Gupta Anoop & Co. Chartered Accountants

LIMITED LIABLITY PARTNERSHIP (LLP)

LIMITED LIABLITY PARTNERSHIP (LLP)


A limited liability partnership (LLP) is a partnership in which some or all partners (depending on the jurisdiction) have limited liabilities. It therefore can exhibit elements of partnerships and corporations. In an LLP, each partner is not responsible or liable for another partner's misconduct or negligence. LLP is an alternative corporate business form that gives the benefits of limited liability of a company and the flexibility of a partnership. The LLP can continue its existence irrespective of changes in partners.

ADVANTAGES OF LLP

  1. In an LLP, one partner is not answerable or liable for another partner’s misconduct or negligence.
  2. The partners of an LLP have the right to manage the business directly. An LLP provides limited liability protection for the owners.
  3. If the number of Partners reduces less than 2, the sole partner can still find a new Partner to fill the position.
  4. Post incorporation, an LLP can have limitless partners.
  5. If there is only one partner in an LLP, there is time to find a new one, without dissolution of the LLP.
  6. It is a separate legal entity.
  7. LLPs have assets and liabilities that are separate from that of the promoters.
  8. An LLP can raise funds from Partners, Banks and NBFCs.

PROCEDURE:

Step 1: Obtain Digital Signature Certificate (DSC)

Before initiating the process of registration, you must apply for the digital signature of the designated partners of the proposed LLP. This is because all the documents for LLP are filed online and are required to be digitally signed. So, the designated partner must obtain their digital signature certificates from government recognized certifying agencies.

Step 2: Apply for Director Identification Number (DIN)

You have to apply for the DIN of all the designated partners or those intending to be designated partner of the proposed LLP. The application for allotment of DIN has to be made in Form DIR-3.

You have to attach the scanned copy of documents (usually Aadhaar and PAN) to the form. The form shall be signed by a Company Secretary in full- time employment of the company or by the Managing Director/Director/CEO/CFO of the existing company in which the applicant shall be appointed as a director.

Step 3: Name Approval

LLP-RUN (Limited Liability Partnership-Reserve Unique Name) is filed for the reservation of the name of the proposed LLP which shall be processed by the Central Registration Centre under Non-STP. But before quoting the name in the form, it is recommended that you use the free name search facility on MCA portal.

The system will provide the list of closely resembling names of existing companies/LLPs based on the search criteria filled up. This will help you in choosing names not similar to already existing names. The registrar will approve the name only if the name is not undesirable in the opinion of the Central Government and does not resemble any existing partnership firm or an LLP or a body corporate or a trademark.

Step 4: Incorporation of LLP

The form used for incorporation is FiLLiP(Form for incorporation of Limited Liability Partnership) which shall be filed with the Registrar who has jurisdiction over the state in which the registered office of the LLP is situated. The form will be an integrated form.

Fees as per Annexure ‘A’ shall be paid.

This form also provides for applying for allotment of DPIN, if an individual who is to be appointed as a designated partner does not have a DPIN or DIN.

The application for allotment shall be allowed to be made by two individuals only.

The application for reservation may be made through FiLLiP too.

If the name that is applied for is approved, then this approved and reserved name shall be filled as the proposed name of the LLP

Step 5: File Limited Liability Partnership (LLP) Agreement

LLP agreement governs the mutual rights and duties amongst the partners and also between the LLP and its partners.

LLP agreement must be filed in form 3 online on MCA Portal.

Form 3 for the LLP agreement has to be filed within 30 days of the date of incorporation.

The LLP Agreement has to be printed on Stamp Paper.

The value of Stamp Paper is different for every state.

Documents Required for LLP Registration

1.Documents of Partners
  • PAN Card/ ID Proof of Partners.
  • Address Proof of Partners (Voter’s ID, Passport, Driver’s license or Aadhar Card)
  • Residence Proof of Partners Latest bank statement, telephone bill, mobile bill, electricity bill or gas bill should be submitted as residence proof. Such bill or statement shouldn’t be more than 2-3 months old and must contain the name of partner as mentioned in PAN card.
  • Photograph
  • Passport (in case of Foreign Nationals/ NRIs)
  • Foreign nationals or NRIs have to submit proof of address also which will be a driving license, bank statement, residence card or any government-issued identity proof containing the address.
  • 2.Documents of LLP
    • Proof of Registered Office Address
    • If the registered office is taken on rent, a rent agreement and a no-objection certificate from the landlord has to be submitted.
    • Besides, any one document out of utility bills like gas, electricity, or telephone bill must be submitted.
    • Digital Signature Certificate: One of the designated partners needs to opt for a digital signature certificate also since all documents and applications will be digitally signed by the authorized signatory
    • Checklist for LLP Registration

      • Minimum of two partners.
      • DSC for all designated partners.
      • DPIN for all designated partners.
      • Name of the LLP, which is not similar to any existing LLP or trademark.
      • Capital contribution by the partners of the LLP.
      • LLP Agreement between the partners.
      • Proof of registered office of the LLP.

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