Limited Liability Partnership (LLP) was introduced by way of the Limited Liability Partnership Act, in India 2008. The essential premise behind the introduction of Limited Liability Partnership (LLP) is to give a form of business entity that is easy to maintain while providing limited liability to the owners. Since its establishment in 2010, LLPs have been well accepted with over one lakh registrations in India.

Limited Liability Partnership (LLP) is one of the simplest types of businesses to manage and incorporate in India. With an easy incorporation procedure and manageable compliance formalities, LLPs are preferred by Professionals, Micro and Small businesses that are closely-held or family-owned. Since LLPs are not having the ability to issue equity shares, LLP should not be chosen for any business that has plans for raising equity funds from Angel Investors, Venture Capitalist or Private Equity Funds.

Requirements of an LLP 

Any body corporate or an individual may be a partner in a limited liability partnership: Provided that an individual shall not be capable of becoming a partner of a limited liability partnership, if:

1. He has been found to be of unsound mind by a Court of competent jurisdiction and the finding is in force;
2. He is an undischarged insolvent; or
3. He has applied to be adjudicated as an insolvent and his application is pending.

Documents Required for LLP 

Documents required for registration of an LLP are as follows :

1. Documents of Partners:
1. PAN Card/ ID Proof of the Partners
2. Address Proof of the partners
3. Residence Proof of Partners
4. Photograph
5. Passport (in case of Foreign Nationals/ NRIs)
2. Documents of LLP:
1. Proof of Registered Office Address
2. Digital Signature Certificate

Procedure Of LLP Formation

The steps by step Process For the formation of an LLP is as follows :

1. Registration: Register yourself on the website of the Ministry of Corporate Affairs, developed for LLP services, i.e. www.llp.gov.in. This website may also be accessed through the website of the ministry www.mca.gov.in On the home page of the URL www.llp.gov.in click the “Register” tab on the top right-hand corner of the page. Fill in the registration form. Fields marked * in the form are to be mandatorily filled. Select your user name and password. Upload digital signature certificate On successful registration, the system will give a message that you have been registered successfully.

2. Director Identification Number (DIN): You have to apply for the Director Identification Number (DIN) of all the designated partners or those intending to be designated partners of the proposed LLP. The application for allotment of DIN has to be made in Form DIR-3. You have to attach the scanned copy of documents usually Aadhaar and PAN to the form. The form shall be signed by a Company Secretary in full- time employment of the company or by the Managing Director/Director/CEO/CFO of the existing company in which the applicant shall be appointed as a director.

3. Digital Signature Certificate: Designated partner or partner of LLP or 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, details of which are available on the home page of the LLP portal under the tab “Certifying Authorities”.

4. Reservation of name: Limited Liability Partnership-Reserve Unique Name (LLP-RUN) is filed for the reservation of the name of proposed LLP which shall be processed by the Central Registration Centre under Non-STP. However, before quoting the name in the form, it is suggested that you use the free name search facility on MCA portal. The system will give a list of closely resembling names of existing LLPs or companies based on the search criteria filled up. This will help you in choosing names not similar to already existing names. The registrar gives approval of the name only if the name is not undesirable in the opinion of the Central Government and does not resemble any existing body corporate or partnership firm or an LLP or a trademark. The form RUN-LLP has to be accompanied by fees as per Annexure ‘A’ which may be either approved or rejected by the registrar. A resubmission of the form shall be allowed to be made within fifteen days for rectifying the defects. There is a provision to provide for two proposed names of the LLP.

5. Incorporation of LLP: The form used for incorporation is Form for incorporation of Limited Liability Partnership (FiLLiP) which shall be filed with the Registrar who has jurisdiction over the state in which the registered office of the LLP is situated. The form will be an integrated form. Fees as per Annexure ‘A’ shall be paid. This form also provides for applying for allotment of DPIN, if an individual who is to be appointed as a designated partner does not have a DPIN or DIN. The application for allotment shall be allowed to be made by two individuals only. The application for reservation may be made through FiLLiP too. If the name that is applied for is approved, then this approved and reserved name shall be filled as the proposed name of the LLP.

6. File Limited Liability Partnership Agreement: LLP agreement governs the mutual rights and duties amongst the partners and also between the LLP and its partners. LLP agreement must be filed in form 3 online on MCA Portal. Form 3 for the LLP agreement has to be filed within thirty days of the date of incorporation. The LLP Agreement has to be printed on Stamp Paper. The value of Stamp Paper is different for every state.

Registered Office Of LLP 

The Registered office of the LLP is the place where all correspondence related to the LLP would take place, though the LLP can also prescribe any other for the same. A registered office is needed for purposes which are as follows:

1. All the statutory books and records of accounts of the LLP will be maintained at this office.
2. The Jurisdiction of Registrar of Companies is based on the registered office of the LLP

At the time of incorporation, it is essential to submit proof of ownership or right to use the office as its registered office with the Registrar of Companies.

Conclusion 

The Limited Liability Partnership Act, 2008 is the identification of the changing requirements of the business environment in the current era. The incorporation of the LLPs will require a helpful new option for startups like professional partnerships that are concerned about their exposure to liability. In view of the growth of Indian Service industry in recent times, startup LLPs would further contribute to the growth of the service industry and a large number of existing companies, private as well as public, are expected to convert into LLPs with a view to have access to the profits of the LLP.