LLP Annual Compliance: Form 8, Form 11, and the Audit Threshold

An LLP has no board, no AGM and no shareholders, but it has two Registrar filings every year without exception. Late filing attracts a per-day penalty that falls on the LLP and on its designated partners personally. This article maps the annual compliance of a limited liability partnership: the two forms, the audit line, the books behind them, and what delay costs.

Legal basis: Limited Liability Partnership Act 2008 (LLP Act), ss.7 (designated partners), 34 (books, Statement of Account and Solvency, audit), 35 (annual return), 36 (inspection), 69 (additional fee for late filing); Limited Liability Partnership Rules 2009 (LLP Rules), rule 24 (books, Form 8, audit) and rule 25 (Form 11).

The two filings every LLP owes every year

An LLP's compliance does not hinge on meetings. It hinges on two documents.

1. Statement of Account and Solvency (Form 8). Every LLP must, within six months from the end of each financial year, prepare a Statement of Account and Solvency as at the last day of that year, signed by the designated partners (s.34(2), LLP Act 2008). It must file that statement with the Registrar within the prescribed time (s.34(3), LLP Act 2008). The Rules prescribe Form 8, to be filed "within a period of thirty days from the end of six months of the financial year" (rule 24(4), LLP Rules 2009).

2. Annual return (Form 11). Every LLP must file an annual return, duly authenticated, with the Registrar within sixty days of closure of its financial year (s.35(1), LLP Act 2008). The prescribed form is Form 11 (rule 25(1), LLP Rules 2009).

Neither section carves out dormant or nil-revenue LLPs. Both provisions say "every limited liability partnership".

For an LLP with a 31 March year-end, the arithmetic is: the sixty days under s.35(1) run out on 30 May; six months end on 30 September and thirty days after that is 30 October for Form 8. These dates are our own day-counts from the statutory periods, so confirm them for your LLP's year-end.

Form 11 first: sixty days from year-end

The annual return is the earlier deadline. For a March year-end, the return falls due before the accounts statement.

Form 11 carries a certificate, and the certifier depends on size (rule 25(2), LLP Rules 2009):

• an LLP with turnover up to five crore rupees in the corresponding financial year, or contribution up to fifty lakh rupees, files with a certificate from a designated partner other than the signatory to the return, to the effect that the return contains true and correct information;
• in all other cases the return is accompanied by a certificate from a Company Secretary in practice, to the effect that he has verified the particulars from the books and records of the LLP and found them true and correct.

Know which side of the line the LLP falls on before filing season. Engaging a certifying professional late compresses an already short sixty-day window.

If the annual return is not filed before the period expires, the LLP and its designated partners are liable to a penalty of one hundred rupees for each day the failure continues, subject to a maximum of one lakh rupees for the LLP and fifty thousand rupees for designated partners (s.35(2), LLP Act 2008). Both the entity and the individuals are exposed.

Form 8 next: prepared within six months, filed within thirty days after

The Statement of Account and Solvency is the LLP's balance-sheet moment. It must be prepared within six months of the year's end, struck as at the last day of that year, and signed by the designated partners (s.34(2), LLP Act 2008).

Signing is not ceremonial. The Rules provide that the statement "shall be signed by the designated partners of the LLP and each designated partner shall be taken to be a party to its approval unless he shows that he took all reasonable steps to prevent their being approved and signed" (rule 24(7), LLP Rules 2009). Note that the presumption attaches to each designated partner, not only to those who physically sign. A designated partner who disagrees with the statement should be ready to show what he did to prevent its approval, and a documented written dissent is the obvious way to do that.

On default, s.34(5) provides that an LLP failing to comply with the filing duty in s.34(3), and its designated partners, are liable to a penalty of one hundred rupees for each day during which the failure continues, subject to a maximum of one lakh rupees for the LLP and fifty thousand rupees for every designated partner (s.34(5), LLP Act 2008).

