{"id":21530,"date":"2020-12-10T15:07:07","date_gmt":"2020-12-10T09:37:07","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=21530"},"modified":"2020-12-11T16:04:26","modified_gmt":"2020-12-11T10:34:26","slug":"no-restriction-on-registering-manufacturing-business-as-llp","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/no-restriction-on-registering-manufacturing-business-as-llp\/","title":{"rendered":"No Restriction on Registering Manufacturing Business as LLP"},"content":{"rendered":"\n<p class=\"has-drop-cap\">Incorporating an LLP has a blend of the benefits of a Company and a\nPartnership Firm. It has mainly the features of limited liability of a company\nand also the flexibility of a Partnership firm. Considering an upward moving\ntrend, many new LLP&#8217;s were incorporated during this year with various objects,\nand one of them was the manufacturing business as LLP.<\/p>\n\n\n\n<p>Earlier <strong><em>before 8th April 2019<\/em><\/strong> a\nrestriction on LLP&#8217;s was imposed, according to which if LLP desires to register\nwith manufacturing activity as its main objects was NOT allowed. Currently,\nthere are now more than 12,000 active LLPs already into the manufacturing\nsector.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/no-restriction-on-registering-manufacturing-business-as-llp\/#Why_were_Manufacturing_units_restricted_to_have_LLP_Registration\" >Why were Manufacturing units restricted to have LLP Registration?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/no-restriction-on-registering-manufacturing-business-as-llp\/#MCA_has_withdrawn_Restriction_from_Manufacturing_units_for_LLP_registration\" >MCA has withdrawn Restriction from Manufacturing units for\nLLP registration<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/no-restriction-on-registering-manufacturing-business-as-llp\/#What_Earlier_Clarification_by_MCA\" >What Earlier Clarification by MCA?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/no-restriction-on-registering-manufacturing-business-as-llp\/#MCAS_Strong_Decision\" >MCA&#8217;S Strong Decision<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/corpbiz.io\/learning\/no-restriction-on-registering-manufacturing-business-as-llp\/#Withdrawal_of_the_MCA_memo\" >Withdrawal of the MCA memo<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/corpbiz.io\/learning\/no-restriction-on-registering-manufacturing-business-as-llp\/#Good_News_for_Manufacturing_Business\" >Good News for Manufacturing Business<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/corpbiz.io\/learning\/no-restriction-on-registering-manufacturing-business-as-llp\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Why_were_Manufacturing_units_restricted_to_have_LLP_Registration\"><\/span>Why were Manufacturing units restricted to have LLP Registration?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Conceptually, a manufacturing &amp; allied activities were not covered under LLP law. <strong><em>According to the LLP Act, 2008, manufacturing activities do not come under the definition of &#8220;Business&#8221;.<\/em><\/strong> On these grounds, <strong>MCA<\/strong><sup><a href=\"http:\/\/www.mca.gov.in\/\"><strong>[1]<\/strong><\/a><\/sup> has stated in the OM (Office of Memorandum) on 6th March 2019 that an incorporation of LLPs and also the conversions into LLPs with a proposed business activity such as manufacturing and allied activities were not allowed. However, now the rule has been changed an <strong><em>LLP can be registered with its main business activity as a manufacturing activity.<\/em><\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"MCA_has_withdrawn_Restriction_from_Manufacturing_units_for_LLP_registration\"><\/span>MCA has withdrawn Restriction from Manufacturing units for\nLLP registration<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img decoding=\"async\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/12\/Reason-of-Withdrwaing-Restriction-upon-Manufacturing-Units-as-an-LLP.png\" alt=\"withdrawn Restriction from Manufacturing units for LLP \" class=\"wp-image-21531\" width=\"536\" height=\"314\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/12\/Reason-of-Withdrwaing-Restriction-upon-Manufacturing-Units-as-an-LLP.png 1000w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/12\/Reason-of-Withdrwaing-Restriction-upon-Manufacturing-Units-as-an-LLP-300x176.png 300w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/12\/Reason-of-Withdrwaing-Restriction-upon-Manufacturing-Units-as-an-LLP-768x451.png 768w\" sizes=\"(max-width: 536px) 100vw, 536px\" \/><\/figure><\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_Earlier_Clarification_by_MCA\"><\/span>What Earlier Clarification by MCA?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The Manufacturing units are now allowed to register as LLPs under Limited Liability Partnership Act, 2008. However, there is an apprehension that if the manufacturing unit having an <a href=\"https:\/\/corpbiz.io\/llp-registration\"><strong>LLP registration<\/strong><\/a> expands its scale of operation, then it wouldn&#8217;t be suitable for it to operate as an LLP.<\/p>\n\n\n\n<p>In regard to this, MCA has clarified that\ncertain threshold limit on the share capital or annual turnover must be fixed\nsoon for a manufacturing unit to get LLP registration. It was similar to the\ncase of One Person Company (OPC) and other small companies.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Threshold Limit<\/h3>\n\n\n\n<p>The MCA imposed certain restrictions on the\nmanufacturing businesses vide order memo on <strong><em>CRC\/LLP\/e-Forms dated 06.03.2019<\/em><\/strong>.