Limited Liability Partnership Compliances is a form of business entity under which there is the limited liability of the members. The liability of each partner is limited to the extent of...
What is LLP?
Limited Liability Partnership (LLP) is a body corporate formed and incorporated under the LLP Act, 2008. LLP is a legal entity which has a separate identity from its partner. LLP is a newly introduced corporate entity which aimed at small and medium-sized business.
Why should you go for LLP?
LLP is a partnership where one get the benefits of some features of partnership and companies together. Recently, small and medium entrepreneurs have started opting for Limited Liability Partnership considering the following advantage:
- Benefits of both partnership and companies;
- No minimum capital requirement;
- The advantage of Tax Benefits;
- Lower compliance requirement;
- Perpetual Succession;
- Low cost of incorporation;
- Liability of partners is limited to the contribution mentioned in the agreement.
What is the procedure of LLP incorporation?
All the Designated Partners of proposed Limited Liability Partnership has to apply for Designated Partners Identification Number (DPIN). DPIN application shall make in e-form DIR 3.
The Designated Partner whose signatures are to be affixed in e-form shall register their DSC on MCA portal.
File the Form 1 for reservation of name of proposed Limited Liability Partnership. You can select up to 6 proposed name of LLP in form 1. Also, need to provide the details of minimum 2 designated partners of proposed Limited Liability Partnership. One partner shall be a resident of India. Any individual or Body corporate can be Partner of Limited Liability Partnership.
After the reservation of name, the applicant shall file the ‘Form 2’ for incorporation and subscription. Inform 2, the details of partners, the amount of proposed monetary value of partners contribution, Subscriber sheet, proof of registered of add, consent form from partners need to be given and if proposed name include any banking, venture, CA, CS, Trademark etc, then in principle approval of the regulatory authority need to attach in form 2.
On receipt of complete application, Registrar will issue a certificate of incorporation after satisfying of LLP Act.
After the successful registration, the draft of LLP agreement needs to be incorporated in line with LLP Act. The agreement is not mandatory at the time of registration can be filed within 30 days of incorporation. All the partners are liable to comply with the provisions of Agreement at all time. Followings are the some imported clause need to be incorporate in Limited Liability Partnership agreement:
- Name, Object and Register Office of Limited Liability Partnership;
- The initial Contribution of the LLP by Partners;
- Valuation of Non-Monetary contribution;
- The net profits or losses sharing ratios;
- Detail of Designated Partners;
- Interest payable on Capital Loan;
- Remuneration payable to the working partners;
- Mode of operation of Bank Accounts;
- Appointment of an arbitrator;
- Rights and Duties of Partners;
- Rights and Duties of Designated Partners;
- Indemnity clause;
- Goodwill clause;
- Procedure to appoint Auditor;
- Admission of New Partner;
- Cessation of Existing Partners;
- Winding up of Limited Liability Partnership;
- Amendments of Limited Liability Partnership;
- The extent of Liability of Limited Liability Partnership;
- Liability of Partners in Limited Liability Partnership;
- Other business if any carried
The LLP agreement once finalized need to be filed in Form:3 (Information with regard to Limited Liability Partnership agreement) and Form 4 (Notice of appointment of partner and his consent). The agreement may be filed along with Form 2 or within 30 days of the incorporation.