LLP registration

MCA has vide its notification dated 18th September, 2018 streamlined the process of incorporation of Limited Liability Partnerships (LLP) in India. Hitherto, for more than 10 months, the LLP incorporation had come to a standstill as MCA had stopped issuing stand-alone Director Identification Number (DIN) to individuals.

1) Now name reservation for a LLP can be done by a web service called LLP-RUN. Unfortunate part is that this RUN will be governed by their Central Reservation Centre (CRC) which is a retrograde step, in my view. That section is manned by totally incompetent people who have no idea at all about business incorporation.

2) Form 2 for incorporation of LLP will be replaced by FiLLiP which will carry the DIN allotment process also. So this is good move.

3) Similarly minor amendments have been made to Addendum to Form 2 (which will be known as Addendum to Form FiLLiP, form 5 (notice for change of name), form 17 (conversion of general partnership firm into LLP) and form 18 (conversion of a private company/ unlisted public company into LLP) consequent to the above amendments. It would be interesting to note form 18 amendments as with the proposed mandatory demat of securities of unlisted public limited companies from 2nd October onwards, many unlisted public companies will seek to convert themselves into LLPs / private companies to avoid that compliance. They might seek to convert themselves into private companies but there is always a lurking fear the mandatory demat of securities could be extended to private companies as well, in the future.

All these changes will take effect from 2nd October, 2018.  

Unlisted Public Companies (Preferential Allotment) Amendment rules 2011

The MCA has vide gazette notification dated 14th December 2011 amended the Unlisted Public Companies (Preferential Allotment) Rules 2003 vide the 2011 Amendment Rules. Salient features of the amendment are:

1) The definition of "preferential allotment" has been expanded to include instruments convertible into shares including hybrid instruments convertible into shares on a preferential basis but has excluded private placement made by a company under section 81(1A) and issue of shares to promoters and their relatives either in public issue or otherwise;
2) A proviso has been added in the above definition to state that the name, father's name, address & occupation needs to be mentioned in the resolution to be passed by the members u/s 81(1A) for the preferential issue;
3) Another proviso has been added that such preferential offer cannot be made to more than 49 persons;
4) A new rule 8 has been added which states that no fresh offer shall be made unless the earlier offer has been completed and the allotment in respect thereof. Any offer not in compliance with sec 81(1A) read with sec 67(3) shall be treated as a public offer and SEBI regulations on the subject shall apply. Monies shall be received under the offer only through cheque or demand draft or other banking channels (presumably NEFT, internet banking), not by cash. Allotment should be completed within 60 days of the date of receipt of application money and in case the company is not able to do that, then application monies have to be repaid within 15 days thereof with an interest of 12% p.a. Monies received on application have to be kept in a separate bank account and can be utilised only for adjustment against allotment of securities or repayment of moneys where allotment could not be done within the stipulated time. Companies are not allowed to release any advertisement or use any media, marketing or distribution channels or agents in such issue.

Copy of the MCA notification can be found here