A Limited Liability Partnership (LLP) is a body corporate incorporated under the Limited Liability Partnership (LLP) Act, 2008 and the rules made thereunder. It is a distinct legal entity separate from its partners and has its own existence in the eyes of law. It can be formed by two or more persons with the intent to carry on a business together to earn profits and share losses in the ratio, as mutually agreed between them. The persons who share profits and losses are known as “Partners” of the LLP and every Limited Liability Partnership must have the words “LLP” as the last words of its name. The LLP is a hybrid form of an organisation having features of Partnership as well as of a company. In this article, we will discuss LLP Registration process in India.
LLP Registration process in India
We will understand the complete registration process by having an understanding of features of LLP. Then we would explain advantages, documents required and step by step process.
Features of Limited Liability Partnership (LLP):
Following are the features of a Limited Liability Partnership:
1. Corporate Personality:
A Limited Liability Partnership has corporate personality it means that in the eyes of law, it has an identity of its own different from its Partners. It means that the acts of a Partner do not bind the LLP as the LLP and Partner are two distinct persons.
2. Limited Liability:
The Liability of Partners in a Limited Liability Partnership is limited to that extent up to which they have undertaken to contribute to the capital of the LLP.
3. Perpetual Succession:
An LLP has ‘perpetual succession’, meaning uninterrupted existence until it is legally dissolved. A Limited Liability Partnership being a separate legal person, will exist irrespective of the changes in the Partnership. It means that the partners of the LLP may keep changing or the whole management changes in one go, but the LLP goes on forever.
4. Separate Property:
Being a separate legal entity, the Limited Liability Partnership can acquire, own, enjoy and alienate, property in its own name. No partner is eligible to claim the property of the LLP as his own, as long as the LLP is a going concern.
5. Managed by Designated Partners:
In the case of LLP, there shall be at least two individuals who shall become the Designated Partners of the LLP. It is required that at least one of them shall be the resident in India. The Designated Partners are liable to manage day to day operations of the LLP and considered as Managers of the LLP. It shall be noted the persons who become Partners may also be appointed as Designated Partners of the LLP, but they shall be individuals only. In case one or more Partners of the LLP are body corporates or any other form of organisation and not an individual then in such a case, the said body corporate(s) may appoint, an authorised representative who is an individual, as the Designated Partner of the LLP.
6. Limited Liability Agreement:
The LLP is governed by the provisions of LLP Act, 2008 and the rules made thereunder. The partners can enter into a Limited Liability Agreement which will define the mutual rights and duties of the partners inter-se and the LLP will be operated according to the provisions made under this agreement. In case, the partners will not enter the Limited Liability Agreement, then the LLP will be governed by the provisions of Schedule I of the LLP Act, 2008.
Advantages of Limited Liability Partnership (LLP):
Once you follow simple LLP Registration process in India and LLP is registered, advantages to follow are:
1. Better recognition than partnership firm
Being a corporate personality, an LLP enjoys more recognition in the eyes of law. LLP is being considered as more trustworthy and credible before the banks and financial institutions.
2. Limited Liability:
In the case of LLP, the liability of partners is limited to that extent up to which they have undertaken to contribute to the capital of the LLP.
3. Less Compliances:
The LLP form of organisation has lesser compliances in comparison to companies
4. Separate Management:
Since the LLP is required to appoint at least two individuals as Designated Partners, they are liable to manage the day to day affairs of the LLP. As these Designated Partners can be different persons form the Partners of the LLP, then in this case, having separate management may help in better and efficient working.
Procedure for LLP Registration process in India:
Documents and Details Required:
In order to complete the LLP Registration process in India, the following documents and information are mandatorily required:
Documents and Details Required for All the Partners:
- 1 Passport Size Photograph;
- PAN Card;
- Aadhaar Card;
- Identity Proof (Voter ID/Driving License/Passport) (any one of these);
- Address Proof (Bank Statement/Electricity Bill/Telephone Bill not older than two months) (any one of these);
- E-mail ID and Mobile Number of every Partner; and
- Educational Qualification and Place of Birth of every Partner
Documents Required for Registered Office Address of the LLP:
- Electricity Bill/Water Bill/Gas Bill (not older than two months) (any one of these);
- No Objection Certificate (NOC) from the Owner of Premises; and
- Rent Agreement (if any).
