Why A LLP Not Allowed to DO Manufacturing Business by MCA?

LLP Cannot Do Manufacturing Business Says MCA - Is it Right? - No in our View and LLP Act does not debars manufacturing business in any way

UPDATE – 17th APRIL, 2019 – MCA HAS WITHDRAWN THE OFFICE MEMORANDUM (MENTIONED BELOW) W.E.F 17TH APRIL, 2019 THEREBY GIVING END TO CONFUSION.

So we are referring to a internal office memorandum of Ministry of Corporate Affairs, Manesar, Central Registration Branch as imaged below (Authenticity not verified) on 6th March, 2019 which happens to suggest that LLP are not empowered to conduct manufacturing business as per the provisions of LLP Act. This is also evidenced since MCA has been off late denying conversion of Manufacturing business companies into LLP.

As per above letter, which refers to earlier Minutes of Review Workshop of MCA dated 18th & 19th December, 2018 says that the objective for LLP is professional services and not manufacturing activities. Further conversion of manufacturing business company into LLP shall not be allowed.

It further states that Section 2(1)(e) of LLP Act, 2008 specifically excludes the Manufacturing and Allied Activities.

Now, Section 2(1)(e) of LLP Act Says that “Business” includes every trade, profession, service and occupation .

It is to be noted that Business have been defined in an inclusive and very broad sense by words every trade and occupation. The Term ‘trade’ and ‘occupation’ are wide enough to cover manufacturing business and that same is held by catena of judgements by various courts.

Hence there is no reason why LLP cannot do Manufacturing activity and it is imperatively important that MCA clarifies this aspect at the earliest to stop undue confusion.

Even the ICSI has written a representation to MCA on 8th April, 2019 to discuss their view on the matter and has said that LLP Act no where debars LLP to conduct manufacturing business.

Eligibility-of-Manufacturing-Businesses-to-form-an-LLP_Charteredonline

Let’s Await a Positive corrigendum from MCA on this aspect, until then Happy Reading and Waiting !!

CA Ankit Gulgulia (Jain)

CA Ankit Gulgulia (Jain) is Fellow Member of ICAI, Certified IFRS & Business Valuation from ACCA UK and is Practising Chartered Accountant with 8 Years plus of Rich Experience in Audit, GST, Income Tax, DGFT, Valuation, Strategic Advisory, Matters of FEMA, FDI, NCLT, RERA, ROC, SEBI, RBI, M&A, Fundraising, Startups etc as Founder of AGA, Chartered Accountants. AGA Works in wholesome business solutions right from scratch of Company Incorporation to Compliances all under One Roof. He also takes interest in being Virtual Chief Financial Officer (CFO) for Small and Medium Enterprises for Guiding them with All Business, Tax & Strategic Business Decision Making . To Know More, Learn here or contact us at ankitgulgulia@gmail.com

CA Ankit Gulgulia (Jain)
About CA Ankit Gulgulia (Jain) 1116 Articles
CA Ankit Gulgulia (Jain) is Fellow Member of ICAI, Certified IFRS & Business Valuation from ACCA UK and is Practising Chartered Accountant with 8 Years plus of Rich Experience in Audit, GST, Income Tax, DGFT, Valuation, Strategic Advisory, Matters of FEMA, FDI, NCLT, RERA, ROC, SEBI, RBI, M&A, Fundraising, Startups etc as Founder of AGA, Chartered Accountants. AGA Works in wholesome business solutions right from scratch of Company Incorporation to Compliances all under One Roof. He also takes interest in being Virtual Chief Financial Officer (CFO) for Small and Medium Enterprises for Guiding them with All Business, Tax & Strategic Business Decision Making . To Know More, Learn here or contact us at ankitgulgulia@gmail.com

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