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TMI BlogLIMITED LIABILITY PARTNERSHIP-PART-XXXIV - (Foreign Limited Liability Partnerships)X X X X Extracts X X X X X X X X Extracts X X X X ..... LIMITED LIABILITY PARTNERSHIP-PART-XXXIV - (Foreign Limited Liability Partnerships) - By: - Dr. Sanjiv Agarwal - Limited Liability Partnership - LLP - Dated:- 20-10-2010 - - The LLP Act, 2008 empowers the Central Government to make rules for (i) provisions in relation to establishment of place of business by foreign LLPs within India and carrying on their business therein by applying or incorporating, with such modifications, as appear appropriate, the provisions of the Companies Act, 1956 or (ii) such regulatory mechanism with such composition as may be prescribed in such rules. Section 59 pertains to the foreign limited liability partnerships. This Section empowers the Central Government to make rules in relation to the establish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of the place of business in India by a foreign LLP and also to modify the provisions of the Companies Act, 1956 and other regulations in case it is required. Using this power, the Government has issued Rule 34 of the LLP Rules for procedural aspects. Statutory Provision ( Section 59 ) Foreign Limited Liability Partnerships. - The Central Government may make rules for provisions in rela tion to establishment of place of business by foreign limited liability partnerships within India and carrying on their busi ness therein by applying or incorporating, with such modifica tions, as appear appropriate, the provisions of the Companies Act, 1956 (1 of 1956) or such regulatory mechanism with such composition as may be prescribed. For ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eign Limited Liability Partnership Foreign limited liability partnerships (FLLPs) as defined under section 2(m) of LLP Act, 2008 means a Limited Liability Partnership which is formed, registered or incorporated outside India and which establishes a place of business in India. Readers may also refer to commentary under section 2(m) of LLP Act . Section 59 of the Act deals with the establishment of place of business in India by an LLP incorporated outside India. As per the provision, foreign LLPs shall have to establish a place of business in India's jurisdiction for Indian operations and comply with provisions of LLP Act, 2008 and rules made there under. It appears that the provision has been inserted to have more effective ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... control over the working of FLLPs in India and to bring FLLPs on par with Indian LLPs for the purpose of compliance of rules as framed by Central Government. Establishment of Place of Business in India In Deverall V. Grant Advertising Inc (1955) 25 Comp Cas. 37, it was held that the word "establish" indicates more than occasional connection. If a company incorporated outside India has a specified or identifiable place at which it carries on business (like office, godown, store house or other premises having some connection between locality and business), it will be considered to have a established place of business in India. It is not that such place of business has to be established in India as a onetime exercise but such place ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of business should remain continuously established in India. FLLP should continue to have an established place of business in India. It is not that a full fledged office be opened. Even the setting up of a liaison office would also mean establishing a place of business in India. In Oriel Ltd. (1985) 3 All ER 216: 1985 BCLC 343 (CA), it was observed that a mere fact that the directors of a company had a residence in England from which they acted on behalf of the company did not constitute the residence as an established place of business.... the company must have a degree of continuity and reconcilability in respect of its business activities before it is treated as possessing an established place of business. The test would be satisfied if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there was some specific location readily identifiable with company by members of the public from which it could be deduced that some substantial business activity was being carried on. If a foreign company has a agent in India but has no office here, it does not , establish a place of business within India, to come under the ambit of section 592 (Lord Advocate v. Huron and Erie Loan and Saving Co. 1911 Scottish case 612). In one of the cases, it was held that where representatives of a foreign company were often coming and staying in a hotel in England for purchasing machinery, cotton etc, the foreign company had a place of business in England. Re Tovarishestvo Manufacture Liudvig Rabenek (1944) 2 All Er 556 : (1945) Comp Cas. 9 (Ch). