There should be atleast 2 persons (natural or artificial) are required to form a LLP. In case any Body Corporate is a partner, than he will be required to nominate any person (natural) as its nominee for the purpose of the LLP.
Following can become a partner in the LLP
1. Company incorporated in and outside India
2. LLP incorporated in & outside India
3. Individuals resident in & outside India
In case of LLP, there is no concept of any share capital but every partner is required to contribute towards the LLP in some manner. The said contribution can be tangible, movable or immovable or intangible property or other benefit to the limited liability partnership, including money, promissory notes, and other agreements to contribute cash or property, and contracts for services performed or to be performed.
In case the contribution is in intangible form, the value of the same hall be certified by a practicing Chartered Accountant or by a practicing Cost Accountant or by approved valuer from the panel maintained by the Central Government. The monetary value of contribution of each partner shall be accounted for and disclosed in the accounts of the limited liability partnership in the manner as may be prescribed.
The LLP Agreement must specify the contribution intended to be paid all the members and the form in which it will be paid.
‘Designated Partner’ means a partner who is designated as such in the incorporation documents or who become a designated partner by and in accordance with the Limited Liability Partnership Agreement.
Every limited liability partnership shall have at least two designated partners who are individuals and at least one of them shall be a resident in India
Provided that in case of a limited liability partnership in which all the partners are bodies corporate or in which one or more partners are individuals and bodies corporate, at least two individuals who are partners of such limited liability partnership or nominees of such bodies corporate shall act as designated partners.
Designated Partner shall be:
1. Responsible for the doing of all acts, matters and things as are required to be done by the limited liability partnership in respect of compliance of the provisions of this Act including filing of any document, return, statement and the like report pursuant to the provisions of this Act and as may be specified in the limited liability partnership agreement; and
2. Liable to all penalties imposed on the limited liability partnership for any contravention of those provisions.
Explanation.—for the purposes of this section, the term “resident in India” means a person who has stayed in India for a period of not less than one hundred and eighty-two days during the immediately preceding one year.
Designated Partners Identification Number (DPIN)
Every Designated Partner is required to obtain a DPIN from the Central Government.
DPIN is an eight digit numeric number allotted by the Central Government in order to identify a particular partner and can be obtained by making an online application in Form 7 to Central Government and submitting the physical application along with necessary identity and Address proof of the person applying with prescribed fees. However if an individual already holds a DIN (Director Identification Number), the same shall deemed to be the DPIN (Designated Partner Identification Number), and for the purpose, an intimation to be made in Form 25 with Central Government.
It is not necessary to apply Designated Partner Identification Number every time you are appointed partner in a LLP, once this number is allotted it would be used in all the LLP’s in which you will be appointed as partner.
Digital Signature Certificate
All the forms like eForm 1, eForm 2, eForm 3 etc which are required for the purpose of incorporating the LLP are filed electronically through the medium of Internet. Since all these forms are required to be signed by the partner of the proposed LLP and as all these forms are to be filed electronically, it is not possible to sign them manually. Therefore, for the purpose of signing these forms, at least one of the Designated Partner of the proposed LLP needs to have a Digital Signature Certificate (DSC).
The Digital Signature Certificate once obtained will be useful in filing various forms which are required to be filed during the course of existence of the LLP with the Registrar of Companies.
LLP Name Approval, Prohibited word, Words which require Approval
Selection of the name for the proposed LLP to be incorporated is one of the important processes of the entire incorporation process, ideally the name of the LLP should be such which represents the business or activity intended to be carried on by the LLP. Before selecting the name of the LLP, it is necessary to evaluate the proposed name under the following given criteria:
♠ LLP with Similar Name: The proposed name of the LLP should not be similar to the name of the Company or LLP, which is already registered in India.For example:
Name of Company already registered: XYZ Consultants Pvt Ltd
Name of Proposed LLP: XYZ Consultants LLPWhether Proposed Name would be available: No
♠ Prohibited Word: The Ministry of Corporate Affairs of India has prescribed certain words, which should not form part of the name of LLP intended to be incorporated in India, such words are prohibited under The Emblems and Names (Prevention of improper use) Act, 1950. Following is the List of Prohibitive words alongwith reasons:-
National, Union, Central, Federal, Republic, President, Rasthrapathi, Small Scale Industries, Cottage Industries, Financial Corporations, Municipality, Panchayat or any other word imparting connection Union or State Government : It signifies Government Patronage or Participation.
1. State together with the name of Particular State for e.g. Delhi state corporations Ltd : It gives an impression that the state is also participating in the paid up share capital of the company.
2. Ashoka Chakra, Dharma Chakra, Name of Parliament , State Legislature : Prohibited Under Emblems & Names (Prevention of Improper Use ) Act, 1955.
3. Rama Krishna Math, Ramakrishna Sarada Mission, Bharat Scouts, Interpol : Prohibited Under Emblems & Names (Prevention of Improper Use ) Act, 1955.
4. Chhatarpait Shivaji Maharaj, Mahatma Gandhi or the name of any Prime Minister/President of India : Prohibited Under Emblems & Names (Prevention of Improper Use ) Act, 1955.
♠ Words Based on Approval: Various government regulatory authorities operating in India like Securities & Exchange Board of India, Reserve Bank of India, has prescribed certain words, which if forms part of the name of the proposed LLP to be incorporated, requires there first hand approval.Following is the List of Words which requires approval alongwith the Name of the Authority from whom approval is required:-
1. Venture Capital/Venture Capital Company/Venture Capital Fund/Venture Capital Finance Company:- Department of Economic Affairs/ SEBI
2. Stock Exchange/Mutual Funds:- Securities Exchange Board of India (SEBI)
3. Name belongs to registered trade mark:- Owner of the registered trade mark
4. Insurance:- Insurance Development Regularity Authority of India (IDRA)
5. Bank, Banker, Banking:- Reserve Bank of India (RBI)
6. Names reserved for Foreign LLP/Companies: In case Foreign LLP/Companies have reserved their name under rule 18 of the LLP Rules 2009, than that name will not be applicable for forming of LLP to persons other than the Foreign LLP/Company
For the purpose of forming a LLP, there should be agreement between the partners interested in forming the LLP to be known as LLP Agreement. The said Agreement forms the basis of the formation of LLP and lays down its founding structure. The LLP agreement is an agreement between the Partners and between the LLP & its partners.
The basic contents of Agreement are:
⇒ Name of LLP
⇒Name of Partners & Designated Partners
⇒Form of contribution
⇒Profit Sharing ratio
⇒Rights & Duties of Partners
In case no agreement is entered into, the rights & duties as prescribed under Schedule I to the LLP Act shall be applicable. It is possible to amend the LLP Agreement but every change made in the said agreement must be intimated to the Registrar of Companies.
The Registered office of the LLP is the place where all correspondence related with the LLP would take place, though the LLP can also prescribe any other for the same. . A registered office is required for following purposes:
1. All the statutory records and books of accounts of the LLP will be maintained at this office.
2. The Jurisdiction of Registrar of Companies is based on the registered office of the LLP
At the time of incorporation, it is necessary to submit proof of ownership or right to use the office as its registered office with the Registrar of Companies.