The Reserve Bank of India has recommended due diligence of certain corporate borrowers availing credit facilities under consortium arrangement / multiple banking arrangements. The circular was first issued by the RBI on 19th September, 2008 and revised from time to time, the last being Circular No.UBD.PCB No.49/13.05.000/2008-09 dated 12th February, 2009.

The said circulars have been issued by the RBI with a view to streamline consortium / multiple banking arrangements and to strengthen the information sharing system among banks in respect of such borrowers. As a part of this measure, Banks are required to obtain regular certification from a professional, preferably a Company Secretary in the prescribed format. The certificate covers critical and relevant areas viz., management of the company and the composition of its Board of Directors, shareholding pattern, forex exposure, risk mitigation through insurance, end use of funds, compliance with Accounting Standards, labour matters, statutory payments etc.

The varied areas of reporting demand the domain expertise of professionals.

We may state that we have formed a team of professionals comprising of qualified Company Secretaries, Ex-banker, Chartered Accountant and Advocate. As a team we will work jointly in the aforesaid Due Diligence exercise. This would ensure that each area of reporting is handled by an expert.

LLP as a business structure / model was awaited by business fraternity doing business as firm (non-corporate) but always needed ‘limited liability cover’ for decades to ensure that business risk does not create personal liability on owners / partners including their personal wealth. There are large numbers of business houses which always wanted to do business as ‘closely held’ but had compulsorily do business as Private Limited Company to have shield of ‘Limited Liability’. Similarly there are large number of firms which had to restrict their exposure for finance etc. to avoid risk of direct claim on partners properties in the event of business loss etc.

The Govt. of India has taken the call to resolve the business limitations of firms where the entrepreneurial skills are highest , which leads to national GDP growth and finally in 2009 the Govt. provided a legally acceptable solution by allowing the incorporation of LLP.

LLP is a hybrid type of business structure where the features of a Partnership Firm as well as Limited Liability Company are available. LLP is a body corporate with perpetual succession and has a separate legal identity distinct from its partners. Further, the liability of the partners is limited to their agreed contribution in the LLP which may be of tangible and/or intangible nature.