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In Framroze Rustomji Paymaster v. British Burmah Petroleum Co. Ltd. (1976) 46 Comp Cas. 587 (Born), it was held that by delivering the documents to Registrar of Companies, Bombay, the defendants had admitted that the company had established a place of business in India. Carrying on business activity in India The provisions relating to the establishment of place of business in India by an LLP would apply when a business activity is carried on by foreign LLP in the Indian Territory. In Indian context, the mere presence of a representative of a foreign company is not sufficient if his only authority is to elicit orders from customers, but not to make contacts on behalf of the company. The requirement of "carrying on business in India" ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is satisfied if a company's business is carried on at a fixed and definite place in India for a sufficiently and reasonably long period of time Re P.J. Johnson v. Astrofiel Arnandorm (1990) 69 Comp case 619 (Kerala). A holding of property shall not be sufficient. In Pratap Singh v. Bank of America (1976) 46 Comp Cas. 532 (Bom), it was held that where a foreign corporation has made the necessary registration under the section, it could be held to be carrying on business at a place in respect of which the necessary registration has been made under clause (e) of sub-section (1) of section 592. Rule 34 pursuant to section 59 prescribes the rules for foreign limited liability partnerships. Certification and Authentication For the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urposes of certification of documents to be filed by FLLPs with the Registrar, FLLPs have been divided into three categories [Rule 34(2)] (a) FLLP incorporated in any country which is a Commonwealth country- Documents as required to be filed with Registrar as per rule 34(1) should be certified by official of Government to whose custody original document is committed or by notary public in that part of Commonwealth or any officer of FLLP on oath before Oath Administrator in that part of Commonwealth. (b) FLLP incorporated in a country outside Commonwealth but that country is a party to Hague Apostile Convention, 1961- Documents as required to be filed with Registrar as per rule 34(1) should be certified by any official ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of that Government to whose custody the original is committed and be duly apostillized as per Hague Convention. Documents such as list of partners, addresses, authorized persons to accept service etc. shall be notarized and be apostillized in country of origin as per Hague Convention. (c) FLLP incorporated in a country outside Common-wealth and also not a party to Hague Apostile Convention, 1961. Documents as required to be filed with Registrar as per rule 34(1) should be certified by an official of the Government to whose custody the original is committed or notary public of that country or an officer of LLP. In case certification by Government official or notary public, signature or seal should bear an authentication by a di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plomatic or consular officer authorized under section 3 of Diplomatic and Consular Officers (Oaths and Fees) Act, 1948 or where such officer is available, by any official as per section 6 of Commissioners of Oaths Act, 1889. If certification is done by any officer of FLLP, it should be signed before a person having authority to administer an oath under section 3 of Diplomatic and Consular Officers (Oaths and Fees) Act, 1948 or where such officer is available, by any official as per section 6 of Commissioners of Oaths Act, 1889. Forms to be filed by FLLP Form 30 Particulars of FLLP within 30 days of establishing place of business in India with Registrar of Companies (Rule 34 (1)] Form 31 Return of alteratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n in (a) incorporation document or constitution document of FLLP (b) registered or principal office of FLLP, and (c ) partners or designated partners of FLLP, within 60 days of close of financial year with Registrar of Companies [Rule 34 (3) (i)] From 32 Return of (a) alteration in name or address of authorized persons to accept services on behalf of LLP, (b) alteration in principal place of business of FLLP in India, and (c) cessation to have place of business in India, within 30 days from the date of such alteration [Rule 34(3) (ii) , 34(8)] Form 8 Statement of account and solvency as per section 34(rule 24) within 30 days from the end of six months of the financial year, with the Registrar of Companies [Rule 24, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rule 34(4)]. The aforementioned forms required to be filed by any FLLP should be filed in electronic from through the portal maintained by the Ministry of Corporate Affairs on its website. Further, these documents (Forms 8, 30, 31 and 32) should be filed by FLLP with the Registrar of Companies having jurisdiction over New Delhi. Thus, all FLLPs have to file documents with Registrar having jurisdiction over New Delhi and not to the Registrar having jurisdiction over the principal place of business in India. The forms or documents to be filed or delivered or registered by FLLPs with the Registrar shall be accompanied by the payment of prescribed fees as per Annexure B of Rules i.e., as follows- Fee for filing of form or statement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or return or notice or documents by FLLP- (a) for filing documents under Rule 34(1), i.e., Form No 30. - Rs 5000 (b) For any other form or statement or return or notice or document - Rs 1000 i.e., form 8, 31, 32 or any other form for each such document. - - Scholarly articles for knowledge sharing authors experts professionals Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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