New Regulations In Cs Profession

“Change is the only constant”,[object Object],NEW REGULATIONS IN COMPANY SECRETARIES PROFESSION: LLP , ICDR and the forthcoming,[object Object],Neha Singhi,[object Object],Practicing Company Secretary,[object Object],Add: c/o Kreeti Technologies ,[object Object],#330 SDF Building, Block GP,,[object Object],Sector V, Salt Lake City,[object Object],Kolkata-700091,[object Object],Ph- 9133 40083385,[object Object],Email: neha@nehasinghi.com,[object Object]

Copyright,[object Object],This Presentation is the property of Neha Singhi and no part of it can be copied, reproduced or distributed in any manner, without prior permission of the Proprietor.,[object Object]

Index,[object Object],Need for New Regulations,[object Object],Limited Liability Partnership Act, 2008,[object Object],ICDR Guidelines,[object Object],Forthcoming Regulations,[object Object]

Need for New Regulations,[object Object],[object Object]

To keep pace with the global changing scenarios

Constantly changing Business environment

Innovation and Development of Technology

Some new regulations introduced are-Limited Liability Partnership Act, 2008,[object Object],SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009,[object Object]

LIMITED LIABILITY PARTNERSIP ACT, 2008,[object Object],Apple pie for maturing service industry in India,[object Object]

Introduction,[object Object],A new business entity, which will combine limited liability, corporate personality and the advantages of partnership taxation,[object Object],Rule that an LLP partner's personal assets will generally NOT be at risk in the event of a financial disaster resulting from business losses,[object Object],Simple partnership structure, so easier to form,[object Object],Rights and Obligations of partners are mutually decided,[object Object],Useful for small enterprises, venture capitalists, professional firms like lawyers, accountants, architects etc.,[object Object]

Global Scenario of LLPs,[object Object],LLPs are very popular form business in U.K., USA, Australia, China, Japan, Singapore, etc,[object Object],LLP emerged in United States in 1990s, different statutes for individual states,[object Object],LLP Act in UK came in force on 1st April 2001,[object Object],In UK, LLP is a ‘fiscal transparency’, i.e. not subject to taxation and only the members are liable to tax.,[object Object]

Entry of LLP in India,[object Object],LLP Bill, 2006 introduced in RajyaSabha on 15th December 2006,[object Object],Examined by Parliamentary Standing Committee,[object Object],On 24th October 2008, revised LLP Bill 2008 passed by RajyaSabha,[object Object],LokSabha passed the bill on 12th December 2008,[object Object],LLP Act, 2008 came into with President’s assent on 7th January 2009,[object Object]

….contd,[object Object],LLP website launched on 1st Apr 2009 (llp.gov.in),[object Object],LLP Rules 2009, were issued on 1st Apr 2009 covering registration and operational aspects,[object Object],1st LLP was registered on 2nd Apr 2009,[object Object],Rules relating to conversion of a partnership firm, a private company, an unlisted public company into LLP came into effect 31st May 2009,[object Object],As per data available on llp.gov.in, 880 LLP’s have been registered till 05.3.2010,[object Object]

LLP Partner,[object Object],Individual,[object Object],Body Corporate, wider scope,[object Object],Designated Partner vis a vis Director,[object Object],Section 7,[object Object],Minimum two Designated Partners: individuals,[object Object],Atleast one Designated partner resident in India,[object Object],Mutual Rights and duties of partners governed by First Sch, in absence of LLP Agreement on such matters,[object Object]

Main Provisions of the LLP Act,[object Object],Any 2 or more persons can form a LLP (Section 6),[object Object],Section 3,[object Object],Body corporate with separate legal entity,[object Object],Perpetual succession,[object Object],Any change in partners does not affect LLP,[object Object],Liability of partners limited to their contribution.,[object Object],Indian Partnership Act,1932 not applicable.,[object Object],No limit for maximum partners.,[object Object],File within 6 months of end of financial year Statement of accounts and solvency with the Registrar,[object Object],File Annual Return within 60 days of closure of financial year with the Registrar,[object Object]

Incorporating a LLP,[object Object],Obtain DPIN for Designated Partners by filing Form 7, and sending the physical copies of the application and documents,[object Object],File for Name Availability in Form 1,[object Object],Form 2 for Incorporation,[object Object],File LLP Agreement in Form 3,[object Object],Consent of partners in Form 4,[object Object]

Taxation Issues,[object Object]

Taxation Issues on LLP,[object Object],LLPs will be treated as Partnership firms for the purpose of Income tax,[object Object],Profit will be taxed in the hands of LLP and not in the hands of partners,[object Object],No surcharge will be levied on income tax,[object Object],Minimum Alternate Tax and Dividend Distribution Tax not applicable for LLP,[object Object],Section 167C inserted in I.T. Act,[object Object],Every partner of a LLP jointly and severally liable for the taxes, for the period during which he is a partner unless gross neglect, misfeasance etc.,[object Object],Remuneration to partners to be taxed as “Income from Business and Profession”,[object Object]

