What is Limited Liability Partnership?

The (LLP) limited liability partnership is upgraded version of General Partnership. The Limited Liability Partnership Act 2008 was published in the official Gazette of India on 7 January 2009 and has been notified with effect from 31 March 2009.

As the name suggests LLP: A limited liability partnership (LLP) is a partnership in which some or all partners have limited liabilities. LLP registration has been made easy and compliance is very less as compare to private limited company.

What is LLP Registration

LLP is One of the popular and highly preferred categories of entity for doing business in almost all economic sectors in the majority of the countries worldwide. LLP registration is way different from general Partnership. It is more in form of organized form business.

LLP is mainly for the people who provide consultancy service. Partnerships (LLP), along with the private and public limited corporations. It is the hybrid form which incorporates benefits of both partnership and companies.

Founders liability is protected under LLP Structure

Founders liability after LLP registration, the personal liability of a partner has been protected which may arise due to the errors or omissions, or any other liability may arise in business.

Separate Legal Entity-Continue its existence irrespective of Changes in partners i.e. perpetual succession.

The words “Limited Liability Partnership” or use the word “LLP” as the last words in its name.

Through voluntary consent or necessary interference of the concerned Tribunal Winding up is processed.

What you need to know about LLP Registration

  1. A minimum of two partners will be required for formation of an LLP (one of them must be a resident of India).
  2. There is no restriction on the maximum number of partners.
  3. Any Individual or Body Corporate may be a partner of Limited Liability Partnership.
  4. Every Partner of the LLP is, for the purpose of the business of LLP, the agent of the LLP, but not of the other partner.

LLP Registration Procedure

1. Basic requirement for LLP Registration

  • Obtain DSC (If already there then Ignore)
  • Obtain DIN (If already there then Ignore)
  • Search for Name Availability for LLP formation name.

2. Name Reservation Process for LLP Registration

Reservation of name shall be filed. Partners shall have to select name of the proposed LLP (up to 6 choices can be indicated in the order of preference)

Check list for filing of LLP Form-1 for LLP name reservation

  • DIN of Designated Partner.
  • Email Id is required mandatorily.
  • Occupation of the partners.
  • State of Register office of Company.
  • Objects of LLP to be clearly stated.
  • Partners Contribution into LLP.
  • Name of LLP in order of preference.
  • Significant of Name.
  • If Proposed Name is based on Trade Mark (NOC from the Owner of Trademark).
  • DSC of Designated Partner

3. Draft LLP Agreement as per section 23(3)

Section 23(3) of the LLP Act provides that an agreement in writing form is to be made before the incorporation of an LLP. It has to be on stamp paper as prescribed where necessary.

Main Features of the LLP Agreement: Inter alia are

  • Registered office.
  • Objective of LLP.
  • Designated Partners.
  • Rights and Duties of the partners and designated partners.
  • Commencement of Business of LLP/Duration of LLP.
  • Role of Partners in Management/Contribution of partners.
  • Remuneration of Working Partners.
  • Define Interest to Partners: interest up to 12%.
  • Extent of the liabilities of the LLP.
  • Accounting Year.
  • Profit Sharing Ratio

4. File Form 2

for incorporation and subscription Document have to be filed with ROC after the name is reserved for LLP by Registrar.

5. File Form 3

for LLP Agreement: It is not compulsory to file LLP agreement at the time of registration and the same can be filed in form LLP-3 within 30 days of Incorporation of LLP

List of Forms required to filed to MCA for LLP Registration

Forms to be filed by limited liability partnership (LLP)on incorporation Forms
Application for reservation or change of name Form 1
Filing documents necessary for incorporation Form 2
Provide the Detailed information about designated partners Form 2A
Information with regard to limited liability partnership agreement and changes, if any Form 3

Limited Liability partnership (LLP) vs Private Limited Company

Factors Limited Liability Partnership Private Limited Company
Define LLP is a partnership in which some or all partners have limited liabilities. It, therefore, exhibits elements of partnerships and corporations.

A company whose shares may not be offered to the public for sale and which operates under legal requirements less strict than those for a public company.

Recommended for Professional service firms Early-stage entrepreneurs with broad business vision
Minimum Requirement Designated Partners â€" 2 Member â€" 2
Director -  2
Compliance Requirement Annual Filings only Annual Return Filing, Board Meetings & General Meeting etc
Statutory Audit Only if Contribution increases the Limit Compulsory
Limited Liability Protection Provides Protection to founder Provides Protection
Business Growth Medium High
Dividend Taxation No Yes
Investor Preference Medium High
Penalty High Low Compared to LLP
Venture Capital Funding No Yes. it is Possible
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