# Reconstruction or Amalgamation of LLPs [Section 62]
## When Section 62 Triggers [S.62(1)]
While a compromise / arrangement application is pending under Section 60, if the Tribunal is shown that:
- (a) The scheme is for reconstruction of an LLP or amalgamation of two or more LLPs; AND
- (b) Under the scheme, the whole or part of the undertaking, property or liabilities of a transferor LLP is to be transferred to a transferee LLP.
Then the Tribunal may make provisions (in the sanction order or by a later order) for ANY of the following:
## Matters Tribunal can Direct [S.62(1)(b)(i)–(v)]
| Clause | Direction |
|---|---|
| (i) | Transfer of whole/part of undertaking, property or liabilities of transferor LLP to transferee LLP |
| (ii) | Continuation of legal proceedings by/against transferee LLP |
| (iii) | Dissolution, without winding up, of any transferor LLP |
| (iv) | Provision for dissenting persons (within such time and manner as Tribunal directs) |
| (v) | Such incidental, consequential and supplemental matters as necessary |
## Two Critical Provisos
### Proviso 1 — Amalgamation of LLP Under Winding Up
If an LLP being wound up is to amalgamate with another LLP, the Tribunal shall not sanction unless it receives a Registrar's report that the LLP's affairs have not been conducted prejudicial to partners or public interest.
### Proviso 2 — Dissolution Without Winding Up [for S.62(1)(b)(iii)]
No order of dissolution (without winding up) shall be passed unless the Official Liquidator, after scrutiny of books and papers, reports that the LLP's affairs have not been conducted prejudicial to partners or public interest.
## Statutory Vesting [S.62(2)]
Where the Tribunal's order provides for transfer of property/liabilities:
- Property is transferred to and vested in transferee LLP.
- Liabilities become liabilities of transferee LLP.
- If the order so directs, property is freed from any charge that the compromise/arrangement is to terminate.
## Filing with Registrar [S.62(3)]
Within 30 days of the Tribunal's order, every LLP in relation to which the order is made must file a certified copy with the Registrar.
## Penalty for Default [S.62(4)]
| Defaulter | Initial Penalty | Continuing Default | Cap |
|---|---|---|---|
| LLP | ₹10,000 | ₹100/day after the first | ₹1,00,000 |
| Every Designated Partner | ₹10,000 | ₹100/day after the first | ₹50,000 |
## Definitions [Explanation]
- "Property" = property, rights and powers of every description.
- "Liabilities" = duties of every description.
- ⚠️ An LLP shall NOT be amalgamated with a Company. (LLP can amalgamate only with another LLP.)
## Key Takeaway
S.62 enables LLP-to-LLP mergers/restructurings with automatic vesting of property and liabilities, but requires careful safeguards (Registrar/OL reports) when winding up or dissolution without winding up is involved.