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WHAT IS A LIMITED LIABILITY PARTNERSHIP i.e. an LLP Registration in India?

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LLP Registration in India is an alternative business form that gives the benefit of limited liability of a company and the flexibility of a partnership. According to the Liability Partnership Act, 2000, Limited liability means the liability of the partners is limited by the memorandum of the amount pre-decided by the parties. The LLP Agreements sets forth the provisions and conditions of the relations between the partners. LLP’s are basically partnership whose liability is limited to the agreed amount of assets or capital as decided beforehand. A partner is liable to contribute only the agreed amount in case of winding up. The shareholders cannot ask for more contribution then the agreed amount from the partners of the company.

This type of partnership is preferred where the risk is to be minimized. The partnership is limited with reference to the value of shares or to the amount which the partners have guaranteed to contribute in the event of winding up of the firm.

REQUIREMENTS OF REGISTERING A PARTNERSHIP FIRM:

Basic requirements of commencing a limited liability partnership firm:

-Minimum 2 members(out if which one should be a resident in India)

-Select a Name and have the name registered with the ROC(Registrar of Companies)

-Form an LLP Agreement.

The Registered address which will be publicly made available.

While selecting a name, the name should not be same as the existing name of any other company, the name should not be too offensive.

The cost of incorporating a limited partnership is cost effective and cheaper as compared to a Company. A company is required to incorporate with minimum paid up capital of One Lac, whereas there is no such minimum specified limit in case of LLP Registration in India.

The selection of same should be purely a case specific based on factors such as the objectivity of the founder, business rationale, funding requirement, ownership and management control and such other factors.

The Procedure:

The premier step is to obtain a DPIN(Designated Partner Identification Number) and also the Digital Signature Certificate and register the same on the e-portal. After the selected name gets approved by the MCA, one can start with the registration and incorporation processes. The Information Technology Act,2000, provides or encourages that all the documents be submitted in electronic forms.

A Registered and a Licensed Certifying Authority (CA) means a person who has been granted a license to issue a digital signature certificate under the Section 24 of the Indian IT Act 2000. The designated name of the LLP needs to be registered by filling the Form 1(Application for reservation or change of name). After that, depending upon the type of LLP Incorporated, the documents need to be filed via Form 2(Incorporation document and Subscriber’s statement).

After the incorporation of the LLP, the initial agreement needs to be filed within 30 days of incorporation in Form 3.

Form 1 Application for reservation of name or change of name
Form 2 Incorporation documents and other documents
Form 3 Information with regard to LLP and changes if any.
Form 17+ Form 2 Application and statement for the conversion of a firm into LLP.
Form 18+ Form 2 Application and Statement for conversion of a private company/ unlisted public company into limited liability partnership (LLP).
Form 27 For starting a FLLP(Foreign Limited Liability Partnership).

The LLP Formation concept is quite useful for small and medium enterprises in general and for the enterprises in services sector in particular. Worldwide, LLPs are the preferred vehicle of business particularly for activities involving professionals. An LLP is similar in some ways to a standard Partnership, except that the individual members have lower liabilities to any debts which may arise from running the business.

For detailed discussion on the choice of your entity visit Company Vakil and consult their expert CA and CS for free.

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