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Limited Liability Partnership

LLP Registration / Formation Procedure in India

Narendra Kumar

| Updated: Jul 20, 2017 | Category: Business Registrations, Company Registration

LLP Registration

The (LLP) limited liability partnership is an upgraded version of the Partnership. The Limited Liability Partnership Act 2008 was published in the official Gazette of India on 7 January 2009 and has been notified with effect from 31 March 2009

As the name suggests LLP: A Limited Liability Partnership (LLP) is a partnership in which some or all partners have limited liabilities.

Introduction of LLP Act 2008

One of the popular and highly preferred categories of entity for doing business in almost all economic sectors in the majority of the countries worldwide is the limited liability. LLP is way different from Traditional Partnership. It is more in the form of organized form business.

LLP is mainly for the people who provide consultancy service. Partnerships (LLP), along with private and public limited corporations. It is the hybrid form which incorporates benefits of both partnership and companies.

Is There Any Liability Protection of Founder Under LLP

An LLP also limits the personal liability of a partner for the errors, omissions, incompetence, or negligence of the LLP’s employees or other agents.

Separate Legal Entity-Continue its existence irrespective of Changes in partners i.e. perpetual succession.

Every Limited Liability Partnership shall have either the words “Limited Liability Partnership“ or the acronym “LLP” as the last words of its name and even LLP can be winded up with the consent of partners.

LLP Registration Process

Partners:

  1. A minimum of two partners will be required for the formation of an LLP (one of them must be a resident of India). There will not be any limit to the maximum number of partners
  2. Any Individual or Body Corporate may be a partner of Limited Liability Partnership.
  3. Every Partner of the LLP is, for the purpose of the business of LLP, the agent of the LLP, but not of the other partner 

Registered Office:

As per LLP Act, There should be a registered office thru legal correspondence can be done.

Simplified Procedure:  

  1. Obtain DIN (If already there then Ignore)
  2. Obtain DSC (If already there then Ignore)
  3. Search for Name Availability for LLP formation name.
  4. File Form 1 – Rule 18(5): Reservation of name:

Reservation of name shall be filed. Partners shall have to select the name of the proposed LLP (up to 6 choices can be indicated in the order of preference)

Following Information are Required to be Filed in Form LLP-1

  • DIN of Designated Partner.
  • Email Id
  • Occupation
  • State of Register office of Company
  • Objects of LLP
  • Partners Contribution into LLP
  • Name of LLP
  • Significant of Name
  • If Proposed Name is based on Trade Mark (NOC from the Owner of Trademark)
  • DSC of Designated Partner
  • Draft LLP Agreement as per section 23(3): Section 23(3) of the LLP Act provides that an agreement in writing made before the incorporation of an LLP Between the persons who have subscribed their names to the incorporation document and should be on stamp paper.

Main Features of the LLP Agreement: Inter alia are

  • Registered office
  • Objective of LLP
  • Designated Partners
  • Rights and Duties of the partners and designated partners
  • Commencement of Business of LLP/Duration of LLP
  • Role of Partners in Management/Contribution of partners
  • Remuneration of Working Partners
  • Define Interest to Partners: interest up to 12%
  • The extent of the liabilities of the LLP
  • Accounting Year
  • Profit Sharing Ratio
  1. File Form 2 for incorporation and subscription Document have to be filed with ROC after the name is reserved for LLP by Registrar.
  2. File Form 3 for LLP Agreement: It is not mandatory to file LLP agreement at the time of registration and same can be a file in form LLP-3 within 30 days of Incorporation of LLP.

List of Forms for Incorporation

Forms to be filed by limited liability partnership (LLP) on incorporation: Forms
Application for reservation or change of name

Incorporation document and subscriber’s statement

Details in respect of designated partners and partners of Limited Liability Partnership

Information with regard to the limited liability partnership agreement and changes, if any, made therein

Form 1

Form 2

Form 2A

Form 3

Note: Stamp Duty needs to be paid where necessary as per the Stamp Act.

  • After the Registrar is satisfied that all the formalities with respect to the incorporation have complied, he will issue a Certificate of Incorporation as to the formation of the LLP within a maximum of 14 days from the date of filing of documents.
  • The Certificate of Incorporation issued shall be the conclusive evidence of the formation of the LLP.
  • On incorporation Every LLP so registered shall be assigned an LLP identification number (LLPIN) in one consecutive series.

Penalty: For non-compliance, the penalty charged to LLP is Rs 100 Per day

Limited Liability Partnership (LLP) vs Private Limited Company:

Factors Limited Liability Partnership Private Limited Company
Define A limited liability partnership (LLP) is a partnership in which some or all partners (depending on the jurisdiction) have limited liabilities. It, therefore, exhibits elements of partnerships and corporations. A company whose shares may not be offered to the public for sale and which operates under legal requirements less strict than those for a public company.
Recommended for Professional service firms Early-stage entrepreneurs with broad business vision
Minimum Requirement Designated Partners – 2 Member – 2

Director –  2

Compliance Requirement Annual Filings only Annual Return Filing, Board Meetings & General Meeting etc
Statutory Audit Only if Contribution increases the Limit Compulsory
Limited Liability Protection Provides Protection to founder Provides Protection
Business Growth Medium High
Dividend Taxation No Yes
Investor Preference Medium High
Penalty High Low Compared to LLP
Venture Capital Funding No Yes. it is Possible

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Narendra Kumar

Experienced Finance and Legal Professional with 12+ Years of Experience in Legal, Finance, Fintech, Blockchain, and Revenue Management.

Business Plan Consultant


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