Limited Liability Partnership(LLP) is defined as partnership firm and registered under Limited Liability Partnership(llp) Act in the office of Registrar of Companies (ROC), India. LLP Firm is an alternative corporate business form that gives the benefits of limited liability of a company and the flexibility of a partners. 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. The LLP Firm is a separate legal entity, 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.
Key features of LLP Registration :
Easy to Form: It is very easy to form LLP, as the process is very simple as compared to Companies and does not involves much formalities.
Liability: A LLP exists as a separate legal entity from its partners. Both LLP and its partners are separate entities and both functions separately. Liability for repayment of debts and lawsuits incurred by the LLP lies on it and not on the partner. Any business with potential for lawsuits should consider incorporation, it will offer an added layer of protection.
Perpetual Succession: An incorporated LLP has perpetual succession. Notwithstanding any changes in the partners of the LLP, the LLP will be a same entity with the same privileges, immunities, estates and possessions. The LLP shall continue to exist till its wound up in accordance with the provisions of the relevant law.
Flexible to Manage: LLP Act 2008 gives LLP the atmost freedom to manage its own affairs. Partner can decide the way they want to run and manage and put the same in form of terms and conditions in the LLP Agreement . The LLP Act also in most cases provides that the said provision will applicable, only in case nothing is provided in the LLP Agreement.
Easy Transferable Ownership: It is easier to become or leave the partnership of the LLP or otherwise it is easier to transfer the ownership in accordance with the terms of the LLP Agreement. Ceasing of old partners and coming of new partners , will automatically leads to change in ownership of LLP.
Separate Property: A LLP as legal entity is capable of owning its funds and other properties. The LLP is the real person in which all the property is vested and by which it is controlled, managed and disposed off. The property of LLP is not the property of its partners.
Taxation: LLP is not required to pay surcharge on income tax. Moreover , it is also not required to pay tax on profits distributed to partners whereas Company is required to pay tax on dividend distributed to its shareholders.
Raising Money: Financing a small business like sole proprietorship or partnership can be difficult at times. A LLP being a regulated entity like company can attract finance from PE Investors, financial institutions etc.
Capacity to sue: As a juristic legal person, a LLP can sue in its name and be sued by others. The partners are not liable to be sued for dues against the LLP.
No Mandatory Audit Requirement: In LLP, only in case of business, where the annual turnover/contribution exceeds Rs 40 Lacs/Rs 25 Lacs are required to get their account audited annually by a chartered accountant. This provides great relief to small businessmen.
Partners are not agent of other Partners: In LLP, Partners unlike partnership are not agents of the partners and therefore they are not liable for the individual act of other partners.
5-15 days (Subject to ROC Response) after receipt of all the necessary Documents, The breakup of the Number of days is as follows
|Taking Digital Signature of Partners||1-2 Day|
|Taking Designated Partnership Identification Number (DPIN)||1 Day|
|Reservation of the name of the Company||0-3 Days|
|Preparation of other documents such as MOA,AOA, Forms etc||0-1 Days|
|Filling of documents with Authorities||0-1 Day|
|Getting Final Certificate of Incorporation||3-7 Days|
|Total Number of Days||5-15 Days|
DOCUMENTS REQUIRED FOR LLP COMPANY REGISTRATION :
INFORMATION REQUIRED FOR LLP REGISTRATION :
? LLP Detail
What you get after LLP Registration in India:
1. Unique Designated Partnership Identification Number (DPIN) for Life time.
2. Digital Signature Certificates (DSC)
3. Name Approval
4. LLP Registration Certificate
5. To Have the Rubber Stamp of the LLP
6. To Apply for PAN Card of the LLP.
7. To Provide you the Proper Incorporation File
8. 10 Draft Copies of LLP Agreement.
Q1. Who can be a “Designated Partner”?
A. Every LLP shall be required to have at least two designated partners who shall be individuals and at least one of the designated partner shall be a resident of India.
In case of a LLP 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 LLP or nominees of such bodies corporate shall act as designated partners.
However following shall be consider as disqualification to appoint as Designated Partner:
Q2. How can a person become partner of an LLP?
A. Persons, who subscribed to the “Incorporation Document” at the time of Incorporation of LLP, shall be partners of LLP Firm. Subsequent to incorporation, new partners can be admitted in the LLP as per conditions and requirements of LLP Agreement.
Q3. Whether every LLP would be required to maintain and file accounts?
A. An LLP shall be under obligation to maintain annual accounts reflecting true and fair view of its state of affairs. The LLP is Required to File Minimum 2 Forms per Year. Annual Return in Form 11 signed by Designated Partners is to be filed before 30th May of each year. The Statement of Account & Solvency in Form-8, essentially signed by the designated partners, is to be filed within 30days from the six months from the closure of the respective financial year i.e. by 30th October. If there is any delay filing of Form 8/ Form 11 then the penalty would be Rs. 100/- per day after the above specified period.
Q4. Whether audit of all LLPs would be mandatory?
A. Every LLP in India, whose annual turnover exceeds the magnitude of Rs. 40Lakhs or the total contribution of its partners gets above the limit of Rs. 25Lakhs, is mandatorily need to get its accounts audited every financial year. Provided also that where the partners of such LLP do not decide for audit of the accounts of the LLP, such LLP shall include in the Statement of Account and Solvency a statement by the partners to the effect that the partners acknowledge their responsibilities for complying with the requirements of the Act and the Rules with respect to preparation of books of account and a certificate in the form specified in Form 8.
Q5. Which documents are available for public inspection in the office of Registrar?
Q6. Can Partnership Firm, Private Limited Company and Unlisted Public Company Converted to Limited Liability Partnership
A. Yes, The Registrar shall, on conversion of a firm by filing Form 17, private company or an unlisted public company by filing Form 18 into limited liability partnership along with prescribed fees, issue a Certificate of Registration under his seal in Form 19.
In the event, Registrar has refused the registration, the applicant firm or private company or unlisted public company, as the case may be, may apply to the Tribunal within sixty days from the date of receipt of such intimation of refusal.
For the purposes of the proviso to sub-section (1) of section 58, where the firm, private company or unlisted public company has been converted into limited liability partnership, an intimation of such conversion to the concerned Registrar of firms or Registrar of Companies, as the case may be, shall be given in Form 14 within fifteen days of the date of registration of the LLP.
Q7. Difference between LLP & a Company?
A. A basic difference between an LLP and a joint stock company lies in that the internal governance structure of a company is regulated by statute (i.e. Companies Act, 1956) whereas for an LLP it would be by a contractual agreement between partners.
• The management-ownership divide inherent in a company is not there in a limited liability partnership.
• LLP will have more flexibility as compared to a company.
• LLP will have lesser compliance requirements as compared to a company.
Q8. What is the validity of DIN?
A. DIN is a unique number, allotted by Registrar and it is valid for the life time of the individual.
Q9. What activities cannot be carried out by LLP?
A. Currently activities related to financing , leasing , investment in securities cannot be carried on in LLP.
Q10. For which type of business LLP is suitable?
A. LLP is suitable for mostly all type of business whether small, medium and large but worldwide it is more popular in service sector.
Q11. What are things to remember while choosing name of the LLP?
Q12. Whether having a registered office for LLP is mandatory?
A. Yes, every LLP should have a registered office and a proof of the ownership or permission to use the same , must be filed at the time its incorporation.
Q13. Whether stamp duty will be paid on the LLP agreement?
A. Yes, stamp duty will be paid on the LLP Agreement, the amount of the same will depend upon the place of its execution because stamp duty differs from state to state.
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