Limited Liability Partnership (LLP) is a popular form of business entity in India, offering the benefits of both a company and a partnership firm. Understanding the process of LLP registration is crucial for entrepreneurs and businesses. This guide provides comprehensive insights into LLP registration in India, covering its meaning, features, eligibility criteria for partners, LLP agreement, and the step-by-step registration process.
Meaning of LLP
Limited Liability Partnership is governed by the Limited Partnership Act, 2008. It is a hybrid form of a Company and a Partnership Firm. The LLP is a distinct legal entity from its partners. It is regulated by the Registrar of LLPs.
Features of LLP
- LLP is a corporate body having separate legal entity and perpetual succession.
- It is registered under the Limited Liability Partnership Act, 2008.
- It is regulated by the Ministry of Corporate Affairs.
- Liability of partners is limited except in case of fraud.
- It is applicable to any trade or business.
- LLP can be created by a minimum of 2 partners.
- Every partner is the agent of the LLP.
- Rights and duties of the partners are administered by the LLP agreement.
Who can become a partner in LLP?
(a) An individual (other than person of unsound mind by court or an undischarged insolvent.
who has applied to be adjudged insolvent and the application is pending)
(b) Private or Public Company.
(c) LLP
(d) LLP registered outside India.
(e) Foreign Company
Who cannot become a partner in LLP?
(a) A sole proprietorship
(b) A co-operative society
(c) Any other person not mentioned in the above para “who can be a partner in LLP”
LLP Agreement
“A Limited liability Agreement is a written agreement between the Limited Liability Partnership or its partners or the partners of the Limited Liability Partnership. It directs the mutual rights and duties of the partners.
It is mandatory to draft a LLP agreement within 30 days from the date of the LLP Incorporation.
The Limited Liability Partnership (LLP) Agreement is the charter of the LLP, identical to the Memorandum of Association and Articles of Association for a private limited company. It defines the scope and extent of the LLP’s operations as well as the rights, duties, obligations of the partners.
Clauses to be mentioned in the LLP Agreement
- Name of The LLP
- Registered Office of The LLP
- Business of The LLP
- Capital Contribution
- Profit Sharing Ratio
- Meetings
- Admission of Partner
- Designated Partners
- Term of the LLP
- Rights and duties of designated partners
Procedure for registration of Limited Liability Partnership:
STEP 1 – Register DSC and DIN
The DSC should have registered on the MCA website. Every applicant of the LLP must have a DIN who wants to become the designated partner. Obtain DSC and DIN for the individuals acting as Designated Partners of LLP.
The application for DIN can be made online through Form-DIR-3
The following documents are required:
- Proof- of Identity
- Proof of Residence.
STEP 2 – Apply for Name Reservation
The second step in the LLP Registration is reservation of the name of the LLP. The application for reservation of name is made in Form RUN-LLP (Reserve Unique Name Limited Liability Partnership) to the MCA.
Once the name is approved by the MCA, the name approval letter will be issued to the proposed designated partners of the LLP and the name will be reserved for 90 days.
STEP 3 – Incorporation of LLP:
After reservation of the name, the further step is to file e-Form FiLLip for registration of an LLP.
Form FiLLiP contains the details of the proposed LLP going to be registered, Details of Designated Partners’. The form must be digitally signed by a person named as a designated partner. Also, it should be digitally signed by an advocate/Company Secretary/Chartered Accountant/Cost Accountant in practice.
Once the Registrar is satisfied that all the requirements with respect to the incorporation of the LLP have complied, he will issue a Certificate of Incorporation within 14 days from the date of filing of documents. The Certificate of Incorporation issued will be conclusive evidence of the formation of the LLP.
On incorporation, an LLP identification number (LLPIN) will be assigned to every LLP registered so.
In any case, the Registrar finds any document to be defective or incomplete in any aspect, he shall give intimation to the applicant to remove the defects and re-submit the form within a period of fifteen days from the date of such intimation given by the Registrar.
Cost incurred in the registration of LLP
Step 1: DSC – Around Rs. 1500-2000 for two partners
Step 2: Name Reservation – Rs. 200
Step 3: Incorporation – Depends on the capital contribution i.e. upto Rs. 1 lakhs – Rs. 500 etc.
Step 4: LLP Agreement -Depends on capital contribution, i.e. if, in case, contribution is upto Rs 1 lakh – Rs 50 for filing Form 3.
Conclusion: LLP registration offers entrepreneurs and businesses a flexible and advantageous legal structure for conducting business in India. By understanding the meaning, features, eligibility criteria for partners, LLP agreement, and registration process outlined in this guide, prospective LLP owners can navigate the registration process efficiently and establish their businesses with ease.
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