LIMITED LIABILITY PARTNERSHIP
Now a day’s entrepreneur is opting for Limited Liability Partnership for doing business due to its special positive features. Limited Liability Partnership (LLP) is a separate legalentity. In general law a LLP is regarded as a body corporate. It is essentially a general partnership in form, with one important distinction thatthe partner or investor’s liability is limited to the amount he/she has invested in the LLP.It isregistered under the Limited LiabilityPartnership Act, 2008 and the rules made thereunder and governed/managed as per LLP agreement. LLP partners do not receive dividend, but enjoy direct access to the flow of income and expenses
a) The LLP has Separate Legal Entity i.e. the LLP and the partners are distinct from each other.
b) Minimum of 2 partners are required to form a LLP. However, there is no limit on the maximum number of partners.
c) No requirement of minimum capital contribution
d) Partner’s liability is limited to the extent of the agreed contribution in the LLP agreement.
BENEFITS AND ADVANTAGES OF REGISTRATION OF LLP:
a) The Liability of each partner is limited to his share as written in the Agreement filed at the time ofcreation of LLP as compared to Partnership Firms which have unlimited liability.
b) It has a low cost of formation and is easy to form.
c) The Partners are not liable for the acts of each other and can be held liable only for their own acts ascompared to Partnerships wherein they can be held liable for the acts of their partners as well.
d) Less Restrictions and Compliance are enforced on a LLP by the Govt. as compared to the restrictionsenforced on a Company.
e) As a Juristic Legal Person, a LLP can sue in its name and be sued by others. The partners are not liable tobe sued for dues against the LLP.
IMPORTANT KEY POINTS:
a) All the Designated Partners of the proposed LLP should have a Designated Partner Identification Number (DPIN). The Directors Identification Number (DIN) can be used instead of DPIN if the partner is already having a DIN.
b) One of the Designated Partner of the proposed LLP should be a resident of India. In case of a LLP in which all the partners are bodies corporate or in which one or more partners are individuals and bodies corporate, at least two individuals who are partners of such LLP or nominees of such bodies corporate shall act as designated partners.
To register/incorporate a LLP it involves fivebasic and simple steps to incorporate a LLP.
Step 1: Acquire and Register DSC
A licensed Certifying Authority issues the digital signature. Certifying Authority means a person who has been granted a license to issue a digital signature certificate under Section 24 of the IT
Register DSC: The DSC once issued by the certifying authority should be registered by Role check on MCA21 portal as only then the DSC can be used for online filings of LLP E-forms.
Step 2: Obtain Designated Partner Identification number.
Every individual intending to become designated partner in LLP has to apply for allotment for DPIN in DIR-3 by attaching prescribed documents.
Step 3:Applying for Name Approval
Application for reservation of name: The application for the reservation of the name of the LLP is to be filed in E-form 1.
Criteria for name approval: The registrar will approve the name applied for provided the name is not either undesirablein the opinion of the Central Government or that is identical with or that which too nearlyresembles to the name of any existing partnership firm or a LLP or a body corporate or atrade mark registered or pending registration under the Trade Marks Act, 1999.
Step 4: Filing of Incorporation Document and Subscribers’ Statement — Details of registered office, partners, etc has to be filed in E-form 2.
Following are the mandatory attachments:
· Proof of Address of registered office of the proposed LLP Subscribers’ sheet along with the consent of the Designated Partners of the proposed LLP.
· Details of LLP(s) / Company(s) in which the Designated Partner is already a Director or DesignatedPartner, if any.
Pay the prescribed registration fee as per LLP Rules, based on the total monetary value of contributionof partners in the proposed LLP
On submission of complete documents the Registrar after satisfying himself about compliance withrelevant provisions of the LLP Act will register the LLP and will issue a certificate of incorporation.
Step 5: Drafting and Filing of LLP Agreement
LLP shall file its LLP Agreement in Form 3 within 30 days of its incorporation.
Limited Liability Partnership Agreement shall contain the following particulars:
a) Name of the LLP
b) Name of Partners & Designated Partners
c) Manner of contribution
d) Profit/Loss Sharing ratio between partners
e) Rights & Duties and obligations of Partners
f) Proposed Business of LLP
g) Rules for governing the conduct of operations of LLP
DOCUMENTS/INFORMATION REQUIRED FOR INCORPORATION OF LIMITED LIABILITY PARTNERHSIP (LLP)
- Signed Original Application;
- One Color Photograph of the Applicant;
- Photograph should be crossed signed on the application;
- Signed Copy of PAN attested by Gazetted officer/ Bank Manager;
- Signed Copy of Address Proof attested by Gazetted officer/ Bank Manager;
- Valid Email Address;
- Mobile Number;
- Mother’s Name -in order to register the same on MCA.
Designated Partner Identification number (DPIN)
o Signed Copy of PAN;
- Signed Copy of Address Proof;
- One Color Passport size Photograph;
- Area of Occupation (whether Self Employed / Professional/ Homemaker/ Student/ Servicemen);
- Educational Qualification Certificate;
- Valid Email Address;
- Mobile Number.
o Subscribers sheet
o Consent of Designated Partners/Partners to act as such.
o Statements by an Advocate/ CA/ CS/Cost Accountant in Practice that all requirements of LLP Act, 2008 andRules made there under are complied with.
o Proof of registered office address.
o Details of LLP(s) / Company(s) in which the Designated Partner is already a Director or Designated Partner, if any
o LLP Agreement.