Topic 39 Statement Account Solvency Form8

THE LEGAL BRIDGE

Judiciary Examination Study Material

Topic 39

Statement of Account & Solvency (Form 8)

Section 34(2) — Contents, 30-Oct Deadline, Solvency Declaration & Penalties

Pillar 5 — Accounts, Audit & Annual Compliance (Sections 34–36)

Module Overview

Form 8 (Statement of Account and Solvency) is the primary financial disclosure document filed by an LLP with the Registrar of Companies each year. This topic provides a comprehensive examination of its contents, the prescribed deadline (30th October), the solvency declaration, the signing requirement, the audit certification requirement, and post-2021 penalties for non-filing.

39.1 What is Form 8?

Form 8 is the Statement of Account and Solvency prescribed under Section 34(2) of the LLP Act, 2008 read with Rule 24 of the LLP Rules, 2009. It is filed electronically on the MCA21 portal. It serves a dual purpose:

Financial disclosure: Provides a summary of the LLP's assets, liabilities, income, and expenditure for the financial year — the LLP's equivalent of a balance sheet and income statement.
Solvency declaration: Contains a statement by the designated partners that the LLP is solvent — able to pay its debts as they fall due in the ordinary course of business.

39.2 Contents of Form 8

Part	Contents
Part A — Statement of Account	Balance sheet items: fixed assets, current assets, investments, sundry debtors, cash/bank balances, loans and advances; liabilities: partner's capital, loans, sundry creditors, other liabilities; profit and loss account summary
Part B — Statement of Solvency	Declaration by designated partners that the LLP has no charges; OR statement of charges; solvency declaration ("we declare that the LLP is solvent")
Part C — Declaration by Designated Partners	Names of designated partners; their DPINs; declaration that the SoAS is true, accurate, and complete; declaration that the LLP has complied with its statutory obligations during the year
Auditor's Certificate (where applicable)	For LLPs exceeding audit threshold (turnover > Rs. 40 lakhs OR contribution > Rs. 25 lakhs): certificate by practising CA verifying the financial statements

39.3 The 30-October Deadline — Analysis

31 March

Financial Year End

Within 6 months

Section 34(2) says

30 Sept

Six months from 31 March

30 Oct

Rule 24 prescribes

The "30 September vs 30 October" Examination Trap

Section 34(2) text: "within a period of six months from the end of each financial year" — six months from 31 March = 30 September.

Rule 24(1) of LLP Rules 2009: Specifies the deadline as 30th October.

Which prevails? Rule 24(1) — as a specific Rule supersedes the general Act provision for deadline purposes. The ACTUAL filing deadline is October 30. Examination answers should state "30 October per Rule 24" — not "30 September per Section 34(2)".

39.4 Solvency Declaration — Critical Legal Aspects

The solvency declaration in Form 8 is a statutory representation by the designated partners that the LLP is able to pay its debts as they fall due. This declaration has several important legal consequences:

False declaration = criminal offence: A designated partner who signs a Form 8 containing a false solvency declaration when they know the LLP is insolvent commits an offence under the LLP Act.
Basis for Section 30 liability: If the LLP has been trading while insolvent and the designated partners have been signing solvency declarations, this can constitute evidence of intent to defraud creditors under Section 30.
IBC relevance: A signed solvency declaration in Form 8 can be relevant evidence in Insolvency and Bankruptcy Code proceedings — particularly in determining the date from which the LLP became insolvent.
Audit override: Even for LLPs below the audit threshold, the solvency declaration remains binding on the designated partners — the audit requirement and the declaration are independent obligations.

