INCORPORATION OF LIMITED LIABILITY PARTNERSHIP (LLP)
Introduction
Limited Liability Partnerships (LLPs) combine the benefits of partnerships with the benefits of limited liability companies. It has taken shape in India since January 2009 and was an immediate hit with startups and professional services. The idea behind LLP was to provide an easy-to-maintain business form and assist owners through limited liability.
Limited Liability Partnership (LLP) means a partnership that has been incorporated and incorporated under the provisions of the Limited Liability Partnership Act of 2008. The following features of limited liability partnerships, unlike other forms of legal entity, are gaining popularity in the business world.
Why Should You Choose An LLP?
- It provides “advantages of both a Company and a Partnership firm.
- Neither partner is responsible for the misconduct of the other partner.
- The Liability of the Partners is limited to the contribution made by them.
- LLPs shall have perpetual succession. Unlike other forms of legal entity, changing an LLP partner does not affect the existence, rights, or responsibilities of the LLP.
- LLPs have lesser compliance obligation compared to the private/public companies in terms of annual filings, returns, audit etc.
- There is no restriction of not having more than 200 members as in the case of a private limited company.
Mandatory Requirements
- At least two partners, either individuals or body corporates.
- At least two designated partners (individuals only) and one of them must live in India.
- Obtain prior written consent from designated partners in Form LLP 9 within 30 days of appointment.
- Every designated partner shall have a Digital Signature Certificate (DSC).
- LLP must have either “Limited Liability Partnership" or the abbreviation “LLP” as the last word in its name.
Steps to Register an LLP in India
1. Obtain DSC of partners
The first step is to obtain the digital signature certificates of the partners of the limited liability company. The reason is that all forms must be submitted online and require an partner's digital signature. Following information/documents are required for application of DSC:
i. Aadhaar Card
ii. PAN Card
iii. Photograph
iv. Email address
v. Mobile Number
2. Application for Name Approval
This process involves registering the LLP. Before doing this, you need to check if the name is already in use. You can use the free search function facility of the MCA portal. The registrar only approves LLP names that have not yet been used. Name approval is given by the Prime Minister only if the central government deems it undesirable. Also, its name must not resemble any of the existing partnerships, LLPs, brands, or entities. If the proposed name of the LLP includes bank, insurance, venture capital, mutual fund, stock exchange, CA, CS, CWA, advocate, etc., the in-principle approval need to be obtain from its regulator or governing council.
3. Filing of LLP Incorporation Documents with MCA
An LLP registration application consists of creating and submitting an e-form FiLLip using MCA with the required documentation. All documents executed and attested in accordance with document requirements must be attached to the FiLLip e-form and digitally signed with the Digital Signature Certificate (DSC) of all proposed and designated partners.
4. LLP Agreement
The LLP agreement is very critical document in limited liability partnership as it set out mutual rights and obligations between partners and between LLPs and partners. Partners enter into an LLP contract at the time of LLP registration by filling out Form 3 online on the MCA Portal. The procedure must be completed within 30 days of the date of incorporation.
5. Apply for PAN & TAN & Bank Account
Once you receive your Incorporation Certificate, apply for LLP PAN & TAN to NSDL. It takes about a day.
Documents Required for LLP Registration
PAN Card
PAN Card of Partners.
Foreign nationals must provide a valid passport.
Email ID & Mobile No.
Email ID and Mobile no. of designated partners and partners.
Photograph
Latest passport size photograph of Partners.
Identity Proof
Aadhar card / Voter ID / Passport / Driving License of Partners.
Partner’s Address Proof
Latest Electricity Bill/ Telephone Bill / Bank Account Statement of Partners.
Business Address Proof
Latest Electricity Bill/ Telephone Bill and Rent agreement of the registered office address. It should not be older than 2 months.
NOC
NOC or No Objection Certificate from the landlord of the registered office.
Note
In case of NRI or Foreign National, documents of Partners must be notarized or apostilled.