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2019

Limited Liability Partnership Formation in India

Limited Liability Partnership Formation in India

Limited Liability Partnership (LLP) is the combination of Partnership & Private Limited Company. It is separate legal entity & juristic person who is established under Limited Liability Partnership Act, 2008.

This act contains rules & regulations related to limited liability Partnership (LLP).

Minimum Number of Partners:

  • The minimum number of Partners required to form an LLP is Two while there is no bar (limit) on maximum number of partners.
  • There should be minimum two designated partners required who shall be individuals.
  • If a body corporate wants to participate as a partner in LLP it needs to appoint one of its members as a partner in LLP who acts on behalf of such body corporate.
  • Out of two designated partners at least one should be resident in India (It means he must satisfy the Residential status conditions for individuals of Income Tax Act, 1961).

 

Essential Characteristics of Limited Liability Partnership (LLP):

  • Separate Legal Entity: Limited Liability Partnership (LLP) is a separate legal entity & juristic person establish under the act (i.e. Limited Liability Partnership Act, 2008).
  • Easy Transferability: Ownership of LLP can be easily transferred to another person by introducing them as a designated partner of LLP. As it is a separate legal entity so it is separate from its managing partners. That’s why by changing the managing partners the ownership of LLP can be changed.
  • Uninterrupted Existence: As a separate legal person, it is unaffected by the death, retirement or other departure of any partner. It continues to be in existence irrespective of change in partnership.
  • Ownership of Property: Being a juristic person, LLP can acquire own property in its own name. No any partner can make a claim upon the property of LLP.
  • Limited Liability: In Limited Liability Partnership (LLP), liability of the members in respect of the LLP’s debts is limited. It means status of being legally responsible only to a limited amount for the debts of an LLP unlike proprietorship & partnership. The rights & duties of the partners of LLP are governed by LLP agreement.
  • Statutory Audit Limit for LLP: LLP’s whose turnover exceeds Rs.40 lakh or whose contribution exceeds Rs. 25 lakh are required to annually get their accounts audited by any chartered accountant in practice. It means LLP’s whose turnover up to 40 Lakh & capital contribution less than 25 Lakh are exempted from statutory audit compliances.

 

LLP Registration Process:

A. Documents Required:

1 .Documents of Partners:

    1. PAN
    2. ID Proof
    3. Residential Proof
    4. Passport Size Photograph
    5. Pass Port (In case of NRI/ Foreign Nationals)
    6. PAN – It is Primary proof of ID
    7. ID Proof: 1) Voter ID 2) Passport 3) Aadhar Card 4) Driving License
    8. Residential Proof: 1) Latest Bank Statement 2) Telephone Bill 3) Electricity Bill
    9. Photograph: 2 Passport size photo
    10. Passport (NRI Case): NRI / Foreign Nationals has to submit their passport compulsorily
    11. Digital Signature Certificate (DSC) of one of the designated partners is required

 

Note: If documents are in other than English language a Notarized or apostilled transaction copy will also be attached. 

2. Documents of LLP:

    1. Proof of Register office
    2. DSC

 

3. Proof of Register office:

    1. Electricity / Telephone Bill ( not older than 2 months)
    2. Rent agreement (If Register office is on Rent)
    3. NOC from Landlord (If Register office is on Rent) (NOC will be the consent of the landlord to allow the LLP to use place as registered office)

 

B. Government Fees:

  • Step 1: DSC = Rs. 1500-2000/- (for 2 Partners)
  • Step 2: DIN = Rs. 1000-2000/- ( For 2 Partners)
  • Step 3: Name Reservation = Rs. 200/-
  • Step 4: Incorporation (Form 3) – Depends on Capital Contribution
    • Contribution up to 1 Lakh – Rs.500/-
    • Contribution between Rs. 1 lakh – 5 lakh = Rs. 2000/-
  • Step 5: LLP agreement – Depend on capital contribution

 

C. Registration Process of Limited Liability Partnership:

  • Step 1: Apply for DSC of partners
  • Step 2: Apply for DIN
  • Step 3: Apply for Name Reservation
  • Step 4: Apply for Incorporation
  • Step 5: LLP Agreement

 

D. Approximate Time for Process:

  • From Obtaining DSC to filling Form 3 it takes approx. 15 days subject to availability of all documents & process timing of Registrar of Companies (ROC).

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