Recently most entrepreneurs have started opting for Limited Liability Partnership, considering it has most positive features of Partnership and Companies. It is hybrid form which incorporates benefits of both partnership and companies.
Limited Liability Partnerships (LLPs) are commercial vehicles which combine the features of partnership and company form of business .The concept of Limited Liability Partnership (LLP) has been introduced in India by way of Limited Liability Partnership Act, 2008 (notified on 31st March 2008).
REQUIREMENTS FOR INCORPORATION OF LLP:
Step-I- Obtain din:
Every individual intending to be appointed as designated partner of a limited liability partnership has to make an application for allotment of Director Identification Number. MCA has vide its notification amended the limited liability partnership rules, 2009. Now instead of DPIN, every partner who will be appointed as designated Partner , will need to apply for DIN and not DPIN.
Step-II- obtain dsc
Designated partner of LLP/proposed LLP, whose signatures are to be affixed on the e-forms has to obtain class 2 Digital Signature Certificate (DSC) from any authorized certifying agency. Register Digital Signature of Designated Partner on the website of Ministry of Corporate Affairs. Fill in the registration form. Fields marked * in the form are to be mandatorily filled. Upload digital signature certificate. On successful registration, system will give a message that you have been registered successfully.
Step-III- search for name availability
Selection of business name is crucial for the image of your venture. You select a name which reflects the business you plan. Ensure selected name satisfy LLP Name Guidelines of Ministry of Corporate Affairs.
Free name search facility (of existing companies / LLPs) is available on MCA portal. The system will provide the list of similar/closely resembling names of existing companies/LLPs based on the search criteria filled up . Link given below:
Step-IV- filling of form llp-1 (name approval)- Section-16
After Search of Name approval, If name is available according to your search. Then Download Form LLP-1 from the below given Link: http://www.mca.gov.in/MinistryV2/Download_eForm_LLP.html
Following Information are required to be filed in form LLP-1
Step-V- Drafting of LLP agreement Section- 23(3)
Section 23(3) of the LLP Act provides that an agreement in writing made before the incorporation of a LLP Between the persons who have subscribed their names to the incorporation document.
This is common, and also advisable, to have an agreement between the persons who have subscribed their names to the incorporation documents of a LLP. Such agreements usually relate to preliminary and pre-incorporation expenses of a LLp and their subsequent ratification by the LLP, after incorporation. The provison of Secton- 23(3) suggests that such an agreement(s) may impose obligations on the LLP only when such an agreement(s) is ratified by all the partners after the incorporation of the LLP.
The LLP agreement is very lengthy document and should be on Stamp paper.
The LLP Agreement must be Stamped in accordance with the stamp Act applicable in the relevant state where LLP is being incorporated.
Its include information as given below:
Effective Date of LLP Agreement, Registered Office of LLP, Business of LLP, Contribution of Partners, Profit Sharing Ratio, Provisions for Admission, Resignation, Retirement and cessation of partners, Removal of Partners, Rights of Partners, Duties of Partners, Duties & Responsibilities of Designated Partner, Meetings, Liability of LLP, Winding up & Dissolution, Accounting Year, Audit, Jurisdiction, Validity of this Agreement etc.
Step-VI Filing of (Form 2) for Incorporation and Subscription Document
After receiving of Name approval Letter from ROC within 90 days there is need to prepare and get sign all the documents required to be attached in Form-2 and file Form-2 with ROC.
INFORMATION REQUIRED TO BE MENTION IN FORM LLP-2
DOCUMENTS REQUIRED TO BE ATTACH IN FORM LLP-2
Step-VII- Filling of LLP agreement (form- 3)
It is not mandatory to file LLP agreement at the time of registration and same can be file in form LLP-3 within 30 days of Incorporation of LLP. Designated partners are responsible for doing all acts, matters and things that are required to be done for complying with the provisions of the LLP act. They are liable to all penalties imposed on the LLP. So it is very important to draft LLP agreement with professional help.
The LLP agreement has to be uploaded. Once it gets approved all the formalities for registration gets completed. The LLP can start It’s business now onwards.
VALUE OF STAMP DUTY ON LLP AGREEMENT
|A.||Contribution in cash|
|a)||where share of contribution does not exceed Rs. 50,000||Rs. 500|
|b)||where it exceeds Rs. 50,000 for every Rs. 50,000 or part subject to a maximum of Rs. 5,000||Rs. 500|
|B.||Contribution by way of property||Same duty as on conveyance under A.25 on the market value of property|
|A||1 % of Contribution Subject To Max 5000/-|
(Author – CS Divesh Goyal, ACS is a Company Secretary in Practice from Delhi and can be contacted at email@example.com)