Budget 2010-11 CGT & Carry forward of losses,[object Object],Under existing provisions of IT Act, transfer of assets on conversion of a company to LLP under Section 56 or 57, attracts levy of capital gains tax. Similarly, carry forward of losses and of unabsorbed depreciation is not available to the successor LLP.,[object Object],In the Union Budget 2010, it is proposed that the transfer of assets in such case shall not be regarded as a transfer for the purposes of capital gains tax under section 45, subject to certain conditions. These conditions are as follows:,[object Object],the total sales, turnover or gross receipts in business of the company do not exceed sixty lakh rupees in any of the three preceding previous years;,[object Object],the shareholders of the company become partners of the LLP in the same proportion as their shareholding in the company;,[object Object],no consideration other than share in profit and capital contribution in the LLP arises to partners;,[object Object],the erstwhile shareholders of the company continue to be entitled to receive at least 50 per cent of the profits of the LLP for a period of 5 years from the date of conversion; ,[object Object],all assets and liabilities of the company become the assets and liabilities of the LLP; and,[object Object],no amount is paid, either directly or indirectly, to any partner out of the accumulated profit of the company for a period of 3 years from the date of conversion. ,[object Object]

Budget 2010-11… contd,[object Object],If the above conditions are fulfilled carry forward and set-off of business loss and unabsorbed depreciation to the successor LLP,[object Object],If the above conditions are not complied with the benefit availed by the company shall be deemed to be the profits and gains of the successor LLP chargeable to tax for the previous year in which the requirements are not complied with.,[object Object],The aggregate depreciation allowable to the predecessor company and successor LLP shall not exceed, in any previous year, the depreciation calculated at the prescribed rates as if the conversion had not taken place. ,[object Object],It is further proposed that the actual cost of the block of assets in the case of the successor LLP shall be the written down value of the block of assets as in the case of the predecessor company on the date of conversion. ,[object Object]

Budget 2010-11… contd,[object Object],It is also provided that the cost of acquisition of the capital asset for the successor LLP shall be deemed to be the cost for which the predecessor company acquired it.,[object Object],Credit in respect of tax paid by a company under section 115JB is allowed only to such company under section 115JAA. It is proposed to clarify that the tax credit under section 115JAA shall not be allowed to the successor LLP.,[object Object],These amendments are proposed to take effect from 1st April, 2011 and will, accordingly, apply in relation to the assessment year 2011-12 and subsequent years.,[object Object]

Winding up of LLP,[object Object],LLPs can be wounded up voluntary or by tribunal.,[object Object],LLPs can be wound up by tribunal,[object Object],LLP decides so,[object Object],No. of partners less than two for a period more than 6 months,[object Object],LLP is unable to pay its debts,[object Object],LLP has acted against sovereignty and integrity of India, the security of State or public order,[object Object],Defaulted in filing with Registrar Statement of Accounts and Solvency, Annual return,[object Object],In the opinion of tribunal it is just and equitable,[object Object]

Advantages of an LLP,[object Object],Provides more professional opportunities to professional firms of Company Secretaries, Chartered Accountants, Advocates etc.,[object Object],An attractive mode of business as the tax cost is concerned,[object Object],LLP & its partners are distinct from each other, advantage over Partnership firms,[object Object],Easy to form, comparatively low cost of formation than limited companies.,[object Object],No requirement of any minimum capital contribution,[object Object],No restrictions as to maximum number of partners,[object Object],Less legal Compliance compared to limited companies,[object Object],No exposure to personal assets of the partners except in case of fraud,[object Object],Audit requirement only in case of contributions exceeding Rs. 25 lakh or turnover exceeding Rs. 40 lakh,[object Object]

ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS, 2009,[object Object],Old Wine in New Bottle,[object Object]

Introduction,[object Object],SEBI moto,[object Object],Protect the interest of investors in securities,[object Object],Promoting the development of the securities market,[object Object],Regulating the securities market,[object Object],Section 11A(1)(a) of the SEBI Act,1992 empowers SEBI to issue new by regulations for investor protection, issue of capital, disclosures etc.,[object Object],SEBI (Disclosure and Investor Protection) Guidelines, 2000 stands rescinded ,[object Object],SEBI(Issue of Capital and Disclosure Requirements) Regulations, 2009 is notified on 26th August 2009,[object Object],Some redundant provisions are removed, some are modified, while some are further clarified,[object Object],SEBI(ESOP & ESPS) Regulations, 1999 contained some provisions to be complied by an unlisted issue at the time of public offer- such provisions are now incorporated in ICDR Guidelines,[object Object]

New Regulations In Cs Profession

New Regulations In Cs Profession

New Regulations In Cs Profession

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