The additional fee for late filing

Separately from the daily penalty, the Act allows a late document to be filed after the due date on payment of an additional fee, in addition to the normal filing fee, "without prejudice to any other action or liability under this Act" (s.69, LLP Act 2008). The amount is set by the Rules. The Limited Liability Partnership (Amendment) Rules 2022 set the additional fee as a multiple of the normal filing fee. The multiple grows with the length of the delay and starts at one time the normal fee for a delay up to 15 days. For Form 8 and Form 11 in particular, a delay beyond 360 days costs 15 times the normal filing fee (small LLPs) or 30 times (other LLPs), plus ten rupees (small LLPs) or twenty rupees (other LLPs) for every day beyond 360 days (Fee table, item 8, LLP Amendment Rules 2022). "Small limited liability partnership" is a defined term (s.2(1)(ta), LLP Act 2008).

The daily penalty and the additional fee are two different consequences. Paying the additional fee to get the document on the register does not by itself answer the penalty exposure under ss.34(5) and 35(2).

The audit question: forty lakh turnover or twenty-five lakh contribution

LLP accounts are to be audited in accordance with the Rules (s.34(4), LLP Act 2008). The Rules then draw the exemption line: an LLP "whose turnover does not exceed, in any financial year, forty lakh rupees, or whose contribution does not exceed twenty-five lakh rupees shall not be required to get its accounts audited" (rule 24(8), first proviso, LLP Rules 2009).

Note the "or": either condition exempts.

• An LLP with ninety-lakh turnover but twenty-lakh contribution is exempt, because contribution does not exceed twenty-five lakh.
• An LLP with thirty-lakh turnover but one-crore contribution is exempt, because turnover does not exceed forty lakh.
• Audit is required only where turnover exceeds forty lakh rupees and contribution exceeds twenty-five lakh rupees.

Two refinements matter.

• Partners of an exempt LLP may still decide to get the accounts audited. If they do, the accounts are audited in accordance with the Rules (rule 24(8), second proviso, LLP Rules 2009).
• Where the partners do not decide for audit, the LLP must include in the Statement of Account and Solvency a statement by the partners acknowledging their responsibilities for complying with the Act and the Rules on preparation of books of account, together with a certificate in the form specified in Form 8 (rule 24(8), third proviso, LLP Rules 2009).

Where an audit is done, the auditor must be a Chartered Accountant in practice (rule 24(9), LLP Rules 2009). The Central Government may by notification exempt classes of LLPs from the audit requirement (s.34(4) proviso, LLP Act 2008).

The books behind the forms

The LLP must maintain proper books of account, on cash or accrual basis and on the double-entry system, at its registered office (s.34(1), LLP Act 2008). The Rules require the books to contain (rule 24(2), LLP Rules 2009):

• particulars of all sums of money received and expended and the matters in respect of which they were received and expended;
• a record of assets and liabilities;
• statements of cost of goods purchased, inventories, work-in-progress, finished goods and cost of goods sold; and
• any other particulars the partners decide.

Books must be preserved for eight years from the date on which they are made (rule 24(3), LLP Rules 2009). An eight-year duty means today's filing position must be reconstructible long after the designated partners have changed.

Failure to comply with the books, Statement of Account preparation or audit duties (s.34(1), (2) and (4)) is punishable with a fine of not less than twenty-five thousand rupees and up to five lakh rupees on the LLP, and not less than ten thousand rupees and up to one lakh rupees on every designated partner (s.34(6), LLP Act 2008). This is a separate scale from the daily filing penalties.

Who signs: designated partners carry the filing

Every LLP must have at least two designated partners who are individuals, at least one of them resident in India (s.7(1), LLP Act 2008). The designated partners sign the Statement of Account and Solvency (s.34(2), LLP Act 2008; rule 24(6), LLP Rules 2009). The annual return must be duly authenticated (s.35(1), LLP Act 2008). The daily penalties for late filing reach designated partners as well as the LLP (ss.34(5), 35(2), LLP Act 2008).

A vacancy among designated partners therefore threatens the LLP's ability to file. Fill vacancies before filing season, not during it.

