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Llp incorporation partners contribution in Form 1 and 2

NolanFan (AAA) (36 Points)

08 November 2012

We are 2 partners trying to form an LLP. In Form 1 & 2, we need to mention partners' contribution. Total capital investments comes to around 1 crore 37 lakhs. Both partners together collectivley are contibuting around 37 lakhs out of their own money. The rest is to be availed of as bank loan. When I inquired with a CA friend, he said that contribution may be both equity and debt. But I am still in doubt. Whether contribution in Forms 1 and 2 refer to just the 37 lakhs of partners' margin or the whole capital investments which includes both the partners' margin and debt capital? Please clarify. Thanks in advance.

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4 Replies

CA Ayush Agarwal (Kolkata-Pune-Mumbai) (27186 Points)
Replied 08 November 2012

No, Form1-2 for Only Incorp Info of LLP, There is No Relation With Project Info to be Given to mCA.

Only Contribution Details Will go.

It may be a single rupee Contribution.

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NolanFan (AAA) (36 Points)
Replied 08 November 2012

Sorry Ayush, not able to follow you. Can you please clarify with respect to my particular situation? Any other inputs from anybody else on this are welcome. Thanks in advance for all the help.

ANTONY EDGAR (CA in Practice) (89 Points)
Replied 28 November 2012

The contribution mentioned in the forms are only partners contribution(i.e capital) and in your case its is 37lakhs. The money which you intent to borrow will not form part of contribution.

Javed Khan (Student Others) (222 Points)
Replied 29 November 2012

Please have a look at this provision of the LLP Act:-

Section 32. Form of contribution.-

(1) A contribution of a partner may consist of tangible, movable or immovable or intangible property or other benefit to the limited liability partnership, including money, promissory notes, other agreements to contribute cash or property, and contracts for services performed or to be performed.

(2) The monetary value of contribution of each partner shall be accounted for and disclosed in the accounts of the limited liability partnership in the manner as may be prescribed.

Kindly note the highlighted words, which make clear that even promissory notes, agreement to contribute cash and services performed or to be performed are included in the contribution.

Further refer to the instructions issued by the Ministry of Corporate Affairs for filing form 2 in which state that,

"Enter the total monetary value of contribution by all the partners/ designated partners of

the LLP. Value of contribution cannot be less than the contribution entered at the time

of name availability." It can not be less than the initial cash contribution but can be more than that and therefore, the contribution that you're availing through bank loan is to be included in the total contribution amount.

Thank You...