Company Registration

Limited Liability Partnership Registration Procedure in India: A Complete Guide

LLP Registration Procedure

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. Let’s have a deep dig at the complete LLP Registration in India.

Meaning of LLP

As the name itself suggests, a Limited Liability Partnership (LLP) is a partnership in which some or all partners have limited liabilities. It has the benefit of company and partnership. It is a partnership where some or all partners have limited partnership.

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 business.

LLP is mainly for the people who provide consultancy service. It is the hybrid form which incorporates benefits of both partnership and companies.

Major Features of LLP

The major features of LLP are as follows:

Major Features of LLP
  • An LLP limits the personal liability of a partner for the errors, omissions, incompetence, or negligence of the LLP’s employees or other agents.
  • The nature of LLP is that it is a separate Legal Entity which means Continues 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.
  • It is governed by the Registrar of Companies.
  • A minimum of two partners will be required for the formation of an LLP (one of them must be a resident of India). There is no limit to the maximum number of partners.
  • Any Individual or Body Corporate may be a partner of Limited Liability Partnership.
  • Every Partner of the LLP is, for the purpose of the business of LLP, the agent of the LLP.
  • As per LLP Act, there should be a registered office through which legal correspondence can be done.
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LLP Registration Procedure

LLP has a simplified procedure for registration. It is provided below:

  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) application for Reservation of name:

Note- 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

5. Draft LLP Agreement as per section 23(3) – Section 23(3) of the LLP Act[1] 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:

  • 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

It may be noted that Form 2 for incorporation and subscription Document have to be filed with ROC after the name is reserved for LLP by Registrar. File Form 3 for LLP Agreement and it is not mandatory to file LLP agreement at the time of registration and the same can be a file in form LLP-3 within 30 days of Registration of LLP.

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

6. 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.

7. The Certificate of Incorporation issued shall be the conclusive evidence of the formation of the LLP.

8. 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

FactorsLimited Liability PartnershipPrivate Limited Company
DefineA 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 forProfessional service firmsEarly-stage entrepreneurs with broad business vision
Minimum RequirementDesignated Partners – 2Member – 2   Director- 2
Compliance RequirementAnnual Filings onlyAnnual Return Filing, Board Meetings & General Meeting etc
Statutory AuditOnly if Contribution increases the LimitCompulsory
Limited Liability ProtectionProvides Protection to founderProvides Protection
Business GrowthMediumHigh
Dividend TaxationNoYes
Investor PreferenceMediumHigh
PenaltyHighLow Compared to LLP
Venture Capital FundingNoYes. it is Possible

Conclusion

The LLP Act doesn’t state about the process and periodicity of convening the meetings of partners. The Act prescribes that decisions taken at the partners meeting has to be recorded in 30 days of taking the decision.

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