Limited Liability Partnerships

So you and your friend have been wondering on an idea and are ready to take the plunge. What do you choose? To go for a private limited company or a limited liability partnership (LLP)? First let us take you through the process of getting into a limited liability partnership.

Why register as an LLP?

  • An LLP is a separate legal entity which allows the partners to sue each other if the need arises. Like a private limited company, even an LLP has perpetual succession, which allows the business to remain regardless of whether the partners continue to be a part of it.
  • It is also very easy to induct a new partner and transfer the partnership to them.
  • There is no limit on the number of partners an LLP can have. Also, the cost of forming an LLP is low compared to other forms and there are fewer regulations and compliance.
  • An LLP can be started with the minimum amount of capital money. Capital may be in the form of tangible, movable asset like Land, machinery or intangible form.

How to register as an LLP ?

Step 1: The first step is applying for a digital signature of the designated partners since LLP documents are filed online and need to be digitally signed.

Step 2: The second step is applying for the DIN of all the designated partners or those intending to be designated partner of the LLP. This is made via eForm DIR-3.

Step 3: The next step is reserving the Name. For this, an LLP-RUN (Limited Liability Partnership-Reserve Unique Name) is filed for the reservation of name of proposed LLP. Before quoting the name in the form, it is recommended the MCA portal be checked for similar names that already exist since the name will only be approved if the name is not undesirable in the opinion of the Central Government and does not resemble any existing partnership firm or an LLP or a body corporate or a trademark.

Step 4: After reserving the name, there is incorporation. The process for incorporation is submitting FiLLiP(Form for incorporation of Limited Liability Partnership) which shall be filed with the Registrar who has jurisdiction over the state in which the registered office of the LLP is situated.

Step 5: This step is filing the Limited Liability Partnership Agreement. This step is very important as it defines the rights you will have as a partner. The LLP agreement governs the mutual rights and duties amongst the partners and also between the LLP and its partners. The agreement becomes active when the LLP is registered via form 3 on the MCA portal and must be done within 30 days of the date of incorporation.

LLP formation starting from obtaining DSC to Filing Form 3 takes approximately 15 days subject to availability of all the documents.

What do I need to register as an LLP ?

  • A minimum of two partners. There is no upper limit on the number of partners.
  • DIN and DSC for all partners.
  • At least one Indian resident as a designated partner
  • Authorized capital of at least one lakh, no minimum capital required.
  • Address proof for the registered office
  • There is no requirement for shared capital but each partner must contribute which is known as partner’s capital.

Proofs required for LLP registration

From Partners:

  • Copy of PAN card/Passport (for Foreign Nationals and NRIs)
  • Copy of AADHAR/Voter ID/Passport/Driver’s License
  • Copy of bank statement/phone bill/electricity or gas bill

P.S: One of the partners must self attest the documents mentioned above. The documents must be notarised in case of foreign nationals and NRIs if currently in India or a non-Commonwealth country, and apostilled if in a Commonwealth country.

For the office:

  • Copy of bank statement/phone bill/electricity or gas bill
  • Copy of notarized rent agreement if rented property along with NoC from landlord
  • Copy of Sale Deed/Property Deed in English in case of owned property

Note: Your registered office can be your residence, it does not have to be a different commercial space.