39.5 Penalties for Non-Filing of Form 8 — Pre and Post 2021 Amendment

Aspect	Pre-2021 Regime	Post-2021 Amendment (In force April 1, 2022)
Nature of default	Criminal offence — tried in criminal court	Civil default — adjudicated by Registrar/Adjudicating Officer
Penalty on LLP	Fine (criminal court)	Rs. 100 per day during default; maximum Rs. 1,00,000
Penalty on designated partners	Same criminal fine	Rs. 100 per day during default; maximum Rs. 50,000 each
Compoundability	Non-compoundable in some cases	Civil penalty — adjudicating officer can reduce based on circumstances
Procedure	Prosecution + bail + court trial	Adjudicating order by Registrar — administrative process

39.6 Form 8 vs Form 11 — The Two Essential Annual Filings

Feature	Form 8 (Statement of Account & Solvency)	Form 11 (Annual Return)
Statutory source	Section 34(2), LLP Act + Rule 24	Section 35(1), LLP Act + Rule 25
Deadline	30 October each year	60 days from end of FY = 30 May each year
Contents	Financial statements + solvency declaration	Partner details + contribution details + changes during year
Signatories	Two designated partners + CA (if audit required)	All designated partners
Nature	Financial compliance document	Administrative/statutory return
Penalty for non-filing	Rs. 100/day; max Rs. 1 lakh (LLP) + Rs. 50,000 (each DP)	Same penalty structure (Section 35(2))

⚖ ABC Consulting LLP v. Registrar of Companies NCLT Chennai (2022)

Held: The NCLT held that the penalty for non-filing of Form 8 is a civil penalty post-2021 Amendment, adjudicated by the Registrar. The LLP challenged the Registrar's penalty order on the ground that no personal hearing was given before imposing the penalty. The tribunal upheld the requirement of natural justice — a reasonable opportunity to be heard must be given before imposing the penalty under Section 34(5).

Principle: Natural justice principles (audi alteram partem) apply to penalty adjudication under Section 34(5) even though the process is civil and administrative — not criminal.

⚖ Hemant Kumar v. Union of India Delhi HC (2020)

Held: The court addressed the question of whether designated partners can avoid personal liability for Form 8 non-filing by arguing they were not responsible for the delay. The court held that Section 34(3)'s signing obligation and the consequent penalty under Section 34(5) vest personally in designated partners — they cannot shift blame to accountants or other partners.

Principle: Designated partners' personal liability for Form 8 non-filing is non-delegable — it attaches by virtue of their statutory role, not by virtue of their operational involvement.

📌 EXAM TIP: Form 8 examination points: (1) Deadline: 30 October (Rule 24 — not 30 September); (2) Signed by: two designated partners (Section 34(3)); (3) Audit threshold: turnover > Rs. 40 lakhs OR contribution > Rs. 25 lakhs; (4) Contains: financial statement + solvency declaration; (5) Post-2021 penalty: Rs. 100/day; max Rs. 1 lakh (LLP) + Rs. 50,000 each DP; (6) Compare Form 8 vs Form 11: Form 8 = financial; Form 11 = administrative; Form 8 deadline: 30 Oct; Form 11 deadline: 30 May.

✔ PRACTICAL NOTE: A common advisory issue: an LLP with turnover of Rs. 45 lakhs (above threshold) gets its CA to certify Form 8, but both designated partners are abroad and have not personally signed before the October 30 deadline. The CA's certification does NOT substitute for the designated partners' personal signatures. Digital signatures (DSC) can be used — but they must be the DPs' own DSCs. Plan ahead; obtain DSCs well before the deadline.

Quick Revision — Topic 39

Key Point	Core Content
Form 8	Statement of Account and Solvency — prescribed under Section 34(2)
Deadline	30 October each year (Rule 24 — NOT 30 September)
Contents	Financial statements + solvency declaration + DP declaration
Signatories	Two designated partners (Section 34(3)); CA certificate if above audit threshold
Audit threshold	Turnover > Rs. 40 lakhs OR contribution > Rs. 25 lakhs
Post-2021 penalty	Rs. 100/day; max Rs. 1 lakh (LLP) + Rs. 50,000 (each DP)
Form 8 vs Form 11	Form 8: financial (30 Oct); Form 11: administrative (30 May)