Every registered Limited Liability Partnership must submit all the annual compliances and observe all the post-registration regulations directed to them by the Ministry of Corporate Affairs (MCA) and the LLP act. Here, this article discusses the financial disclosures that the LLP must submit to the Authority on time and in a specified manner.
Book of Accounts
The Limited Liability Partnership (LLP) must maintain a proper book of account as the Authority prescribes. Such maintenance must relate to the affairs of an LLP for each year of its existence. The LLP can maintain its book of Accounts on the following basis:
- Cash or Accrual Basis
- Double Entry System of Accounting
Also, the LLP must maintain the same at its registered office for the period as prescribed by the Authority. Read More: PPI License
Statement of Account and Solvency
Every Limited Liability Partnership must prepare a Statement of Account and Solvency for the financial year on its last day in the prescribed manner. Also, the LLP must submit the required Statement within six months from the end of each financial year. Lastly, the designated partners of the LLP must sign such statements.
The Statement of Account and Solvency prepared must be filed with the Registrar annually in the form and manner prescribed, accompanied by the required fee.
Limited Liability Partnerships’ accounts must be audited per the rules as prescribed by the Authority. However, the Central Government can exempt any class or classes of LLPs from such requirements by issuing a notification in the Official Gazette.
Penalty for Non-Compliance
If any Limited Liability Partnership fails to comply with the provisions of the LLP Act, then the LLP will be punishable with fine not less than twenty-five thousand rupees. The fine can extend to five lakh rupees. Also, every designated partner of such a Limited Liability Partnership will be punishable with such fine. The penalty for the partners will not be less than ten thousand rupees but can extend to one lakh rupees.
Every Limited Liability Partnership must file an annual return duly authenticated with the Registrar. The LLP must file the return within sixty days of the closure of its financial year. The returns must be submitted in the prescribed form and manner by the Authority, accompanied by the required fee. Read More: Producer Company Registration
Penalty for Not Filing returns
If any Limited Liability Partnership fails to comply with the Act’s provisions, then the MCA will punish her with a fine of less than twenty-five thousand rupees. The penalty can also extend upto five lakh rupees.
Punishment for Contravention
Suppose the Limited Liability Partnership contravenes the provisions of the Return process. In that case, the MCA will punish the designated partner of such LLPs with a fine of fewer than ten thousand rupees but can extend to one lakh rupees.
Inspection of Documents kept by Registrar
The incorporation document, names of partners and changes, if any, made therein, Statement of Account and Solvency, and annual return filed by each limited liability partnership with the Registrar shall be available for inspection by any person in such manner and on payment of such fee as may be prescribed. Read More: IPLC License
Penalty for false Statement
Suppose an LLP has submitted any return, statement, or other document required by the Authority, which is :
(a) False in any material particular or known to be false
(b) Omits any material fact knowing it to be material
In that case, the MCA will punish the said LLP with imprisonment for a term extending to two years. In addition, the LLP will also be liable for a fine. This fine can extend to five lakh rupees but will not be less than one lakh.