An LLP is considered as the right mix of corporate and partnership firm character ship into a single form. LLP is a quite common form of doing business amongst the Small and medium enterprises due to the very obvious reasons pertaining to lesser compliances, various tax exemptions, corporate character, limited liability, easy share transferability and much more. Previously LLP Form of doing of business was predominating in countries like US, UK, Singapore, Australia etc. An LLP registration in India is regulated by the LLP (Limited Liability Partnership) act 2008 with effective from 1st April 2008.
The idea of LLP registration connotes to the fact wherein previously the partnership firm based business persons operating at international and national level, which expose them to the personal liability hence restricting business operations and expansions: a need to eradicate such problem was strongly felt, which thereby coined for LLP form of doing business was introduced. In LLP Registration, the LLP and the partners encompass it, is a separate legal entity and are liable only to the extent of their contribution and except in cases of mala fide intention. However in no their scenario the court can encroach to their private property of such partners.
Well! Now that you are motivated to do LLP registration, what is next? Don’t get topsy –turvy!! In this article, we will guide on everything, even distinctly related to LLP registration.
LLP registration will provide the flexibility of managing the internal management on the basis of agreement mutually executed between them.
LLP registration facilitates the entrepreneurs, service providers and professionals to manage and operate at own terms and conditions and create their own style of working and managing.
If you are somebody who works on its own principles and is not willing to work on others terms and condition, it is strongly suggested to go for LLP registration Online. You can develop your own management style of working, which can be more efficient and thereby effectively competing in the global market of which you are part of.
Before you initiate the LLP registration keep in mind the following
An LLP is allowed to receive FDI, with certain restrictions. However such LLP must have LLP registration certificate and should be registered under the LLP Act, 2008. Let us understand each restriction one by one:
The MCA has notified the Limited Liability Partnership (Limited Liability Partnership Second Amendment) Rules 2018, whereby certain forms have been introduced in substitution of the previous one for LLP registration. The amended Limited Liability Partnership Rules shall come into force w.e.f. 2 Oct. 2018.
The website for Limited liability Partnership form and LLP registration is www.mca.gov.in
In case of partners ready have DSC and DIN, you can skip this step. If the proposed partners are not having DSC and DPIN then apply for DPIN (designated partners identification Number) and DSC for the partners. Obtain Designated Partners Identification Number (DPIN) by the filing of form DIR 3.
Reservation of unique name is required to be applied before MCA in the form RUN –LLP instead of Form 1, with requisite fees. Form RUN- Limited Liability Partnership is to be processed by CRC, as per amended Limited Liability Partnership Rules.
Once the name is approved, prepare the LLP agreement and it is required to be filled in the new Form FiLLip before the CRC. The new LLP registration form introduced is Form FiLLiP, with effect from 2nd October 2018.
The LLP registration application is to be filled before MCA within 90 day based on a capital contribution by LLP Partners/Designated.
Let us understand the different modes of LLP registration / formationin detail.
In case of a fresh LLP registration, one need to apply at the MCA portal, after checking the name availability and followed by the LLP registration Application Form FiLLiP (latest Form, eradicating the previous Form 2). Detailed steps have already been discussed above.
Now, what shall happen to those licenses or registrations obtained from the other authorities? Will they automatically get transferred in the name of new LLP so formed?
No. Nothing as such will automatically get transferred, neither registration and license from the different authorities, nor any properties registered under the Partnership firm prior to the conversion, the LLP must approach the concerned authorities and initiate the desirous steps as prescribed to transfer the assets to the LLP.
It is henceforth strongly suggested that one should understand the aspects and clarify procedural aspects with the concerned licensing or registration authorities prior to beginning the process for conversion into LLP.
The Partnership is deemed to be dissolved and the name of the partnership firm is removed from the register of Registrar of Firms. Regarding the assets, liabilities, rights, privileges, obligations of the Partnership firm, it is basically considered to be wholly transferred to the LLP.
The conversion doesn’t affect any existing contracts, employment, agreement, etc.
For all such transactions conducted after the conversion of a partnership into LLP, no such basic difference shall be there, neither it will affect the Partners personal liable for all business conducted as a Partnership prior to the conversion into LLP.
Upon the conversion to LLP, for at least 12 months from the date of conversion, such LLP must issue a statement stating the fact that it was converted from a Partnership into an LLP.
A private limited company can only be converted into an LLP if it satisfies the given below condition:
After Conversion the private company will be deemed to be dissolved and the registrar shall remove the name of such company from its records.
The conversion of the Private Company into the LLP doesn’t affect any existing contracts, employment, agreement, etc. The existing liabilities, obligations, agreements, contracts and continued employment remain the same.
Fresh applications are usually, made with respect to GST registration or FSSAI registration, however, the term of validity of previously obtained licenses shall also play a vital role in decoding the fresh application requirement.
