion. It is Mandatory in case the consent of all the secured creditors for the conversion of the firm into a limited liability partnership has been.

A Clearance or No Objection Certificate (NOC) from the Tax Authorities.

Once, an LLP Form 17 is filled it must be digitally signed by a Designated Partner from a professionally practicing Chartered Accountant/Cost Accountant/Company Secretary.

⇒ LLP form Fillip (Incorporation):

For the Conversion of a Partnership Firm into LLP, LLP Form 2 and LLP Form 3 must also be filed. LLP Form 2 contains the incorporation document and the subscriber’s statement along with the following attached documents:

1. Proof of address of registered office of LLP;
2. Subscribers’ sheet including consent;
3. In principle approval of regulatory authority, if required
4. Detail of LLP(s) and/ or company(s) in which partner/ designated partner is a director/ partner (if any).

The Details of LLP(s) and/ or company(s) in which the partner/ designated partner is a director/ partner (if any).

⇒ LLP form 3 (Agreement):

LLP Form 3 contains the initial Limited Liability Partnership Agreement. This form can be filed once the Partnership Firm is converted into an LLP or while filing for the conversion of the Partnership Firm into LLP. The LLP Agreement must be attached with the  LLP Form 3.

On successful conversion of Partnership firm into LLP, the Registrar would issue Certificate of Incorporation of LLP. Once, the LLP is incorporated and the Partnership Firm is converted, the Partnership Firm would be deemed to be dissolved. Further, on conversion of Partnership into LLP, all properties, assets, interests, rights, privileges, liabilities, obligations of the firm are transferred to the LLP. In other words, the whole of the undertaking of the firm is transferred to the LLP.

Unregulated Deposit Schemes Ordinance, 2019

  Purpose of the Bill-

•  Totally ban all forms of the Unregulated Deposit Schemes.
• Totally Ban Any fraudulent default in the repayment or return of deposit on maturity or in rendering any specified service promised against such deposit.
• The focal point of the ordinance is to control and regulate Unregulated Deposit Scheme.

Ø  On whome this Ordinance applicable-

This Ordinance shall apply to only those deposits taken & accepted by non-corporate entities in small amounts from multiple investors by an invitation published in a newspaper under some scheme or arrangement.

Ø  Now the question is what does meant by The UNREGULATED DEPOSIT SCHEME.

• It is a Scheme or an arrangement under which deposits are accepted or solicited by any deposit taker by way of business and which is not a Regulated Deposit Scheme.

Ø  Why we need for this Law

• As the country progressed, some legislations were made to control the acceptance of deposits and making of loans & advances but they were applicable mostly to the organized entities like a company and an NBFC.
• However there was no legislation to regulate such deposits taken by many non corporate entities like, individual, Firm, Cooperative Societies, Trusts etc. 
• Banning of Unregulated Deposit Schemes Ordinance, 2019 proposes to control the flow of deposits amongst non-corporate assessees.

Ø  Any specified scheme which is regulated by any of the following regulators shall be called a REGULATED DEPOSIT SCHEME.

1.    Ministry of Corporate Affairs (MCA)

2.    Security & Exchange Board of India (SEBI)

3.    Reserve Bank of India (RBI)

4.    Insurance Regulatory & Development Authority of India (IRDA)

5.    State or U T Government

6.    National Housing Bank (NHB)

7.    Employees Provident Fund Organization

8.    Pension Fund Regulatory & Development Authority of India

9.    Central Registrar Multi-state Cooperative Societies

10.  Deposits accepted under any scheme or an arrangement registered with any regulatory body in India constituted or established under a statute; and

11.  Any other scheme as may be notified by the Central Government under this Ordinance.

Ø  Who are the DEPOSIT TAKERS

·         Individual/group of individual

·         association of persons

·         company

·         partnership firm

·         proprietorship concern

·         limited liability partnership

·         trust

·         co-operative society

Ø  What is DEPOSIT?

“Deposit” means an amount  of money received by way of an advance or loan or in any other form, by any deposit taker with a promise to return whether after a specified period or otherwise, either in cash or in kind or in the form of a specified service, with or without any benefit in the form of interest, bonus, profit or in any other form, but does not include

a)      any amount received as loan from a  banking company.

b)      any amount received as loan from Public Financial Institutions, Reserve Bank of India or Registered NBFC

c)      amounts received from Government or any other source whose repayment is guaranteed by the Government

d)     amounts received from foreign government, foreign banks, foreign development institutions foreign citizens, foreign authorities or person resident outside India as per the provisions of FEMA.

e)      amounts received by way of contributions towards the capital by partners of any partnership firm or a limited liability partnership;

f)       amounts received by an individual by way of loan from his relatives or amounts received by any firm by way of loan from the relatives of any of its partners;

g)      amounts received as credit by a buyer from a seller on the sale of any property (whether movable or immovable);

h)     amounts received by an asset re-construction company which is registered with the Reserve Bank of India under section 3 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002;

i)        any amount accepted by a registered political party under section 29B of the Representation of People Act, 1951;

j)        any periodic payment made by the members of the self-help groups operating within such ceilings as may be prescribed by the State Government or Union territory Government;

k)      any other amount collected for such purpose and within such ceilings as may be prescribed by the State Government;

l)        an amount received in the course of, or for the purpose of, business and bearing a genuine connection  to  such business

including-

i. payment, advance or part payment for the supply or hire of goods or provision of services and is repayable in the event the goods or services are not in fact sold, hired or otherwise provided;

ii. advance received in connection with consideration of an immovable property under an agreement or arrangement subject to the condition that such advance is adjusted against such immovable property as specified in terms of the agreement or arrangement;

iii. security or dealership deposit for the performance of the contract for supply of goods or provision of services; or

iv. an advance under the long-term projects for supply of capital goods

However if the above amounts become refundable and they are not refunded on the expiry of fifteen days, they shall be deemed to be deposits.

