LLP journey blocked???

May, 2018

“Temporary suspension of issuance of allotment of new DINs for Designated Partners/Partners of LLPs is being extended till further notice. A suitable message would be posted on the portal after revised DIR-3 is made available for filing purposes for issuance of new DPIN/DINs for Partners of proposed LLPs. Stakeholders may kindly take note and plan accordingly.”

This is the message on the MCA portal that stares at entrepreneurs who are planning to register a LLP in India. The previous message at least indicated that suspension is until 31st March, 2018 but look at the above. It is indefinite and MCA expects us to plan accordingly. What plans, eh ? All that one can do is to wait and pray that one fine day God MCA will be merciful enough to lift the suspension and allow life to LLPs !! I had to turn down several requests for LLP incorporations and changes in the Designated Partners. Reason – DIN allotment suspended until further notice by MCA. Without a DIN number, a person cannot be appointed as a Designated Partner. A roadblock from the Government even before the journey begins !!

In India we are used to challenges and blocks in every journey but at least should we not be informed what is the reason behind this block (read suspension) and when it will be cleared ? Does the above message suffice ? Is the entrepreneur to wait endlessly without starting his planned business ? Should he be forced to start a private limited company when a LLP suffices ? Why should he be stopped for months (this is on from Jan, 2018 onwards) to induct new Designated Partners ? Should only entrepreneurs who already have DIN be allowed to form LLP during this period ? What about fresh startups who prefer LLP ?

No one seems to know the answer and it is rather embarrassing to respond to clients that a simple form and a number is the reason that he cannot startup as a LLP. Infact one of my clients shot off an email to the PMO’s office. Promptly he got a call from a senior official in MCA assuring that the forms will be ‘out’ soon. This was about 15 days ago ! what is the meaning of soon ?? Another client wants to effect some changes in his LLP Board and get in new people but he is unable to move forward. This may mean loss of business opportunities.

Some of the ingenuous professionals have beaten the ‘suspension’ by applying for a DIN indicating a person will be appointed on a company Board first, appointing him as a Director (please note DIN allotment for directors of companies is not suspended) and then using the DIN number to enter an LLP as Designated Partner. With the changed rules for appointment of Director in companies in India, this is not easy either. This is a convoluted and wrong route that law-abiding corporate citizens would do well to avoid. As the great musician-saint Thyagaraja had composed “Chakkani rajamargamulundaga, sandulu endukkura ?” (meaning when there is a royal highway, why the bylanes). Hope the highway for LLP journey opens soon !!

1 Comment

  • rajesh

    This is so very true. I am not sure why did this Govt take such an action. Moreover, innocent business owners who could not continue their businesses due to major financial issues and could not comply with ROC filings, have been prohibited from forming a new company or reviving the old company after they are ready go ahead.
    Very bad MCA policy, this is going to kill businesses in India.

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