BACKGROUND OF LLP REGISTRATION IN INDIA
The concept of LLP was first time introduced in USA in year 1991, in the city of Texas which gained popularity in majority of USA and resulted in passing of LLP legislation. After USA, LLP form of business structure is adopted by UK, China, Australia, Gulf Countries etc.
In India, it brought in the year 2008 with the Introduction of Limited Liability Act, 2008. However, it was recommended to the Ministry way before it was worked upon.
WHY LLP REGISTRATION?
The company form of business structure is the most popular in India. There are professions like Secretarial, legal, accountancy, and doctorate the members of which are restricted by their respective professional bodies to operate as a corporate body.
On the other hand, the traditional form of partnerships does not provide the limited liability and body corporate benefits to its partners. To overcome these drawbacks the concept of Limited Liability Partnership was introduced in India.
LLP is a newly introduced corporate type of entity in India which is favourable for small and medium size business entities.
FEATURES OF AN LLP
1. It is a blend of Traditional partnership and company form which has separate legal entity and perpetual succession.
2. It holds property in its own name, sue and sued by its own name.
3. Every LLP shall have two partners and 2 designated partners. There is no limit on maximum number of partners.
4. LLP can be formed for profit motive only. It can’t be formed as NGO or NPO.
5. Partners have liability limited to the extent of their contribution amount. There personal assets are protected from paying off debts of LLP.
6. Every LLP name shall end with the word “LLP”.
ADVANTAGES OF LLP REGISTRATION
1. There is no limit on maximum number of partners.
2. LLP registration involves low cost as compared to company registration
3. No requirement for conducting compulsory audit in case of LLP
4. Lower compliance burden as compared to companies
5. Transparent in its functioning, as every significant event has to be reported to Registrar of Companies
6. Easy to wind up under fast track exit in Form 24 of MCA
LLP REGISTRATION DOCUMENTATION REQUIREMENTS
Category
Purpose
Proof of Office address
· Copy of the utility bills (not older than two months)
· No Objection Certificate (NOC) from the owner of the Property.
· If the Property is on Conveyance/ Lease/Rent - Conveyance/ Lease deed/Rent Agreement along with rent receipts
Designated Partners/ Partners
· Self-attested copy of PAN (Mandatory)
· Self-attested copy of Proof of identity - (Voters Identity Card/Passport/Driving License/Aadhaar)
· Self-attested copy of Residential proof, not older than 2 months - (Bank Statement/Electricity Bill/Telephone bill/Mobile bill/Utility Bill/Registered/Notarized Rent Agreement)
Valuation Report (Conditional Attachment)
This attachment is mandatory to attach by the applicant only if the Partner has contributed the subscription money by way "Other than cash”.
Details related to contribution amount
Total capital contribution of each partner.
Business Activity
Details related to proposed business activity of LLP is to be received on that basis Business activity code is to be decided.
STEPWISE PROCEDURE FOR LLP REGISTRATION IN INDIA
Step-1 Obtaining Digital Signature Certificates (DSCs) of Designated Partners
Step-2 Acquiring DPIN (Designated Partner identification number) by filing form DIR-3
(Note: application for DPIN for maximum 5 Designated partners can be made in FiLLiP).
Step-3 Checking Name Availability
Step-4 Name reservation application in form RUN LLP
Step-5 Name approval Letter
Step-6 Application for incorporation of LLP in form FiLLiP along with all attachments
Step-7 Payment of Filing Fees
Step-8 Filing of LLP Agreement in Form-3 within 30 days of incorporation
Step-9 Opening of Bank account
ATTACHMENTS TO FORM FILLIP
Following attachments are to be made along with form FiLLiP for incorporation of the LLP:
· Affidavits and declaration from the partners for non-acceptance of deposits from the public and to the effect that they will not carry out any money circulation scheme Or Multilevel/Pyramid Scheme.
· Consent to act as partners in Form-9.
· Statement disclosing interest in other entities
· Registered Office proof (Rent agreement or NOC from the owner of premise along with utility bill)
· ID and Address Proof of partners and designated partners.
· Sheet showing details of partners and their amount contribution obligation which they have agreed to undertake.
FAQs on LLP registration in India
1. What shall be the financial year for LLPs?
Ans: As per section 2(1) (l) of LLP Act, 2008 financial year in relation to LLP refers to a period from 1st day of April of a year to 31st day of March of the following year.
In case company got incorporated after 30th September of a year, then the financial year will end on the 31st day of March of the year next following that year.
2. Who can be a partner in LLP?
Ans: As per Section 2(1)(q) of the LLP Act, 2008, a “partner” in relation to a Limited Liability Partnership, means any person who becomes a partner in the limited Liability Partnership in accordance with Limited Liability partnership Agreement.
As per section 5 of LLP Act, 2008 any individual or Body Corporate can be a partner of LLP.
3. What is the effect of registration of LLP?
Ans: As per section 14 of the Act, on registration, the Limited Liability Partnership shall by its name, becomes capable of-
a. Suing and being sued
b. Acquiring, owning, holding, and developing or disposing of property, whether movable or immovable, tangible, or intangible
c. Having a common seal
d. Doing such other acts as body corporates may lawfully do
We hope that you liked this article, still if you have any questions or suggestions for us, or if you yourself is looking for professional help regarding LLP Registration in India then please contact to our expert team at Compliance Calendar LLP at [email protected] or 9988424211.