&nbsp; The memo has stated that-<\/p>\n\n\n\n<ul><li>Manufacturing activities does\nnot satisfy the definition of &#8216;Business&#8217; mentioned in the Limited Liability\nPartnership Act, 2008.<\/li><li>Similarly, on this ground, the\nbusinesses which mention manufacturing &amp; allied activity as the main\nactivity are barred from LLP Registration.<\/li><li>The memo raised doubts about\nthe status of more than 12000 active LLPs which were already into manufacturing\nsector. <\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"MCAS_Strong_Decision\"><\/span>MCA&#8217;S Strong Decision<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>When this came to the notice of Institute\nof Company Secretaries of India (ICSI), it has objected to the restriction\nimposed and finally made up a representation on 8th April 2019. In its\nrepresentation ICSI said that &#8220;it has been noticed that in recent times a\nmanufacturing businesses was being restricted from incorporating as LLP on the\nground that manufacturing activities do not fall under the definition of `<strong><em>Business<\/em><\/strong>&#8216;\naccording to the Limited Liability Partnership Act, 2008. Similarly, the\nconversion of private and unlisted companies into LLP has been restricted now\non the same grounds.&#8221;<\/p>\n\n\n\n<p>Considering Strong Criticism of MCA move in\nMedia and representation of ICSI, <strong><em>MCA invoked OM <\/em><\/strong>(Office Memorandum) <strong><em>No.\nCRC\/LLP\/e-Forms dated 06.03.2019 <\/em><\/strong>restricting formation of the LLP for\nmanufacturing &amp; allied activities <strong><em>w.e.f 17th April, 2019<\/em><\/strong>. Hence now\nthe LLP&#8217;s can be registered with manufacturing and allied activity also. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Withdrawal_of_the_MCA_memo\"><\/span>Withdrawal of the MCA memo<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>However, there was an apprehension in an industry spheres. The section has raised doubt if the manufacturing business having LLP incorporation will still be allowed to operate as an LLP then it can scale up its operations on a later date. However, MCA has come up with the clarification. It has announced that it would fix a threshold limit of annual turnover or share capital for the manufacturing unit intending to do LLP registration. Further, these guidelines are expected to be similar to those issued for the OPCs and other such small companies.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Good_News_for_Manufacturing_Business\"><\/span>Good News for Manufacturing Business<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul><li>The withdrawal of MCA memorandum dated 06.03.2019 meant that manufacturing businesses can now register as limited liability partnerships. <\/li><li>Many regular partnership firms prefer to get register themselves as an LLPs because of the attractive features and additional benefits such as-<\/li><\/ul>\n\n\n\n<ol><li>Protection of limited liability available to partners, with a flexibility for organizing the internal company structure as a partnership<\/li><li>Protection of thev business name<\/li><li>Ease of business listing with ROC<\/li><\/ol>\n\n\n\n<ul><li>An LLP enjoys better professional recognition among the clients, as compare to partnership firm.<\/li><li>Recognition under flagship &#8220;Startup India \u2013 Standup India scheme&#8221; of Central Government <\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The eligibility for manufacturing units to get registered under the Limited Liability Partnership Act, 2008 has been clarified. The one can register manufacturing business as LLPs. If a business is involved in manufacturing &amp; allied activities, and wish to incorporate it as an LLP, we at <a href=\"https:\/\/corpbiz.io\/\"><strong>CorpBiz<\/strong><\/a> can help you throughout the process of an LLP registration.<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/annual-compliance-for-llp\/\">\nIs it easy to maintain Annual Compliance for LLP? Let us know in detail!\n<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Incorporating an LLP has a blend of the benefits of a Company and a Partnership Firm. It has mainly the features of limited liability of a company and also the flexibility of a Partnership firm. Considering an upward moving trend, many new LLP&#8217;s were incorporated during this year with various objects, and one of them [&hellip;]<\/p>\n","protected":false},"author":10,"featured_media":21556,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[155],"tags":[1302],"acf":{"service_id":"3"},"authorName":"Soumya Bajpai","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/01\/0.jpg","authorDescription":"Soumya has done LLB (Hons) and has a 2+years experience in writing. Her main interest is in reading judgments, new enactments and amendments taking around in law. She always strives to bring the best to work that she does.","postViews":8751,"readingTime":3,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/21530"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=21530"}],"version-history":[{"count":23,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/21530\/revisions"}],"predecessor-version":[{"id":21687,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/21530\/revisions\/21687"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/21556"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=21530"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=21530"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=21530"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}