Limited Liability Partnership or LLP has become very popular for the past few years. Let’s learn more about it. We shall focus on the elements required and the process and steps involved in the LLP registration process in this article. The guidelines we are going to discuss below comes from the Limited Liability Partnership Act (LLP Act), 2008.
Elements Essential for the Incorporation of an LLP
In India, the given elements are necessary for LLP incorporation according to the LLP Act, 2008:
To electronically submit the completed document of Incorporation in the format prescribed with the Registrar.
To have 2 partners at least- individuals or body corporate
To have an office registered in India for to and fro communications.
To have appointed two individuals at least as designated partners and one of them has to be a resident of India. The partners stay responsible for getting everything done as deemed necessary by the LLP.
To have the Ministry of Corporate Affairs (MCA) allotted DPIN or Designated Partner Identification Number for each of the designated partners.
To have an agreement between the designated partners or between the designated partners and the LLP. In the absence of such an agreement, the provisions under Schedule 1 of the LLP Act, 2008 would apply.
To have a unique name for the LLP. It should not be a name that is already being used by another LLP or a Company or a Partnership firm. The name needs to be distinct.
Process for the Incorporation of an LLP
The following components are needed in the LLP incorporation procedure.
Deciding partners and designated partners.
Obtaining the Digital Signature Certificates (DSCs) and the Digital Partner Identification Numbers (DPINs).
Checking the availability and registering a unique name of the LLP. The applicant is allowed to indicate up to 6 choices of names.
Drafting the agreement for the LLP.
Filing of the necessary documents electronically.
Applying for and issuing the Certificate of Incorporation along with the Limited Liability Partnership Identification Number (LLPIN).
An LLP agreement constitutes the following:
Name of the Limited Liability Partnership.
Names and respective addresses of the partners and the designated partners.
The forms of the contributions and the respective interests on the contributions.
The ratio of profits to be shared amongst the partners.
The remunerations of the respective partners.
The rights and duties of the respective partners.
The business proposed.
The rules for the governance of the LLP.
Steps for the Incorporation of an LLP
Reserving the name for the LLP: The applicant first files the e-Form 1 to check the availability of the name and then register the name of the LLP. Once the name gets approved by the Ministry, it is reserved for the applicant for a duration of 90 days. If the LLP fails to be incorporated within the given frame of time, they let go of the reservation and make it available for other applicants.
Incorporating a new LLP: After the reservation of the name for the LLP, the applicant has to file e-Form 2 for the incorporation of the LLP. It carries all the details of the LLP proposed, plus all the details of the partners and the designated partners.
The partners and the designated partners have to give their consent to act in the respective decided roles.
Filing of the LLP Agreement has to be done with the Registrar in e-Form 3 within 30 days from the incorporation of the LLP. Execution of the LLP Agreement is mandatory as per Section 23 of the LLP Act, 2008.
The LLP Incorporation process is complete after obtaining the approval of the LLP Agreement.
FAQs on Incorporation of an LLP: Process and Advantages
Q1: Which act provides the guidelines for forming an LLP?
Ans: The Limited Liability Partnership Act, 2008 provides guidelines for incorporating an LLP.
Q2: There has to be a registered office in India for forming an LLP in India. Is this statement TRUE or FALSE? If true, what is the purpose of having a registered office in India?
Ans: The given statement is TRUE. The registered office in India is used for sending and receiving communication.
Q3: What is the prerequisite in regards to designated partners for incorporating an LLP?
Ans: At least two designated partners are to be appointed by the applicant who is individuals. And, at least one of the designated partners should be a resident of India. The designated partners are also responsible for carrying out all the things, matter and acts according to the requirements of the LLP.
Q4: When do the provisions of Schedule 1 of the LLP Act, 2008 apply?
Ans: The provisions of Schedule 1 of the LLP Act, 2008 are applied when an agreement between the partners or between the LLP and its partners is not present.
Q5: How does the reservation of a name for the LLP work in the LLP Registration Procedure?
Ans: The applicant goes on to file e-Form 1 to verify if the name is available to register. After the approval from the Ministry, the name stays reserved for that applicant for 90 days. If the applicant fails to incorporate the LLP within the given time period, they make that name available for other applicants.
