LLP Incorporation

What is LLP?

LLP was brought in India by way of the Limited Liability Partnership Act, 2008. The basic premise behind the introduction of LLP is to provide a form of business entity that is simple to maintain while providing limited liability to the owners. Since, LLPs have been well received with over 1 lakhs registration so far until September, 2014.

Required documents for LLP Registration

1)      ID Proof of all Partners

Any one ID proof like AADHAR Card, Voter Card, Driving License or Passport required.

2)      PAN card of all Partners

3)      Any one address proof in name of Partner

 Bank statement having latest 60 days entry

 Bank Passbook with entries page having latest 60 days entry

 Electricity Bill in name of Director

 Airtel / Vodafone / Idea / MTNL / BSNL bill in name of Director

Gas bill in name of Director

4)      Passport size photo of Partners

5)      Any one bill in anybody name for registered office address

  Electricity Bill

   Mobile Bill - Airtel / Vodafone / Idea / MTNL / BSNL bill

   Gas Receipt (not Gas book)

Registration Process Of LLP

Step 1: Digital Signature Certificate (DSC)

Before starting the process of registration, you must apply for the digital signature of the designated partners of the proposed LLP. This is because all the certificate for LLP are filed online and are required to be digitally signed. So, the designated partner must acquire their digital signature certificates from government recognized certifying agencies. .

Step 2: Director Identification Number (DIN)

You have to apply for the DIN of all the partners or those intending to be designated partner of the proposed LLP.

The application for allotment of DIN has to be made in Form DIR-3. You have to attach the scanned copy of documents (usually PAN and Aadhaar) to the form. The form shall be signed by a Company Secretary in full- time business of the company or by the Managing Director/Director/CEO/CFO of the existing company in which the applicant shall be appointed as a director.

Step 3: Name Approval

The LLP-RUN (Limited Liability Partnership-Reserve Unique Name) is registered for the reservation of name of proposed LLP which shall be processed by the Central Registration Centre under Non-STP. But before quoting the name in the form, it is urged that you use the free name search facility on MCA portal. The system will provide the list of closely resembling names of LLPs/existing companies based on the search criteria filled up.

This will assist you in choosing names not similar to already existing names. The registrar will approve the name only if the name is not unregistered in the opinion of the Central Government and does not resemble any existing partnership firm or a body corporate or a trademark. The form RUN-LLP has to be lead with fees as per Annexure ‘A’ which may be either approved/rejected by the registrar. A re-submission of the form shall be allowed to be made within 15 days for rectifying the defects. There is a arrangement to provide for 2 proposed names of the LLP.

Step 4: Incorporation of LLP

The form used for incorporation is FiLLiP (Form for incorporation of Limited Liability Partnership) which shall be filed with the Registrar who has a jurisdiction over the state in which the registered office of the LLP is situated. The form will be an integrated form.

Fees as per Annexure ‘A’ shall be paid.

This form also provides for applying for allocation of DPIN, if an individual who is to be appointed as a designated partner does not have a DPIN or DIN.

The application for allocation shall be allowed to be made by two individuals only.

The application for reservation can be made through FiLLiP too.

If the name that is used for is approved, then this approved and reserved name shall be filled as the proposed name of the LLP

Step 5: File Limited Liability Partnership Agreement

LLP agreement governs the mutual duties and rights amongst the partners and also between the LLP and its partners.

LLP agreement must be filed in form 3 online on MCA Portal.

Form 3 for LLP agreement has to be register within 30 days of the date of incorporation.

The LLP compliance has to be printed on Stamp Paper. The amount of Stamp Paper is different for every state.

Advantage of LLP

The main benefit of a Limited Liability Partnership over a traditional partnership firm is that in an LLP, one partner is not responsible or liable for another partner's misconduct or negligence. It also provides limited liability safety for the owners from the debts of the LLP. Therefore, all partners in this company enjoy a form of limited liability protection for each individual's protection within the partnership, similar to that of the shareholders of a private limited company. However, unlike private limited company stockholder, the partners of an LLP have the right to manage the business directly.

Uninterrupted Existence

An LLP has 'perpetual succession', that is existence or continued until it is legally dissolved. An LLP being an independent legal person, is unaffected by the death or other departure of any Partner. Hence, it continues to be in presence irrespective of the changes in ownership.

Easy Transferability

The ownership of a Limited Liability Partnership can be easily transferred to another person by inducting them as a partner of the LLP. It is an independent legal entity separate from its Partners, so by changing the Partners, the ownership of the LLP can be changed.

Audit NOT Required

An LLP does not need audit if it has less than Rs. 40 lakhs of turnover and less than Rs. 25 lakhs of capital donation. Therefore, it is ideal for small businesses and startups that are just starting their operations and want to have minimal regulatory compliance related formalities.

Owning Property

An LLP being an artificial judicial human, can acquire, own, enjoy and sell, property in its name. No Partner can make any demand upon the property of it - so long as the LLP is a going concern.