If anybody wants to have a separate business entity for their business or they are in a general partnership deed and want to safeguard their personal assets from the risk, then the Limited Liability Partnership (LLP) is their way to go. LLP Registration is one of the most preferred ways to start a business in India.
What is a Limited Liability Partnership?
A Limited Liability Partnership (LLP) is a type of partnership by which some or all the other partners have limited liabilities because of this only it can exhibit elements of both partnerships & corporations. In an LLP, each and every partner is not responsible or liable for another partner’s misconduct or negligence. In India, it is regulated by the Limited liability partnership Act, 2008 which has been in effect since 31st March 2009 and got amended lastly on 2nd Oct 2018.
In India as in many other jurisdictions, an LLP is a bit different from a Limited Partnership. Though LLP operates like a limited partnership particularly in an LLP each and every member is protected from any personal liability, except to the extent of their capital contribution in the particular LLP. These LLP’s are regulated by the Registrar of Companies (ROC) and the Ministry of Corporate Affairs (MCA). LLP is a legal entity, separate from its partners and it has perpetual succession. In simple words, an LLP can be defined as, a form of business structure in which the liabilities of each partner are limited to their agreed contribution in the LLP.
Procedure for LLP Registration in India
The simplified processes were always focused on company registration processes, where the company registration process was re-engineered by frequent changes but the LLP registration process remained untouched for years. This industry has gone through very nominal or insignificant changes in the online LLP registration process since it is being implemented. At the starting of the year 2018, the significant deferment of DIN application was a major obstruction for registration by individuals that were not having DIN. However, as a landmark update, the MCA notified the revised process to be effective from 2nd October 2018. The said process was then simplified with major changes by the addition of DIN application in the LLP incorporation application. The revised registration process for LLP is as follows:
- Procurement of DSC: Before initiating any process, the forms filed to register LLP in India must be signed by Digital Signature Certificate (DSC) of the authorized signatory.
- Reserve LLP Name: Selecting the best business name is a crucial task for all as it will be linked with the brand name at the later stage. This requires the applicants to file a web form named RUN-LLP (Reserve Unique Name – Limited Liability Partnership). The applications under this particular web-form are given with max 2 names in preference order providing their significance respectively. It is then verified whether the given names are in conformity with provisions applicable for LLP name reservation. If the MCA doesn’t approve the given names, the applicant is provided with another chance to give two more (different) names. Upon successful approval of the name, it gets reserved for a definite period of 90 days only to make any incorporation application.
- LLP Incorporation and DIN Application: The application for DIN allotment and incorporation is needed to be filed. This particular application form is called as FiLLiP (Form for incorporation of Limited Liability Partnership). Below are the features of e-from FiLLiP:
- Where an individual is required to be appointed as Designated Partner (DP) but does not have DPIN/DIN, the allotment application can be made in this form subject to a maximum of 2 applications.
- An application for name reservations can also be made under this form.
Upon successful approval of the application made for LLP registration online, the Certificate of Incorporation (COI) must be issued in form 16 along with DPIN/DIN allotted to the DP. COI will also have a Limited Liability Partnership Identification Number (LLPIN). The date of COI will be the date of LLP incorporation since then it would come into legal existence. The business can now be commenced on LLP’s name.
- Apply for PAN and TAN: The application for PAN and TAN allotment is made directly to the Income-tax Department through physical or online filing. Application for PAN allotment is filed in form 49A with COI as an attachment. For TAN allotment, the form used id form 49B.
- Drafting and Filing LLP Agreement: Drafting, execution, and filing of the LLP Agreement is the last step and thus it requires utmost care because drafting will establish a relationship between both the partners and the said LLP protecting their particular interest. The agreement comprises of the details of partners; the business object; their place of business; capital used by the firm; and their profit sharing ratio, etc. As it acts as a prime document of the LLP it needs to be detailed and clear.
Once the said LLP Agreement stands reviewed and agreed upon by all the partners, the same must be executed by payment of stamp duty.
Note: The above-said agreement should be filed along in the LLP form-3 with the Ministry of Corporate Affairs within the first 30 days of the said incorporation. If delayed it will lead to the penalty of Rs.100/day till the date of its actual filing.
Documents required for LLP registration in India
The method of Limited Liability Partnership registration in India does not require much. The documents required are:
To be submitted by Partners:
- Scanned transcript of PAN Card or Passport (Foreign Nationals & NRIs).
- Scanned transcript of Aadhaar Card/ Voter’s ID/Passport/Driver’s License.
- Scanned transcript of Latest Bank Statement/Telephone or Mobile Bill/Electricity or Gas Bill.
- Scanned passport-sized photograph with prior specimen signature.
The partners must self-attest the first three documents. And in case of any foreign national, all the documents must be notarized or apostilled.
For the Registered Office:
- Scanned transcript of the latest bank statement/telephone or mobile bill/electricity or gas Bill.
- Scanned transcript of Notarised Rental Agreement in English.
- Scanned transcript of the No-objection Certificate from the property owner.
- Scanned transcript of Sale Deed/Property Deed in English (in case of owned property).
One’s registered office need not be in a commercial space; it can be in their residence also.
Benefits of LLP Registration
The major benefits and powers enjoyed by LLPs are the following:
- Separate legal entity.
- Buying, Selling and Holding of movable, immovable, tangible or intangible assets.
- Has the power to sue and be sued.
- Has the power to open a bank account.
- Have the power to employ persons.
- Have the power to enter into all types of legal contracts.
In line with all the above, all LLPs are required to maintain compliance and file certain statutory filing with the Government each and every year.
The much-required change that came in the process of LLP registration made its process lightning smoother and quicker. Thus, bringing great relief to its applicants, it also deals with the issue of inactive and multiple unused DIN numbers by homogenizing the incorporation application with DIN application and by abandoning the inactive ones.
LLP registration in India is simpler when assisted by LetsComply’s legal professionals. For reliable professional assistance to register an LLP or any query related to such, call us at +91-9717070500 or send an email at firstname.lastname@example.org.