Limited Liability Partnership_12

Who can be a “Designated Partner”?

Every LLP shall be required to have atleast two Designated Partners who shall be individuals and at least one of the Designated Partner shall be a resident of India. In case of a LLP in which all the partners are bodies corporate or in which one or more partners are individuals and bodies corporate, at least two individuals who are partners of such LLP or nominees of such bodies corporate shall act as designated partners.

Limited Liability Partnership_11

What are the requirements in respect of “Designated Partners”?

Appointment of at least two “Designated Partners” shall be mandatory for all LLPs. “Designated Partners” shall also be accountable for regulatory and legal compliances, besides their liability as ‘partners, per-se”.

Competition Act_Practical Problems_4

The Association of Truck Operators of India by agreement insisted that members of the association shall not deal with the non-members in transportation of goods. The Association claims that this agreement is entered for the welfare of trade and not for anyother purpose. In your opinion whether the agreement would be under the purview of the Competition Act, 2002. Whether your answer would be different if the association attempts to control the provisioning of services rendered by its members.



"Cartel" includes an association of producers, sellers, distributors, traders or service providers who, by agreement amongst themselves, limit, control or attempt to control the production, distribution, sale or price of, or, trade in goods or provision of services; The term cartel like agreement has been given an inclusive meaning. Thus an association for the welfare of the trade or formed for any other purpose not mentioned in the aforesaid definition will not be a cartel. It is only when an association, by agreement amongst themselves, limits control or attempts to control the production, distribution, sale or price of, or, trade in goods or provision of services, that it will be a cartel.

Companies Act_Practical Problems_84

The Board of Directors of ABC Private Limited having a paid-up share capital of Rs. 1 Crore consists of two directors, one of them, viz, Mr. S possesses membership of the Institute of Company Secretaries of India. The company desires to appoint him as a company secretary also. State the legal position.

Under Section 383A of the Companies Act, 1956, in case of a company having only two directors, none of them can be appointed company secretary in spite of possessing the requisite qualification. In view of the overriding effect of Section 383A, consideration of section 314 is unnecessary.

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What are the qualifications for becoming a partner?

Any individual or body corporate may be a partner in a LLP. However an individual shall not be
capable of becoming a partner of a LLP, if—
(a) he has been found to be of unsound mind by a Court of competent jurisdiction and the finding is in force;
(b) he is an undischarged insolvent; or
(c) he has applied to be adjudicated as an insolvent and his application is pending.

Limited Liability Partnership_9

Whether a body corporate may be a partner of an LLP?


Yes.

Companies Act_Practical Problems_83

XYZ Limited has its subsidiary company PRM Ltd, which is formed to carry out some of the objectives of XYZ Limited. XYZ Limited suspends one of its several businesses, by passing a resolution at the company‘s extraordinary general meeting, with effect from Ist January 2008. The business so suspended continues to be suspended until March 2008. On Ist April 2008, a group of shareholders of XYZ Limited file a petition in the court for winding of the company on the ground of suspension of business by the company. Referring to the provisions of the Companies Act, 1956, decide:
(i) Whether the shareholders’ contention shall be tenable?
(ii) What would be your answer in case XYZ Limited suspends all its business?



Section 433 provides that if a company does not commence its business within a year from its incorporation or suspends its business for a whole year, it may be wound up by the court .The contention of the shareholders of XYZ Ltd that the company is liable to be wound up on the ground of suspensions of business, is not tenable for the following reasons:
(i) (a) A company may be wound up by court if a company suspends its business for a whole year. Here the business was suspended only on 1. 1.2008. Hence on 1st April, 2008 the business has not been suspended for the whole year to attract Section 433(c)
(b) Where a company having much business discontinues one of them, it cannot be said to have suspended business within the meaning of Section 433(c).
(c) Where a company ceases to do any business but is a holding company of subsidiaries engaged in the pursuit of the business, which it was previously doing, it cannot be said that the company has suspended its business (Ref; Eastern Telegraph Company Ltd).
(ii) Even if XYZ Ltd suspended all its business the suspension was not for a period of more that 1 year as on 1.4.1997 and hence the provisions of Section 433(c) are not applicable. Again for the reasons stated in (i) (c) above XYZ Ltd cannot be said to have suspended its business as its subsidiary in carrying on the business.