Overview: Limited Liability Partnership (LLP) In India
The budding entrepreneurs are choosing Limited Liability Partnership (LLP) as the most chosen type of firm. Why? Because it comprises all the advantages one would get from a company, and a separate partnership firm.
In India, The idea of forming an LLP was first introduced in 2008. An LLP comprises all the properties present in a company and a partnership firm. The LLP Act is responsible for its regulation in India. The formation of LLP requires at least 2 partners. But there is no fixed number for the maximum number of partners that can exist in an LLP.
There are two partners and both of them should be normal individuals, and at least one partner amongst them must be a native Indian resident. The LLP agreement gives out all the duties and rights of the chosen partners. The partners make sure that all the guidelines and provisions of the LLP Act and agreement are followed properly.
Advantages Of LLP In India
Individual legal unit
Like firms that have an individual legal unit, an LLP also has its legal unit. The partners are not primarily associated with the LLP. Any LLP has the power to either sue or get sued. All the contracts only get signed in the designation of LLP. This increases the trust of several stockholders and provides a confidence boost to the consumers in their firm.
Restricted responsibility of the partners
The responsibility of partners in an LLP depends on the amount of contribution they are making to the company. So, this comes down to the meaning that the partners will pay only the sum of their contribution. Plus, if the company faces any loss, the partners are not responsible for that. If the LLP is on its way to getting dissolved during the wind-up process, only the possessions of an LLP are responsible for reimbursement of its debts. So as the partners don’t have to face any personal obligations they can freely function as dependable businessmen.
Cheap & easy agreement
It is obvious that if you have decided to form an LLP, you would know that it has a low cost when put in comparison with another type of private or public limited company. Another perk that comes with an LLP is that it has few compliances and it requires only 2 official statements per year. Such as a statement of accounts, solvency, and an annual return.
No lowest investment contribution
No set level of minimum capital is needed before establishing an LLP company. An LLP can be incorporated using any amount of investment put in by the partners.
Process To Register LLP In India
1st Step: Get a Digital Signature Certificate (DSC)
Before getting started with the process of registration, get the e-signatures of the official LLP partners. Why? Because it is a compulsory requirement that all the documents of LLP should be digitally signed and uploaded online. After doing that, the partner can obtain his/her e-signed certificate.
The price of DSC differs based on the certification agency. You must also achieve DSC class 3 classification. When you register a Limited Liability Partnership with ODINT Consulting, you can get up to two DINs for free, and you won’t have to register for them individually.
2nd Step: Director Identification Number Registration
All authorized associates or those who wish to be authorized associates of the prospective LLP must register for a DIN. To successfully issue a DIR number, you must complete the issuing of DIR-3.
All the e-copies of your paperwork, like, PAN card and Aadhar card should be adjoined with the application. The paperwork must be approved by a full-time Firm Secretary CEO/ Director / CFO /the Managing Director of the established business where the applicant will be elected as a director.
3rd Step: Approval of the name
The third step is to get the name of the LLP reserved. The LLP RUN, which is the abbreviation for LLP- Reserve Unique Name, comes under this technique. Once you have selected the name, it is then sent to the Central Registration Centre. It is to be ensured before confirming the name in the application that you take the help of the free name option that is present on the MCA portal.
Related to the user’s search parameters entered, the software will generate a list of established businesses with very similar names. Using this, you can pick some of the most unique names. You should pay attention to the fact that your LLP name should be catchy, attractive, and should appear appealing to Central Government. Also ensure that your chosen LLP name is unique, and is distinct from any kind of trademark, LLP, or body corporation. Then only the registrar will give you the permit.
The application RUN-LLP must be supported by fees listed in Annexure ‘A,’ which the registrar may accept or refuse. Once you get the application, you have 15 days in which you can send it back to correct any sort of mistakes in it. You can also send in two different names for LLP as suggestions.
4th Step: Incorporation of LLP In India
- There is a specific form that is used for the establishment process, i.e., Form for incorporation of Limited Liability Partnership, FiLLiP. This form is shared with the registrar. The registrar has the state’s authority in which the LLP’s official office is present. This form is a type of a combined form.
