Limited Liability Partnership

Overview of LLP Registration

The word LLP holds immense significance in the corporate world and refers to Limited Liability Partnership which differs from Private Limited Company and General Partnership in terms of liability, protection and cost. India has become one of the most attractive markets for start-ups, where LLP is one of the most usual business formations for start-ups.

A limited liability partnership (LLP) refers to a body corporate formed under LLP Act, 2008. It is a legally autonomous entity from that of its partners. Such an entity is liable to the full extent of its assets; however, liability of the partners is restricted to their agreed contribution. And since partners' liability is limited in the LLP, it entails elements of partnership firm structure & a corporate structure.

There is no personal accountability of the partner except in the event of fraud. Furthermore, a partner is not accountable for misconduct or negligence of the associate partner as there the concept of joint liability doesn't work in LLP.

The notion of the Limited Liability Partnership (LLP) found its way to India in the year 2008. At least two partners are needed for LLP incorporation, However, there is no upper limit in this context.

Among the partners, there should be at least two designated partners who should be individual, and one of them ought to be an Indian national. The LLP agreement regulates the rights and obligations of such partners. They are accountable for the compliance of all existing provisions of the LLP Act, 2008 & provisions cited in the said agreement.

Notable Benefits of LLP

The following section manifests the benefits of an LLP-Based Entity:

Separate Legal Entity :
An LLP rejoices the independent legal status, just like companies. The LLP holds different status from its partners. Such entities have the right to sue the third party in case of legal dispute and vice versa. 

The contracts are signed in the LLP's name, which aids to foster the trust of various stakeholders and renders the end-users and vendors a sense of confidence in the business.

Limited Liability of the Partners :
The partners of such entities have limited liability. The partners' liability is limited to the agreed contribution to the company. This indicates that they are accountable to pay only the quantum of contributions made by them and are not personally obligated to address any loss in the business. If an LLP ends up insolvent during winding up, only the LLP assets are liable for compensating its debts. The partners possess no personal liabilities, and therefore they can operate as credible businessmen.

Low Cost as well as Minimal Compliance :
The cost of incorporating an LLP is quite low compared to other business structures such as private and public limited companies. Also, the quantum of compliances is on the lower side for these entities. The LLP is mandated to file only two statements yearly basis, i.e. Statement of Accounts and Solvency and an Account return.

No scope of Minimum Capital Contribution :
The LLP can be incorporated in the absence of any minimum capital. Also, there is no requirement of procuring any amount of capital contributed by the concerned partners.

What Type of Documents are Required to Register an LLP in India?

Here is the list of mandatory documentation that is required during the registration of LLP in India;

PAN Card/ Identification proof of proposed partners: All proposed partners are mandated to furnish their PAN during registration time. PAN card serves as a fundamental ID proof.

Partners' address proof: Proposed partner furnish any one document out of passport, Voted ID, DL, or Aadhar Card. Name as well as other information as per address proof & PAN card ought to be exactly the same.

Any flaws in the details of the PAN can be corrected before furnishing to RoC.

Partners' Residence Proof – Updated bank statement, utility bill, should be furnished as residence proof. Such bills should be the latest one, i.e. not older than 2-3 months & must entail the partner's name as cited in PAN card.

Photograph – Partners must furnish the latest passport size photo, preferably on white background.

Passport (in case of Overseas Nationals/ NRIs) – To become a partner of Indian-based LLP, overseas nationals & NRIs have to furnish their passport mandatorily. Passport must be notarized by the concerned authorities in the nation of such foreign nationals and NRI, else Indian Embassy located in the nation can also sign the documents.

Foreign nationals or NRIs must facilitate address proof, bank statement, and legit identity proof enclosing the address.

If the documents exist in any other language, the applicant must facilitate the notarized translation copy. 

Registered Office Address Proof: Registered office proof must be furnished during the registration process or within 30 days of incorporation.

If the registered office is rented, a rent agreement and a NOC from the actual land owner have to be furnished. NOC shall be the landlord's consent to permit the LLP to use the premises as a registered office'.

Also, anyone document out of gas, electricity, or telephone bill should be submitted. The bill should not be older than two months and must reflect the address of the premise and the owner's name.

Digital Signature Certificate (DSC): One of the designated partners must hold DSC for signing the documents electronically.

Checklist For LLP Registration

• Minimum of two designated partners and DSC of all the partners
• DPIN of all serving partners
• Name of the entity, which is not identical to any prevailing company or trademark
• The capital contribution made by the serving partners of the LLP
• LLP Agreement
• Proof of registered office of the LLP

Step-By-Step Procedure for Registering LLP in India

To incorporate an Indian LLP, you must first secure the Designated Partner Identification Number (DPIN). This can be done by filing an e-from for securing DPIN or DIN. You would then require obtaining DSC, i.e. Digital Signature Certificate, and register it on the MCA's portal.

After that, you need to get name approval for the firm from the ministry. Once the name is acquired, you can incorporate the LLP by filing the prescribed application form.

Step 1: Application for DIN or DPIN

All serving partners of the proposed firm shall secure DPIN. For this, you need to file an online application viz, DIR-3 to secure DPIN. For those who already have DIN, the same can be used as a DPIN.

Step 2: Secure & Register DSC

The Information Technology Act, 2000 emphasized the use of Digital Signatures on the dossiers furnished electronically to ensure the document's safety. Prevailing legalities mandate the proposed LLP to use the digital signature for signing the documents.

Acquire DSC – The licensed Certifying Authority, i.e. CA, grants the digital signature. CA indicates a person who has been vested with the authority to grant DSC u/s 24 of the Indian IT-Act 2000.

Register DSC - Role check* can be performed after registering the DSC with the LLP application. 

'Role Check' functionality ensures that the MCA21 system shall validate whether the digital signatures affixed on the prescribed form belong to the company's signatory and/or of a practising professional (if applicable)

Step 3: Create a login on the authority's portal

Visit the concerned authority portal and register as a user in the relevant user category. This is necessary for getting access to e-form.

Step 4: Incorporate an LLP

Use Form 1 for registering the proposed LLP name. After name approval, proceed to address incorporation formalities such as facilitation of Incorporation document and Subscriber's statement.

After form approval, you will come across an email relating to the same. It also shows the status " "Approved" to confirm the applicant.

Step 5: Draft LLP Agreement

After the incorporation process, an initial LLP agreement has to be filed within the duration of 30 days of the incorporation date. The user must file the detail in Form 3 (information about LLP agreement and change, if any, made therein.

The user has to file the information in Form 3 (Information with regard to Limited Liability Partnership Agreement and changes, if any, made therein).