Overview

The LLP (Limited Liability Partnership) is, beyond doubt, a modern and immensely beneficial business model. LPs combine many advantages of a partnership with the security of limited liability—making the LLP a versatile platform with confidence for entrepreneurs.

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What is a Limited Liability Partnership (LLP)?

An LLP is an exceptional form of business that integrates the elements of partnership with that of a company. That is to say, in an LLP, the liability of the partners, like the shareholders in a company, is limited; at the same time, they retain the flexibility and simplicity enjoyed by any partnership. Such an arrangement gives the LLP legal identity, and therefore it can sue or be sued separately from its partners.

In recent times, LLPs have become very popular in various businesses among entrepreneurs in view of the protection given to partners' assets and the relative ease of compliance requirements as compared to traditional corporations. The concept of LLP was introduced in India in 2008 through the LLP Act and offers a dependable and flexible option for businesses of all sizes.

Key Features of LLP ( Limited Liability Partnership )

• Limited Liability

In an LLP, partners are only liable for the amount they agreed to contribute. Partners themselves are not liable for the misconduct or negligence of other partners

• Separate Legal Entity

LLP is a separate legal entity from its partners; thus, capable of owning property, suing, and being sued in its name.

• Perpetual Succession

Any change in partners does not affect the existence of LLP. It remains in existence until it is officially terminated.

• Flexible Management

The LLP agreement provides flexibility to structure internal management as per the partners' mutual agreement, which is not as rigid as in corporations.

Benefits of LLP Registration

• Limited Liability Protection: Partners' liability is limited only to an amount which they have agreed to contribute.
• Separate Legal Entity: LLP is treated as a distinct legal entity from its partners.
• Flexible Agreement: LLP agreement allows flexibility in management and operation.
• Tax Benefits: LLPs are exempted and enjoy several tax-related benefits.
• Less Compliance: It involves less compliance as compared to a private limited company.

LLP Registration Prerequisites and Eligibility Conditions

For LLP company registration in India, you have to follow the requirements that are mentioned below:

• Minimum of Two Partners: To incorporate a Limited Liability Partnership in India, it requires at least two partners; however, there is no bar on the maximum number of partners.
• Designated Partners: A partnership must have at least two designated partners, and they have to be natural persons. Among the designated partners, at least one should also necessarily be a resident of India.
• Designation for Body Corporate Partner: In case a body corporate comes as a partner, a natural person's designation shall represent it.
• Contribution by partners: The shared capital of the LLP shall be contributed by all the partners as agreed and stipulated.
• Minimum Authorized Capital: The LLP shall have a minimum amount of authorized capital of Rs.1 lakh.
• Indian Resident Designated Partner: At least one of the designated partners of the LLP shall be a resident of India.

With all of these requirements met, the process for LLP company registration in India can be continued further and avail several benefits which are attached to this structure of business.

Step-by-Step Procedure for LLP Registration in India

• Obtain a Digital Signature Certificate

The very first step to initiate the registration process is acquiring a DSC for the designated partners of the LLP. This is due to the fact that all documents and applications that are to be filed for LLP registration would be done online only, and Digital Signatures would be required to sign them.

• Apply for a Director Identification Number

The designated partners have to obtain a DIN on filing of Form DIR-3 on the MCA portal with identity and address proof.

• Name Reservation

The unique name of the LLP has to be reserved by filing Form LLP-RUN (Reserve Unique Name). It should not be similar to any other LLP or company in existence. The name must adhere to the prescribed naming guidelines of the MCA.

• Incorporation of LLP

Once the name is approved Form FiLLiP (Form for incorporation of LLP) has to be filed. The details in the form are about the LLP and include the registered office address, details of partners and the contribution of each partner.
The subscribers' sheet and consent of the designated partners in Form 9 are to be attached along with Form FiLLiP.

• LLP Agreement

The LLP Agreement lays down the rights and duties of the partners inter se. Form 3 must be utilized to file this agreement within 30 days of the LLP's incorporation. The agreement has to be printed on a Stamp Paper of appropriate value.

• Certificate of Incorporation

Thereafter, on checking of incorporation documents by the MCA, if found proper, it shall issue a Certificate of Incorporation. The certificate confirming the existence of LLP shall have a unique LLP Identification Number (LLPIN).

Documents Required for LLP Registration

The following documents are required to be furnished by the partners for them to commence the LLP company registration process-

• PAN Card/ID Proof of Partners: Address Proof of Partners: Partners may furnish the following documents: Voter's ID, Passport, Driver's License, or Aadhar Card.
• Residence Proof of Partners: Partners have to provide recent documents like a bank statement, telephone bill, mobile bill, electricity bill, or gas bill from the last 2-3 months.
• Passport Size Photograph: Partners must attach a passport-size photograph with a white background.
• For Foreign Nationals and NRIs: For foreign nationals and NRIs proposing to be partners in an Indian LLP, the passport has to be submitted. Proof of address through a driving license, bank statement, residence card, or any government-issued identity proof carrying the address, is also to be attached.
• Proof of Registered Office Address: The landlord's rent agreement and no-objection certificate are required in case the office premises is rented. A copy of a recent utility bill (gas, electricity, or telephone) with full address and owner's name (not older than two months) shall be submitted.
• Digital Signature Certificate: The application has to be signed digitally by at least one of the designated partners for which DSC would be required.

Conclusion

The process of LLP formation in India is structured and requires several legal formalities and documentation to be complied with. Compliance at each level is necessary for the proper incorporation of the LLP. With the protection of limited liability, flexibility in management, and tax benefits, LLPs have been the most favored route for entrepreneurs and business owners who want to constitute a legally compliant, operationally efficient business structure.