A Limited Liability Partnership (LLP) is a legal entity established under the LLP Law 2008. It is a legally autonomous entity with respect to its partners. Such legal entities are liable for all property. However, the partner’s liability is limited to the agreed contribution. And since the partner’s liability in an LLP is limited, it entails the partner company structure and elements of the corporate structure. Except in cases of fraud, the partners are not personally liable. In addition, since the concept of joint responsibility does not work in LLP, partners are not liable for the misconduct or negligence of their fellow partners. The concept of Limited Liability Partnership (LLP) emerged in India in 2008.
A minimum of two partners is required to register for an LLP, but there is no upper limit in this context. Partners must include at least two designated partners who must be natural persons, one of whom must be an Indian citizen. The LLP Agreement governs the rights and obligations of such partners. They are responsible for complying with all existing provisions of the LLP Act of 2008 and the provisions set forth in their respective agreements.
What Is An LLP And How To Register An LLP In India?
A limited liability partnership (LLP) is a form of business that combines the functions of a partnership and a limited liability company business structure. This business form was introduced in India with the passage of the Limited Liability Partnership Act 2008 in April 2009. In LLP, partners are not liable for the misconduct or negligence of other partners. Instead, all partners have limited liability limited by their acts or omissions, similar to the obligations of shareholders in a limited liability company. However, unlike the shareholders of the company, LLP partners have the right to manage the business directly. LLP also limits the personal liability of partners for errors, omissions, incompetence, or negligence of LLP employees or other agents. Day-to-day business management is specified in the LLP agreement, giving partners the freedom to manage their business affairs. LLP registrations are handled by the Office of Corporate Affairs (MCA) through the Office of Corporate Registration. The incorporation process is completely electronic, just like the incorporation process. This means that applications and documents are submitted electronically and the registrar issues a digitally signed Certificate of Incorporation (COI).
Benefits Of An LLP
The main reasons people prefer LLP structures for their business structures are:
Limited Liability
LLP members are only liable for small debts incurred by them. On the other hand, in the case of property and partnerships, the personal assets of directors and unions are not protected if the business goes bankrupt
Separate Legal Entity
An LLP is a legal entity separate from its participants. It has a lasting existence following eternal continuity. In other words, the partner can leave, but the business remains. For a company to be dissolved, the terms of the dissolution must be mutually agreed upon.
Flexible Agreement
Transferring ownership of an LLP is also easy. A person can be easily induced to a designated partner and ownership is transferred to him.
Suitable For Small Business
LLPs with a capital of less than 25 lakh and an annual turnover of less than 40 lakh do not require a formal audit. Therefore, registering as an LLP is beneficial for small businesses and startups
Once Your LLP is Incorporated, we will send you LLP Certificate
Steps To Register An LLP In India
1. Obtain DSC and DIN of partners
The first step is to obtain the electronic signature certificate of the desired partner of the limited liability partnership. This is because all forms must be submitted online and require an electronic signature from the director. In addition, all directors are required to register a DIN number. Applications must be completed on the DIR-3 form.
2. Application For Name Approval
This process involves enrolling in an LLP. Before doing so, you need to check if the name is already in use. A free search is available on the MCA portal. The registrar only accepts previously unused LLP names. Name approval is done by the registrar only if the central government deems it undesirable. Additionally, the name must not resemble any existing partner company, LLP, trademark, or legal entity.
3. Filing of LLP Incorporation Documents with MCA
LLP registration consists of preparing the E-Form FiLLip along with the required documents and submitting it to the MCA. All documents completed and certified in accordance with the document requirements must be attached to the FiLLip E-Form and digitally signed with a Digital Signature Certificate (DSC) of all proposed and designated partners.
4. LLP Agreement
LLP agreements are very important in limited partnerships as they define mutual rights and obligations between partners and between LLP and partners. Partners sign up for an LLP agreement after registering for an LLP by completing Form 3 online on the MCA portal. This process must be completed within 30 days of the registration date.
5. Apply For PAN & TAN & Bank Account
Once you have your Certificate of Incorporation, apply for an LLP PAN and TAN with NSDL. It takes about a day.
Documents Required For LLP Registration
To register for an LLP, you will need scanned copies of the following documents:
From partners:
· PAN card or passport (foreign or NRI)
· Aadhar card/voter ID/passport/driver’s license
· Recent bankbook/phone/mobile bill/electricity/gas bill
· Passport photo
· Blank document with sample signature.
Note: One partner must independently certify the first three documents. For foreigners or NRIs, all documents must be notarized (if currently in India or a non-commonwealth country) or apostille (if present in a Commonwealth country).
For the registered office:
· Utility bills
· Notarized English rental agreement
· Certificate of No Objection by the Property Owner
· Sale /property deed in English (in case of owned property).
