FAQ’s on PCS Partner in LLP

QCan a PCS appoint partner in LLP?

A – Yes, any PCS will be partner in LLP or registered his/her LLP with Ministry of corporate affairs.

QUnder which regulation it is allowed?

A – Regulation 168 of the Company Secretaries Regulations, 1982, allow to members to become a passive partner in any LLP.

Q – What is the definition of passive partner?

A – A “passive partner” means a partner of LLP who fulfils the following conditions:

  1. He must not be a designated partner;
  1. Subject to the LLP agreement, he may make agreed contribution to the capital of LLP and receive share in the profits of the LLP; and
  1. He must not take part in the management of the LLP nor act as an agent of the LLP or of any partner of the LLP.

However, none of the following activities shall constitute taking part in the management of the LLP:

  1. Enforcing his rights under the LLP agreement (unless those rights are carrying out management function).
  1. Calling, requesting, attending or participating in a meeting of the partners of the LLP.
  1. Approving or disapproving an amendment to the partnership agreement.
  1. Reviewing and approving the accounts of the LLP;
  1. Voting on, or otherwise signifying approval or disapproval of any transaction or proposed transaction of the LLP including: –
    • the dissolution and winding up of the LLP;
    • the purchase, sale, exchange, lease, pledge, mortgage, hypothecation, creation of a security interest, or other dealing in any asset by or of the LLP;
    • a change in the nature of the activities of the LLP;
    • the admission or removal of a partner of the LLP;
    • transactions in which one or more partners have an actual or potential conflict of interest with one or more partners or the LLP;
    • any amendment to the LLP agreement;
  1. A member shall be deemed to have a “substantial interest” in an LLP if he is entitled at any time to not less than 25% of the profits of such LLP.”

Q – Can a practising CS do any other business or occupation in LLP?

A – Yes, PCS become a passive partner of the LLP which is engaged in any other business or occupation provided that the practising member does not hold substantial interest in that LLP.

Q – Can a practicing CS do Complete Practice in LLP?

A – No, PCS become passive partner of a limited liability partnership (LLP) the objects of which include carrying out non-attestation services which fall within the scope of the profession of Company Secretaries irrespective of whether  or not the practicing member holds substantial interest in that LLP.

Q – What is Attestation and Non-attestation Services?

A – “Attestation Services” include services which require signing any certificate, document, report or any other statements relating thereto on behalf of a Company Secretary in Practice or a firm of such Company Secretaries in his or its professional capacity or which require signing anything that is required to be signed by a Company Secretary in practice.

Non-attestation Services” means services which are not attestation services.

Source – ICSI

Advertisements