Limited Liability Partnership
A limited liability partnership is a partnership in which partners 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.
An LLP is a separate legal entity than its members, which means that the liability of members is limited to their agreed contributions.
According to “LLP Act, 2008”, LLP means a partnership formed and registered under this act.
LLP agreement means any written agreement between partners of the LLP or between the LLP or its partners which determines the mutual rights and duties of the partners and their rights and duties in relation to that LLP.
Features
LLP is a body Corporate:
According to Section 3 of the Limited Liability Partnership Act (LLP Act), 2008, an LLP is a body of corporate formed and incorporated under the Act. It is a legal entity separate from its partners.
Perpetual Succession:
Unlike a general partnership firm, a limited liability partnership can continue its existence even after the retirement, insanity, insolvency or even death of one or more partners. Further, it can enter into contracts and hold property in its name.
Mutual Agency:
Another difference between an LLP and a partnership firm is that independent or unauthorized actions of one partner do not make the other partners liable. All partners are agents of the LLP and the actions of one partner do not bind the others.
LLP Agreement:
The rights and duties of all partners are governed by an agreement between them. Also, the partners can devise the agreement as per their choice. If such an agreement is not made, then the Act governs the mutual rights and duties of all partners.
Limited Liability:
According to Section 26 of the Act, every partner is an agent of the LLP for the purpose of the business of the entity. However, he is not an agent of other partners. Further, the liability of each partner is limited to his agreed contribution in the Limited Liability Partnership. It provides liability protection to its partners.
Minimum and Maximum Number of Partners in an LLP:
Every Limited Liability Partnership must have at least two partners and at least two individuals as designated partners. At any time, at least one designated partner should be resident in India. There is no maximum limit on the number of maximum partners in the entity.
Benefits
Less compliance as compared to company:
The cost of forming an LLP is comparatively low as compared to the incorporation of a public or private limited company. Even the compliances that need to be followed by LLP are very low. There is a need for only two statements annually for LLP, i.e., Annual Return and the statement of Accounts and Solvency.
There is no specified limit of maximum partners:
There is no such limit for partners in LLP. To start its formation, there is a need of minimum two partners, and the maximum number can be increased as per requirement.
No requirement of minimum capital contribution:
LLP can be formed without any minimum requirement of capital. There is no such specified minimum paid-up capital before going for incorporation of LLP. It can be easily formed with any amount contributed by the partners.
Like company, it also enjoy benefit of separate legal entity and limited liability:
LLP is distinct from its partners. It is possible to sue LLP and be sued in its name. The contracts can be signed in the name of LLP just to gain the trust of various stakeholders, suppliers, and even customers in the market.
Checklist of documents
- Copy of PAN card, Passport/ Voter-ID/Driving license of Partner(s).
- Bank Statement of partner(s)/ Electricity bill.
- Passport size photo of Partner(s).
- NOC from owner of registered office and rent agreement or sale deed (if any).
- Signature specimen of Partner(s).
Steps Involved in LLP Company Registration Process
The overall process involves five steps stated below:
Get the Digital Signature Certificate (DSC): Before starting the registration process of LLP, you must apply for the Digital Signature Certificate of all the designated partners proposed for LLP. These documents are essential as all the documents regarding the LLP registration are filed online, and to verify all the documents, DSC is required. All the designated partners need to get the certificates from the government-recognized agencies. Mainly the cost of applying for DSC varies on the certifying agency.
All the designated partners or the intended partners need to get their Director Identification Number (DIN). To get this number, the person needs to apply for Form DIR-3. With this form, the person needs to attach a scanned copy of the documents like the Aadhar card and Pan card. The form must have all the details asked in it and must be duly signed by the Company Secretary in full-time employment of the company or any of the Managing Director, CEO, CFO, or directors of any existing company in which the applicant shall be appointed as a director.
The next step in the incorporation of LLP registration services is to get the firm’s name approved. The person needs to get LLP-RUN (Limited Liability Partnership- Reserve Unique Name), which is used to file for the reservation of the name of the proposed LLP. The person needs to choose a name that is not resembling any name of the existing name of LLP. The company needs to get the name approved by the registrar. In case the registrar rejects the proposed names given in the form, the person needs to give two names again within 15 days of rejection of the first form.
After the name approval, there is a need for the FiLLiP (Form for Incorporation of Limited Liability Partnership) that needs to be filled with the registrar who has jurisdiction over the state. The person must pay fees as per Annexure “A”. The application for the allotment needs to be made by two individuals only. Even the person needs to make an application for a reservation through FiLLiP
The final step in the incorporation of LLP is the LLP agreement that will govern the mutual rights and duties of all the partners. The agreement for LLP needs to be filled within 30 days of the date of incorporation. The LLP agreement has to be printed on the stamp paper, and the value of the stamp paper might vary from state to state.
The time involved in Online LLP Registration India
Approximately it takes around ten days to obtain DSC to Form 3. Rest it all depends on the department.
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