The Limited Liability Partnership (LLP) has become a popular business structure among entrepreneurs since it combines the advantages of a partnership firm and a corporation into a single entity.
In 2008, the concept of a Limited Liability Partnership (LLP) was introduced in India. An LLP combines the qualities of a partnership firm and a corporation. In India, the LLP is governed under the Limited Liability Partnership Act of 2008. An LLP must be formed with a minimum of two partners. An LLP, on the other hand, has no upper restriction on the number of partners it can have.
There should be a minimum of two authorised partners who must be people, at least one of them must be a resident of India. The LLP agreement governs the rights and duties of chosen partners. They are directly accountable for ensuring that the provisions of the LLP Act, 2008 and the LLP agreement are followed.
- It has its legal entity, much like a company.
- Each partner’s responsibility is limited to the amount contributed by the partner.
- The formation of an LLP is inexpensive.
- Less regulation and compliance.
- There is no requirement for a minimum capital contribution.
The minimum number of partners required to form an LLP is two. The maximum number of partners in an LLP is unlimited. There should be a minimum of two authorised partners who must be people, at least one of them must be a resident of India.
The LLP agreement governs the rights and duties of chosen partners. They are personally responsible for ensuring that the terms of the LLP Act 2008 and the LLP agreement are followed.
If you wish to form a firm as a Limited Liability Partnership, you must register it under the Limited Liability Partnership Act of 2008.
Step 1: Obtain a digital signature certificate (DSC)
Before beginning the registration process, you must obtain the digital signatures of the chosen partners of the prospective LLP. This is since all LLP documents are filed online and must be digitally signed. As a result, the selected partner must get digital signature certificates from government-approved certifying institutions.
Step 2: Obtain a Director Identification Number (DIN)
You must apply for the DIN of all designated partners or those who plan to be designated partners in the proposed LLP. The application for DIN allotment must be made in Form DIR-3.
The form requires you to provide a scanned copy of papers (often Aadhaar and PAN). The paperwork must be signed by a Firm Secretary who works full-time for the company or by the Managing Director/Director/CEO/CFO of the existing company where the applicant will be appointed as a director.
Step 3: Approval of the Name
The LLP-RUN (Limited Liability Partnership-Reserve Unique Name) form is used to reserve the name of a proposed LLP, and it is processed by the Central Registration Centre under Non-STP. However, before entering the name into the form, it is recommended that you use the free name search feature on the MCA site.
Based on the search criteria entered, the system will generate a list of names that are nearly identical to those of existing companies/LLPs. This will assist you in selecting names that are not already in use. The registrar will only allow the name if it is not unpleasant in the eyes of the Central Government and does not resemble any existing partnership firm, an LLP, a body corporate, or a trademark.
Step 4: Formalizing the LLP
The incorporation form is FiLLiP (Form for Incorporation of Limited Liability Partnership), which must be filed with the Registrar of the state where the LLP’s registered office is located. The form will be a combined form.
Fees following Annexure ‘A’ must be paid.
If an individual who is to be nominated as a designated partner does not have a DPIN or DIN, this form allows them to apply for one.
Only two people will be able to make an application for allocation.
FiLLiP can also be used to make a reservation application.
If the applied-for name is accepted, this approved and reserved name will be used as the LLP’s proposed name.
Step 5: File a Limited Liability Partnership (LLP) Agreement
The LLP agreement governs the partners’ mutual rights and responsibilities as well as the LLP’s and its partners’ mutual rights and duties.
- The LLP agreement must be filed online in Form 3 on the MCA Portal.
- The LLP agreement, Form 3, must be filed within 30 days of the date of incorporation.
- Stamp Paper must be used to print the LLP Agreement. Stamp Paper has a varied value in each state.