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Limited Liability Partnership (LLP) Registration in India

Updated on:  

08 min read

Limited Liability Partnership (LLP) has become a preferred form of organization among entrepreneurs as it incorporates the benefits of both partnership firm and company into a single form of organisation.

The concept of the Limited Liability Partnership (LLP) was introduced in India in 2008. An LLP has the characteristics of both the partnership firm and company. The Limited liability Partnership Act, 2008 regulates the LLP in India. Minimum two partners are required to incorporate an LLP. However, there is no upper limit on the maximum number of partners of an LLP. 

Among the partners, there should be a minimum of two designated partners who shall be individuals, and at least one of them should be resident in India. The rights and duties of designated partners are governed by the LLP agreement. They are directly responsible for the compliance of all the provisions of the LLP Act, 2008 and provisions specified in the LLP agreement.

Features of LLP

  • It has a separate legal entity just like companies.
  • The liability of each partner is limited to the contribution made by the partner.
  • The cost of forming an LLP is low.
  • Less compliance and regulations.
  • No requirement of minimum capital contribution.

The minimum number of partners to incorporate an LLP is 2. There is no upper limit on the maximum number of partners of LLP. Among the partners, there should be a minimum of two designated partners who shall be individuals, and at least one of them should be resident in India.

The rights and duties of designated partners are governed by the LLP agreement. They are directly responsible for the compliance of all the provisions of the LLP Act 2008 and provisions specified in the LLP agreement.

If you want to start your business with a Limited Liability Partnership, then you must get it registered under the Limited liability Partnership Act, 2008.

Form namePurpose of the form
RUN – LLP (Reserve Unique Name-Limited Liability PartnershipForm for reserving a name for the LLP
FiLLiPForm for incorporation of LLP
Form 5Notice for change of name
Form 17Application and statement for the conversion of a firm into LLP
Form 18Application and Statement for conversion of a private company/unlisted public company into LLP

Advantages Of LLP

Separate legal entity

An LLP has a separate legal entity, just like companies. The LLP is distinct from its partners. An LLP can sue and be sued in its own name. The contracts are signed in the name of the LLP, which helps to gain the trust of various stakeholders and gives the customers and suppliers a sense of confidence in the business.

Limited liability of the partners

The partners of the LLP have limited liability. The liability of the partners is limited to the contributions made by them. This means that they are liable to pay only the amount of contributions made by them and are not personally liable for any loss in the business. If an LLP becomes insolvent at the time of winding up, only the LLP assets are liable for clearing its debts. The partners have no personal liabilities, and thus they are free to operate as credible businessmen.

Low cost and less compliance 

The cost of forming an LLP is low compared to the cost of incorporating a public or private limited company. The compliances to be followed by the LLP is also low. The LLP needs to file only two statements annually, i.e. Annual Return and a Statement of Accounts and Solvency.

No requirement of minimum capital contribution

The LLP can be formed without any minimum capital. There is no requirement of having a minimum paid-up capital before going for incorporation. It can be formed with any amount of capital contributed by the partners.

Disadvantages Of LLP

Penalty on non-compliance

The compliance that is to be followed by LLP is minimal. But, if these compliances are not completed on time, then the LLP will have to pay a heavy penalty. Even if the LLP does not have any activity in the year, it is required to file returns with the Ministry of Corporate Affairs (MCA) annually. If it fails to file the returns, then a heavy penalty will be imposed on the LLP.

Winding up and dissolution of LLP

A minimum of two partners is required to form an LLP. If the minimum number of partners is below two for six months, then the LLP will be dissolved. It may be dissolved if the LLP is unable to pay its debts. 

Difficulty to raise capital 

The LLP does not have the concept of equity or shareholders like a company. Angel investors and venture capitalists cannot invest in the LLP as shareholders. This is because the shareholders must be partners in the LLP and have to take up all the responsibilities of a partner. Thus, angel investors and venture capitalists prefer to invest in a company rather than an LLP making it difficult for the LLPs to raise capital.

LLP Registration Process

Step 1: Obtain Digital Signature Certificate (DSC)

Before initiating the process of registration, you must apply for the digital signature of the designated partners of the proposed LLP. This is because all the documents for LLP are filed online and are required to be digitally signed. So, the designated partner must obtain their digital signature certificates from government recognized certifying agencies.

 Here is a list of such certified agencies. The cost of obtaining DSC varies depending upon the certifying agency. Also, you should obtain class 3 category of DSC or you can click here & let a ClearTax expert procure DIN for you. If you go for Limited Liability Partnership company registration with ClearTax, up to 2 DINs are covered in the plan & there is no need to apply for DIN separately.

