Limited Liability Partnerships (LLPs) are commercial vehicles which combine features of partnership and company form of business. LLP is an alternative corporate business form that gives the benefits of limited liability of a company and the flexibility of a partnership. The LLP can continue its existence irrespective of changes in partners. It is capable of entering into contracts and holding property in its own name.
Unlike in partnership, no partner is liable on account of the independent or un-authorized actions of other partners and accordingly individual partners are protected from joint liability created by another partnerís wrongful actions 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.
Pre-requisites for registering a LLP
Partners of LLP
An LLP should have minimum 2 partners. In case any Body Corporate is a partner, then it will be required to nominate any person (natural) as its nominee for the purpose of the LLP.
Partner of LLP can be consisted of
Every LLP should have minimum 2 designated partners who are individuals and at least one of them should be resident in India.
A person or nominee of a body corporate, intending to be appointed as who is appointed as designated partner of LLP should hold a Designated Partner Identification Number (DPIN) allotted by the Ministry of Corporate Affairs.
DPIN can be obtained by submitting application along with address proof and identity proof of the individuals.
Digital Signature Certificate
All forms for registration of LLP shall be filed online after signing digitally and for this purpose, one of the designated partners shall take digital signature certificate.
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.
Like partnership, partners of LLP can frame agreement for defining their terms, profit sharing ratio etc. The basic contents of Agreement are, Name of LLP, Name of Partners and Designated Partners, and Form of contribution, Profit Sharing ratio and Rights and 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. 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.
LLP FORMATION STAGES
Stage I - Partners
To form a LLP, there Minimum two partners and at least two shall be designated partners having DIPN. In case of body corporate as partners, their nominee can be act as designated partners. Out of two designated partners, one must be resident in India. (Who has stayed in India for a period of not less than one hundred and eighty two days during the immediately preceding financial year)
Stage II - Obtaining DPIN & Digital Signature
DPIN can be obtained by making an application online with www.llp.gov.in After submitting the online application, signed physical copy of Form 7 has to be submitted to Ministry of Corporate Affairs along with certified copies of address proof and Identity proof of the applicant.
Digital Signature can be obtained from any of the Certifying Authorities in India.
Stage III - Name filing
After finalization of name, an application of name availability has to be filed in form 1 with www.llp.gov.in for approval. Please note that selection of name is subject to Guidelines issued by MCA.
Stage IV - Agreement
LLP agreement has to be drafted line with LLP Act. It is not mandatory to file LLP agreement at the time of registration and same can be file with in 30 days. If no agreement is framed, provisions of Schedule I of the LLP Act shall be applicable.
Stage V - Filing of Incorporation Documents
The following documents along with required attachments has to be filed with www.llp.gov.in
Above said documents are required to be filed after signing digitally. After verification, registrar will register all documents and issue Certificate of Incorporation.