On conversion, all properties, assets, interests, rights, privileges, liabilities and obligations of the private limited company are transferred to the LLP.
Keep in mind: A HUF or its Karta cannot become a partner or designated partner in LLP.
FLLP registration is done by filing e-form 27, which has to be digitally signed by authorized representative of foreign LLP, available at the MCA portal.
On submission of complete documents, the Registrar maximum within 14 days of the filing of incorporation documents will issue a certificate of incorporation under his seal.
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On similar lines of Company registration, LLP registration has been revamped. Like company now along with LLP registration, name availability can also be checked. For LLP registration and Name availability check the Form FiLLiP is to be filled.
However in case if you wish to do the name check first and then initiate for LLP registration, as even that is also possible. The LLP registration process in such cases is enlisted in below step:
The application is to be made to the registrar having jurisdiction over the State in which the registered office of the limited liability partnership is situated along with fee as provided in Annexure ‘A’:
What else is new in LLP registration?
Well! Now you can do the following:
For cases where an individual to be appointed as a designated partner does not have a DPIN or DIN, application for allotment of DPIN can also be made in Form FiLLiP.
The application for allotment of DPIN shall not be made by more than two individuals in Form FiLLiP.
An application for reservation of name may be made through Form FiLLiP.
Note that even for the cases of conversions, the documents as that of LLP registration are required.
Yeah! Well, when now that you know how to get LLP registration, how to put it to end is something you must also know.
Call a meeting of the partners by issuing a notice to all the partners. The notice is to be issued according to the terms and condition as stipulated in the partnership agreement.
Notice is to be served should be in writing to the partners, stating the intention to hold the partners meeting.
Send the notice as mentioned in the partnership agreement along with the agenda.
Put to Vote to dissolve the partnership and on the basis of the majority vote, whereby if the majority agrees to dissolve then the LLP is dissolved. Keep in mind that fro cases the general partnership agreement establishes a predetermined date for dissolution that date is to adhere. The manner of voting could be anything , by show hand, or by directly asking or according to the provisions of the agreement. Thereafter the votes are recorded in the meeting minutes, the records of the meeting are thereafter recorded and filed.
The LLP has an option of either appointing itself one or more general partners to wind up the partnership's business otherwise it can hire an outside agency to carry on the business affairs. If the partners cannot reach to unanimous decision to appoint an outside agency, the LLP can approach the court to supervise liquidation or hire a liquidation trustee.
The certificate of cancellation is to be filed before the state business registrar. The certificate of cancellation shall contain the following information:
The form to prepare the certificate can be downloaded from the secretary of state's website or the comparable state agency which is authorized to deal the business registrations. Pay the appropriate LLP registration fees along with the form.
Note that the certificate of cancellation is to be filed with the same state office where the partnership's certificate of limited partnership was obtained.
The LLP is required to settle out all the partnership's outstanding obligations like Tax bills if the partnership, Employment taxes, Pay all existing creditors and Set aside money for ongoing payment disputes. It shall liquidate the LP's assets.
Once the liquidation is completed and all the liabilities are paid off, still, certain assets are left with the LLP, the asset is required to be returned in the ratio of the contribution made by the partners. In cases where the remaining assets cannot cover all of the partners' contributions, in such case one need to distribute the available money proportionally to each partners contribution. This is done for the simple logic that at the time of formation of the Partnership firm, the partners must have put in some capital or contribution to the LLP. Hence after completing the liquidation and paying out the liabilities the leftover of the LLP shall be distributed accordingly.
File the Complete final tax forms for the LLP, and give final K-1s to partners.
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Yes, one can do the LLP registration at your residential address.
It takes around 10 to 15 days for LLP registration. However, it also depends on the ROC of the state in which LLP registration and doen , and LLP is situated.
The fees payable for LLP conversion are as follows
The following documents have to be attached along with the application for conversion of the company into LLP:
No, it is not mandatory to obtain the DPIN or DIN for Designated Partners of FLLP but the DSC of the authorized representative is mandatory for the purpose of LLP registration.
A listed company is not allowed to be converted into the LLP. Only private / unlisted public company are allowed to be converted into LLP.
To become a partner he/she must be a natural person & have attained 18 years of age. Even a Foreign nationals, Foreign companies & LLP can become the Partner and incorporate a LLP in India subject to the condition that at least one designated partner is resident in India.
There is no such minimum capital contribution requirement for LLP registration, it can be started with any amount of capital. Capital contribution by partners can be done in the form of tangible, intangible property or such other benefit.
Yes two LLPs are allowed to be merged. The merger shall take place pursuant to section 60 to 62 of the LLP act . The section provides for manner in which the compromises or arrangements are to done for merger and amalgamation.
Central Government may appoint inspectors to investigate the affairs of the LLP registration so involved. The manner and procedure for conduct of investigation has been specified in the Act itself.
The LLP should be al time prepared with the following for inspection