Steps for Incorporation of a Limited Liability Partnership (LLP):
We need to follow the steps below for LLP Registration process in India:
Step – 1: An application through “RUN Service” available on MCA portal, for reserving the Name shall be made to Ministry of Corporate Affairs (herein referred to as ‘MCA’) for which maximum 2 names can be proposed in one application. It should be noted that the Names so proposed shall be as per the MCA Rules and the object shall also be mentioned in the Name Reservation application.
Step – 2: An application for obtaining Digital Signature Certificates (DSC) for all the Designated Partners will also be made.
Step – 3: Now, Draft Declarations will be prepared and on being finalised, the same shall be signed by the Partners and Designated Partners.
Step – 5: At last, an application in form “FiLLip” for incorporation shall be filed with MCA along with application for allotting Designated Partner Identification Number (DPIN) for designated Partners who are not having Director Identification Number (DIN) or Designated Partner Identification Number (DPIN).
Step – 6: Certificate of Incorporation (COI) will be issued and DPIN will also be allotted by MCA and the LLP gets incorporated.
You would find that LLP Registration process in India is a simple process, yet it needs careful drafting and precision. If there are any deviations from set rules, it is required to be resubmitted with corrections.
Conclusion:
An LLP is a mixture of features of Partnership firm as well as a company. This is a kind of Partnership, where the partners can enjoy the benefits of Corporate Entity without being burdened with excessive and rigid compliances. In addition, LLP Registration process in India is similar to private limited company and fairly a simple process.
FAQs:
1. Requirements to register a Limited Liability Partnership.
The LLP Registration process in India is fairly a simple process. It needs at least two persons to act as partners and designated partners of the LLP. The designated partners must be the individuals i.e. natural persons, whereas the partners can be natural persons as well as corporate bodies. However, it shall be noted that if the Partners are Body Corporates, then in this case, these can nominate their authorised representatives who shall be individuals only and one of them shall be resident in India.
2. What is Limited Liability Protection in Limited Liability Partnership?
Limited Liability means the liability of partners is limited up to the amount agreed to be contributed by them as a contribution in the partnership.
3. Is there any minimum capital requirement to start an LLP?
There is no minimum capital requirement as per the LLP Act, 2008 and an LLP can be started with any amount of Capital which may be as small as Rs. 10,000 or less.
4. Is this possible that a residential property can be a Registered Office of the LLP?
The LLP Registration process in India doesn’t mandate that you need to occupy a commercial property for office address. Yes, a residential property may be used for registered office of an LLP.
5. Is there any maximum capital Limit for LLP?
No, there is no such limit on the maximum amount of capital that can be invested in an LLP.
6. Can Contribution be introduced in kind?
Yes, contribution can be introduced in kind subject to the valuation of the property by the Registered Valuer.
7. What are the Annual Compliance requirements to be fulfilled by an LLP?
Following are the mandatory compliances to be fulfilled by an LLP: –
- Filing of Annual Return with Ministry of Corporate Affairs (MCA) in LLP Form 11.
- Statement of Accounts and Solvency will also be filed with Ministry of Corporate Affairs (MCA) in LLP Form 8.
- Income Tax Returns shall also be filed every year with Income Tax Department.
8. Is stamp duty payable during incorporation process?
Yes, Stamp Duty is payable and will be calculated as per the respective State’s Stamp Act where the Registered Office of the LLP will be situated.
9. What is DPIN?
Designated Partner Identification Number (DPIN) is a unique identification number required for every individual who wanted to become a Designated Partner in an LLP. An application may be made to the Ministry of Corporate Affairs in this regard. However, if an individual already holds Director Identification Number (DIN) then he will not be required to have DPIN.
10. What is DSC?
A digital signature certificate (DSC) is electronic signature issued by a certifying authority. It is used for signing the electronic forms, filed with MCA at the time of incorporation of the LLP.
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