A limited liability partnership (LLP) is a type of partnership that allows a few or all partners (contingent upon the jurisdiction) to have certain defined liabilities. This signifies the liability of each partner towards the misconduct or negligence of another partner.
LLP is one of the easiest types of businesses to incorporate & manage and it integrates the advantages of a Partnership Firm and a Company.
The concept of a limited liability partnership was introduced in India by the Limited Liability Partnership Act 2008.
The main reason behind the introduction of Limited Liability Partnership is to furnish such a form of business entity that is less complex in nature, easy to maintain, and pertains limited liability to its owners. Besides, an LLP offers non-rigidity of partnership and restricted liability of a company.
LLPs are most-popular among the Professionals and Closely held businesses that are family-owned. It is not suitable for those kinds of businesses who have plans to raise equity funds from Venture Capitalist, Angel Investors or Private Equity Funds.
The LLP Act, 2008 has listed following requirements for incorporation of LLP
For PartnersThe Ministry of Corporate Affairs vides its notification dated 18th February 2020 effective from 23rd February 2020 has further amended the Companies (Incorporation) Rules, 2014 thereby substituting the old Form INC-32 (SPICe) with web service SPICe+ along with certain other amendments.
The first step is to make an application for reservation of name which shall be reserved by using the web services (RUN LLP) available at www.mca.gov.in along with the specified fees.
Two proposed LLP names (along with their justification) are applied online via RUN LLP form on the MCA portal.
Before applying for a name, kindly check that the name is available on MCA as well as no trademark if there is no such name under the Class of work you are going to apply for
Click on the below-given link to check:
Trademark Registration.
Once the name is allotted by the Ministry, it is reserved for a period of 20 days from date of approval.
Before initiating the process of registration, you must apply for class 2 digital signatures of the designated partners of the proposed LLP. This is due to the fact that all LLP documents are submitted online and must be digitally signed.
Form FiLLiP is the application form for the incorporation of the LLP. FiLLiP is an integrated form that offers a number of services, namely allotment of DIN, Reservation of Name and Incorporation of LLPs.The application for incorporation of LLP shall be accompanied with documents like subscriber’s sheet, directors KYC, consent form and registered office address proof. The e-form has to be digitally signed by one of the partner of LLP through their DSC and certified by the practicing professional (CA/CS/CWA).
Once the E-Form FiLLiP is approved by the Ministry, the Certificate of Incorporation is provided via E-mail.
The last step is to file a limited liability partnership agreement, The agreement governs the mutual rights & obligations between the partners and between the LLP & its partners.
The LLP must be submitted within 30 days of the inclusion of Form 3 and must be printed on stamp paper and should be duly notarized. The rate of stamp duty depends on the state and the capital contribution of the LLP.
LLP Partnerships is a new and convenient concept that does not require any minimum capital. Besides, the registration cost is reasonable.
If you wish to commence your business with Limited Liability Partnership, then it is very important to get it registered under Limited liability Partnership Act, 2008.
One must get its business registered as a Limited Liability Partnership using the legal registration services from professionals who can take on the responsibility for your taxes and commercial compliances.
Any individual or body corporate may be a partner in an LLP. However, an individual shall not be capable of becoming a partner of an LLP, if—
There is no minimum capital required for incorporating LLP under LLP Act 2008.
Any individual or corporate body can be a partner in an Limited Liability Partnership provided that the designated partner (individual) needs to be a major i.e. above the age of 18 years. The Ministry of Corporate Affairs (MCA) has not prohibited on the citizenship or residency of the partner. Thus, any foreign national or the foreign corporate body can be admitted as a partner in Indian LLP with the condition that it must have at least one designated partner should be a resident of India.
It is not mandatory under the Limited Liability Partnership Act, 2008 to get the accounts audited to a certain limit, hence it is necessary to get them audited when:-
An Limited Liability Partnership cannot be converted into a Company because of the Acts are separately governed while it is possible to convert an Limited Liability Partnership into a Partnership Firm.
The stamp duty is based upon the capital of the LLP and the state in which you are incorporating the LLP.
Yes Foreign National or a NRI can become designated partners subject to the condition that there must be at least one Indian Designated Partner. There is no restriction on capital sharing ratio.
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