Moreover if the above amounts are taken to deal in the goods or properties or services which requires some necessary permission or approval  under  any  law, such amounts shall be deemed to be deposits if the necessary permission or approval are not obtained.

New Rule 25A under the Companies (Incorporation) Amendment Rules, 2014

MCA has intorduced another rule 25A in Companies(incorporatio)Amendment Rules, 2014.

Key Highlights of the new rule 25A.

1. New eform INC-22A (Active) introduced;

2. This rule is applicable on every company which is Incorporated on or before 31st December, 2017.

3. Companies who has not filed its finacial statement or annual return cannot file this form.

4. Companies whose status on MCA showing as struck off/under process of struck off/under liquidation/amalgamated/dissolved companies are not required to file that form.

5. last date of the form is 25th April, 2019.

6. If not filed or failed to file then their status will be Active-Non compliance company on MCA.

7. Also company will not be able to file eforms-PAS-3, SH-7,  DIR-12, INC-28.

8. Late Filing fees for the form INC-22A is 10,000 Rs. if filed after due date.

9. eform INC-22A is yet to be notified on MCA.

10. This form will be required OTP verification on email id of Company.

Note:-

specimen formate of the INC-22A form is here http://www.mca.gov.in/Ministry/pdf/CompaniesIncorporationAmendmentRules_21022019.pdf

Format for annual secretarial audit report and annual secretarial compliance report.

Annual secretarial audit and compliance reports 

Every listed entity and its material unlisted subsidiaries incorporated in India shall undertake secretarial audit and shall annex with its annual report, a secretarial audit report, given by a company secretary in practice, in such form as may be prescribed with effect from the year ended March 31, 2019.

New Regulation 24A of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 introduced by SEBI.

Annual secretarial audit report:

Q 1. By whom?

Ans. By every listed entity and its unlisted material subsidiaries.

Annual Secretarial Compliance Report:

·   listed entities shall additionally, on an annual basis, require a check by the PCS on compliance of all applicable SEBI Regulations and circulars/ guidelines issued thereunder;

·     The annual secretarial compliance report in the aforesaid format shall be submitted by the listed entity to the stock exchanges within 60 days of the end of the financial year.

Important Dates

Compliance	Due Date	Explanation
Annual Secretarial Audit Report	To form part of Annual Report of Listed Company and its material subsidiary companies	Applicable from the Financial Year ending on March 31, 2019
Annual Secretarial Compliance Report	Within 60 days from the end of Financial Year. i.e. May 30th every year.	Applicable to listed entities, with effect from the financial year ended March 31, 2019 onwards.

The format for the annual secretarial compliance report is provided here https://www.bseindia.com/downloads/whtsnew/file/1549621039496.pdf

Companies (Acceptance of Deposits) Amendment Rules, 2019

Rule 16 of The Companies (Acceptance of Deposits) Rules, 2014 prescribes about the Return of Deposits to be filed with the Registrar.

“Every company other than Government company shall file a onetime return of outstanding receipt of money or loan by a company but not considered as deposits, in terms of clause (c) of sub-rule 1 of rule 2 from the 01st April, 2014 to the date of publication of this notification in the Official Gazette, as specified in Form DPT-3 within ninety days from the date of said publication of this notification along with fee as provided in the Companies (Registration Offices and Fees) Rules, 2014”

in short;

The form DPT-3 (i.e. return of deposit) is also required to file for following purpose:

Purpose	For the Period	Applicability	Due Date
One time return for disclosure of details of outstanding money or loan received by a company but not considered as deposit in terms of rule 2(1)(c) of Chapter V	From 1stApril, 2014 to 22nd January, 2019	Every company to which these rules apply, except Government Company	21st April, 2019
Annually - Return for disclosures of money or loan received by a company but not considered as depositsin terms of rule 2(l)(c) of Chapter V	Information as on the 31st day of March of that year	Every company to which these rules apply, except Government Company	On or before the 30th day of June, of every year

Applicability:

DPT-3 is applicable on:

1. Private Limited Companies

2. Public Limited Companies

3. One Person Company (OPC)

Not applicable on:

1. Government Companies

2. The company not accepting any loan or does not have any outstanding loan.

Loans to be taken care of:

• All the outstanding receipt of money or loan from the period of 1st April 2014 to 22nd January 2019 will be covered under this electronic Form DPT-3.
• In case any loan is due before 1st April 2014 and is still outstanding in the records of the company. Then report to ROC in e-form DPT-3.
• In case of a company has already repaid loans before or on 22nd January 2018, then such a loan is no longer outstanding. As a result, no need to file e-form DPT-3

In short:

Amendment	Type of Return	Due Date
Explanation to Rule 16	Return of deposit or particulars of the transactions not considered as a deposit or both	On or before 30th June of the preceding year
Insertion of Rule 16A (3)	One time return of outstanding receipt of  money or loan by a company which is  not considered as deposits as per rule 2 (1) (c)	On or before 22nd April 2019