Everything filed is public

The incorporation document, names of partners and changes, Statement of Account and Solvency and annual return filed by an LLP are open to inspection (s.36, LLP Act 2008). The fee for inspection is set under the Rules (rule 26, LLP Rules 2009). Lenders, counterparties and incoming partners can read these filings, so late or inconsistent filings are visible to them.

An LLP annual calendar

• Maintain books at the registered office on a cash or accrual, double-entry basis, and preserve them for eight years (s.34(1), LLP Act 2008; rule 24(3), LLP Rules 2009).
• Test the audit line as the year closes. Audit is not required if turnover does not exceed forty lakh rupees or contribution does not exceed twenty-five lakh rupees (rule 24(8), LLP Rules 2009).
• File Form 11 within sixty days of financial-year closure, with the right certificate: a non-signing designated partner or a Company Secretary in practice, depending on size (s.35(1), LLP Act 2008; rule 25(2), LLP Rules 2009).
• Prepare the Statement of Account and Solvency within six months of year-end, signed by the designated partners, keeping a record of any dissent (s.34(2), LLP Act 2008; rule 24(7), LLP Rules 2009).
• File Form 8 within thirty days from the end of those six months (rule 24(4), LLP Rules 2009).
• Count the cost of delay for each filing: one hundred rupees per day up to one lakh rupees for the LLP and fifty thousand rupees for designated partners, plus the additional fee under s.69 (ss.34(5), 35(2), 69, LLP Act 2008).

What to do now

• Next step: find the LLP's financial year-end, then diarise Form 11 at sixty days from that date and Form 8 at thirty days after the sixth month (s.35(1), LLP Act 2008; rule 24(4), LLP Rules 2009). Check the LLP has at least two individual designated partners, one resident in India (s.7(1), LLP Act 2008).
• Deadline: Form 11 within sixty days of year-end; Form 8 within thirty days from the end of six months of the financial year (s.35(1), LLP Act 2008; rule 24(4), LLP Rules 2009).
• Consequence of missing it: one hundred rupees per day per filing, up to one lakh rupees for the LLP and fifty thousand rupees for designated partners, plus an additional fee to file late (ss.34(5), 35(2), 69, LLP Act 2008).

Have a CA review your facts before you act or file.

FAQ

Our LLP had no revenue this year. Do we still file Form 8 and Form 11?
Yes. Sections 34(3) and 35(1) apply to every limited liability partnership, and neither contains a dormancy or nil-turnover exception (ss.34(3), 35(1), LLP Act 2008). Both forms are due.

Do we need an audit at sixty-lakh turnover and twenty-lakh contribution?
No. Audit is not required where turnover does not exceed forty lakh rupees or contribution does not exceed twenty-five lakh rupees (rule 24(8), LLP Rules 2009). Twenty-lakh contribution satisfies the "or". The partners may still decide on an audit, and without one the Statement of Account and Solvency must carry the partners' statement of responsibility and the Form 8 certificate (rule 24(8), second and third provisos, LLP Rules 2009).

One of our two designated partners resigned. Can the other file alone?
The Act requires at least two designated partners who are individuals (s.7(1), LLP Act 2008), and the Statement of Account and Solvency is to be signed by the designated partners (s.34(2), LLP Act 2008; rule 24(6), LLP Rules 2009). Appoint a replacement before filing.

Who certifies our Form 11?
Turnover up to five crore rupees or contribution up to fifty lakh rupees: a designated partner other than the signatory to the return. In all other cases: a Company Secretary in practice (rule 25(2), LLP Rules 2009).

What does a month's delay on both forms cost?
Each filing attracts its own one-hundred-rupees-per-day penalty (s.34(5) for Form 8, s.35(2) for Form 11, LLP Act 2008), subject to the caps stated above, and an additional fee under s.69 to file late. Two filings delayed together run two penalty streams.

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See Also

• Section 8 Company Annual Compliance: AGM, Filings and Licence Conditions
• Board's Report Under Section 134: Contents, Signing and Penalty
• Nidhi Company Annual Compliance: NDH Filings, Deposit Ratios, and the Dividend Cap