Step 2: Apply for Director Identification Number (DIN)

You have to apply for the DIN of all the designated partners or those intending to be designated partner 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.

Step 3: Reservation of Name

LLP-RUN (Limited Liability Partnership-Reserve Unique Name) is filed for the reservation of the name of the proposed LLP which shall be processed by the Central Registration Centre under Non-STP. But before quoting the name in the form, it is recommended that you use the free name search facility on MCA portal.

The system will provide the list of closely resembling names of existing companies/LLPs based on the search criteria filled up. This will help you in choosing names not similar to already existing names. The registrar will approve the name only if the name is not undesirable in the opinion of the Central Government and does not resemble any existing partnership firm or an LLP or a body corporate or a trademark.

The form RUN-LLP has to be accompanied by fees as per Annexure ‘A’ which may be either approved/rejected by the registrar. A re-submission of the form shall be allowed to be made within 15 days for rectifying the defects. There is a provision to provide for 2 proposed names of the LLP.

Step 4: Incorporation of LLP

  • The form used for incorporation is FiLLiP(Form for incorporation of Limited Liability Partnership) 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

Step 5: File Limited Liability Partnership (LLP) 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 30 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.

Documents Required for LLP Registration

A. Documents of Partners

  • PAN Card/ ID Proof of Partners – All the partners are required to provide their PAN at the time of registering LLP. PAN card acts as a primary ID proof.
  • Address Proof of Partners – Partner can submit any one document out of Voter’s ID, Passport, Driver’s license or Aadhar Card. Name and other details as per address proof and PAN card should be exactly the same. If the spelling of own name or father’s name or date of birth is different in address proof and PAN card, it should be corrected before submitting to RoC.
  • Residence Proof of Partners – Latest bank statement, telephone bill, mobile bill, electricity bill or gas bill should be submitted as residence proof. Such bill or statement shouldn’t be more than 2-3 months old and must contain the name of partner as mentioned in PAN card.
  • Photograph – Partners should also provide their passport size photograph, preferably on white background.
  • Passport (in case of Foreign Nationals/ NRIs) – For becoming a partner in Indian LLP, foreign nationals and NRIs have to submit their passport compulsorily. Passport has to be notarized or apostilled by the relevant authorities in the country of such foreign nationals and NRI, else Indian Embassy situated in that country can also sign the documents.

Foreign nationals or NRIs have to submit proof of address also which will be a driving license, bank statement, residence card or any government-issued identity proof containing the address.

If the documents are in other than the English language, a notarized or apostilled translation copy will be also be attached.

B. Documents of LLP

  • Proof of Registered Office Address: Proof of registered office has to be submitted during registration or within 30 days of its incorporation.
    • If the registered office is taken on rent, a rent agreement and a no-objection certificate from the landlord has to be submitted. No objection certificate will be the consent of the landlord to allow the LLP to use the place as a ‘registered office’.
    • Besides, any one document out of utility bills like gas, electricity, or telephone bill must be submitted. The bill should contain the complete address of the premise and owner’s name and the document shouldn’t be older than 2 months.
  • Digital Signature Certificate: One of the designated partners needs to opt for a digital signature certificate also since all documents and applications will be digitally signed by the authorized signatory

Checklist for LLP Registration

  • Minimum of two partners.
  • DSC for all designated partners.
  • DPIN for all designated partners.
  • Name of the LLP, which is not similar to any existing LLP or trademark.
  • Capital contribution by the partners of the LLP.
  • LLP Agreement between the partners.
  • Proof of registered office of the LLP.

Cost Involved for LLP Registration

Below is the government fees for filing forms:

StepCost
Step 1 – DSCAround Rs. 1500-2000 for 2 partners(varies depending on the agency)
Step 2 – DINRs. 1000 for 2 partners
Step 3 – Name ReservationRs. 200
Step 4 – IncorporationDepends on capital contribution. Contribution up to Rs. 1 lakhs – Rs. 500, Contribution between Rs. 1 and 5 lakhs – Rs. 2000
Step 5 – LLP AgreementDepends on capital contribution. Contribution up to Rs 1 lakhs – Rs 50 for filing Form 3 and stamp duty based on the state where LLP is formed

Time Involved for LLP Registration

LLP formation starting from obtaining DSC to Filing Form 3 takes approximately 10 days, subject to departmental approval and revert from the respective department.

Let our experts manage your taxes and business compliances, while you do what you do best! For more information on documents required for partnership registration click here.

Related Articles:

Documents Required for LLP Registration in India

Annual filings for Limited Liability Partnership (LLP)

How to Convert an LLP into a Private Limited Company in India?

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