Step in incorporation of LLP

A corporate business vehicle that enables professional expertise and entrepreneurial initiative to combine and operate in flexible, innovative and efficient manner, providing benefits of limited liability while allowing its members (partners) the flexibility or organizing their internal structure as a partnership. The LLP shall be a body corporate and a legal entity separate from its partners.

Any two or more persons, associated for carrying on a lawful business with a view to profit, may by subscribing their names to an incorporation document and filing the same with the Registrar, form a Limited Liability Partnership. The LLP is liable to the full extent of its assets but liability of the partners is limited to their agreed contribution in the LLP. Further, no partner is liable on account of the independent or un-authorized actions of other partners, thus individual partners are shielded from joint liability created by another partner’s wrongful business decisions or misconduct. Mutual rights and duties of the partners within a LLP are governed by an agreement between the partners or between the partners and the LLP as the case may be. The LLP, however, is not relieved of the liability for its other obligations as a separate entity.

PROCESS TO START LLP (SNAPSHOT)

Obtain Designated Partners Identification Number (DPIN).

· All designated partners of the proposed LLP shall obtain “Designated Partner Identification Number (DPIN)” by filing an application individually online in Form -7.

Digital Signature Certificate (DSC)

· Partner/Designated partner of LLP/proposed LLP, whose signatures are to be affixed on the e-forms has to obtain class 2 or class 3 Digital Signature Certificate (DSC) from any authorized certifying agency.

Reservation of name

· Form-1 for reservation of name shall be filed. Partners shall have to select name of the proposed LLP (upto 6 choices can be indicated).

· Any partner or designated partner in the proposed LLP may submit Form-1 and will append his digital signatures and submit the e-form

· Necessary fee can be paid online by credit card.

· Details of minimum two designated partners of the proposed LLP, one of them must be a resident of India, is required to be filled in the application for reservation of name. Only individuals or nominees on behalf of the bodies corporate as partners can act as designated partners.

Incorporation of LLP

· Once the name is reserved by the Registrar, Form-2 “Incorporation Document and Statement” shall be filled up and filed.

· Prescribed registration fee as per the slab given in Annexure A of the LLP Rules, 2009, based on the total monetary value of contribution of partners in the proposed LLP shall be paid online.

• Statement in the e-form is to be digitally signed by a person named in the incorporation document as a designated partner having permanent DPIN and also to be digitally signed by an advocate/company secretary/chartered accountant/cost accountant in practice and engaged in the formation of LLP
• On submission of complete documents the Registrar after satisfying himself about compliance with relevant provisions of the LLP Act will register the LLP, and will issue a certificate of incorporation in Form-16.

Filing of LLP agreement (Form-3) and Partners’ details (Form-4)

• Form 3 (Information with regard to LLP agreement) and Form-4 (Notice of Appointment of Partner/Designate Partner, his consent etc.) may be filed with the prescribed fee simultaneously at the time of filing Form-2 or within 30 days of the date of incorporation or within 30 days of such subsequent changes.

SPECIFIC/ TECHNICAL ISSUES: As per the LLP Rules, Indian Partnership Act, 1932 shall not be applicable to LLPs. But we are still waiting for clarification from RBI whether LLP will be treated as a Company or Partnership for FDI purposes. Further, Rules and regulations are more stringent in case of Partnerships.