- The fees according to Annexure A must be submitted
- If any one of the partners doesn’t have a DIN or DPIN, then using these forms that partner can apply for allocation of DPIN.
- Only 2 people can send in an allotment application.
- The FiLLiP form can help applicants in sending a reservation application.
- If your chosen name is approved by the government, then this reserved and selected name shall be picked as the planned LLP name.
- Suppose your chosen name gets the approval, then this permitted name will get filed as the final LLP name.
5th Step: Submit Limited Liability Partnership Treaty
The mutual rights and obligations of the associates, as well as the Limited Liability Partnership and its associates, are governed by the LLP contract.
- Via the MCA portal, submit your Form 3. The whole process will remain online.
- After your LLP incorporation gets completed, within one month, you should submit Form 3.
- Stamp Paper must be used to publish the LLP Contract. Stamp Paper has a varied value in each state.
Documents Required to Form LLP In India
1. Paperwork needed by partners
- Passport – Foreigners and Non – resident Indians must present their passports as a condition of claiming a partnership in an Indian Limited liability partnership. All the NRIs or the citizens of a foreign nation should get their passports apostilled or certified. They can do this with the help of the respective authorities in their native land. If not that, you can contact the Indian Ambassador in that country. He/she can certify your documents.
- Associate Address Evidence – Partner can provide any one of the following documents: voter’s ID, driver’s license, passport, or Aadhar Card. The partner’s details like his name, etc, on the proof of address and the PAN card, must be identical. Suppose a situation arises where there is an error in either your name, your parent’s name or in your DOB, you will have to correct it before submitting it to the RoC.
- ID Proof of Partners/PAN Card— When starting with the LLP registration in India, all associates must produce their PAN. Your PAN card holds immense importance as it acts as the first source of your identity.
- Image — Associates should also offer a passport-size picture with a white background, ideally.
- Associates’ Residency Proof – A recent bank account statement, monthly bills of phone, mobile, electricity, or gas bill must be presented as residence proof. The bank statement or the bill should fall within a time period of 2-3 months. It should also match with the partner’s identity present on his/her PAN card.
If you are an NRI or a foreign citizen, you will have to give proof of your residence. The proof of residence may include, a bank statement, driver’s license, any document registered through the government with your address, or simply your residential permit.
Suppose your documents are in any other language apart from English, you should also provide a certified translated copy of the same.
2. LLP Paperwork
- Digital Signature Certificate: Because all paperwork and requests will be validated through an online portal, by the authorized representative, one of the chosen partners must also choose a DSC.
- Evidence of Registered Business Address: On applying or within 1 month of formation, evidence of business address must be given. If in any case, your registered office address is rented, the owner of the place will have to himself sign a contract and give a letter of no-objection. Once the landlord submits the no-objection letter, the applicant can utilize the LLP business location, and tag it as a “registered business”.
Furthermore, any service bill, such as telephone bill, electricity, or gas, must be provided. The bill must include the exact location of the property as well as the identity of the proprietor, and it must be less than two months old.
Conclusion
Now that we have reached the end of this article, I hope all your doubts regarding an LLP are cleared, and by now you are aware of its meaning, advantages, the process of applying, and the documents that are needed to take forward the application process smoothly.
FAQ’s
A Limited liability partnership can have any number of partners, including individuals and corporations. Juveniles, individuals of unsoundness of mind, and insolvents who have not been dismissed cannot be associates in a Limited liability partnership.
Yes, a Limited partnership must be registered with the Ministry of Corporate Affairs (MCA). To be legally enforceable, an LLP should be registered under the Limited Liability Partnership (LLP) Act.
A Limited liability partnership does not have any directors. A limited liability partnership (LLP) does not need to designate executives or have directors. An LLP’s company is managed by its associates. The LLP’s operational and commercial decisions are made by the associates. As a result, an LLP must always have at least two associates.