A limited liability partnership (LLP) is a partnership in which some or all partners have limited liabilities. It therefore can exhibit elements of partnerships and corporations. In an LLP, each partner is not responsible or liable for another partner’s misconduct or negligence.
There is no upper limit on the maximum number of partners of LLP. The minimum number of partners to incorporate an LLP is 2. Among the partners, there should be minimum of two designated partners who shall be individuals, and at least one of them should be residents 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 LLP Act 2008 and provisions specified in LLP agreement.
LLP registration in India is governed under The LLP Act,2008. It is regulated by MCA (Ministry of corporate affairs). LLP is registered with the ROC (Registrar of Companies).
Documents required for LLP Registration in India
- ID Proof of Partners: All the partners are required to supply their PAN at the time of registering LLP. PAN card acts as a primary ID proof.
- Address Proof of Partners: Partner can submit anyone 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 same. If 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 statement, phone bill, mobile bill, electricity bill or gas bill should be submitted as a residence proof. Such bill or statement shouldn’t be quite 2 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 need to submit their passport compulsorily. Passport has got to be notarised or apostilled by the relevant authorities within the country of such foreign nationals and NRI, else Indian Embassy situated therein country also can sign the documents.
– Foreign Nationals or NRIs need to submit a symbol of address also which can be a driver’s license, statement, residence card or any government issued identity proof containing the address.
– If the documents are in aside from English language, a notarized or apostilled translation copy are going to be also being attached.
- Proof of Registered Office Address: Proof of registered office has got to be submitted during registration, or within 30 days of its incorporation.
If the registered office is taken on rent, rent agreement and a no objection certificate from the owner has got to be submitted. No objection certificate is going to be the consent of the owner to permit the LLP to use the place as ‘registered office’.
Besides, anyone document out of utility bills like gas, electricity, or phone bill must be submitted. The bill should contain complete address of the premise and owner’s name and therefore the document shouldn’t be older than 2 months.
- Digital Signature Certificate: one among the designated partners must choose a digital signature certificate also since all documents and applications are going to be digitally signed by the authorised signatory.
Advantages of LLP Registration
- Separate legal entity: An LLP may be a separate legal entity. this suggests that its assets in its own name and may sue and be sued. Furthermore, one partner isn’t responsible or responsible for another partner’s misconduct or negligence.
- No owner/manager distinction: An LLP has partners, who own and manage the business. this is often different from a personal Ltd., whose directors could also be different from shareholders. For this reason, VCs don’t invest within the LLP structure.
- Flexible agreement: The partners are liberal to draft the agreement as they please, with reference to their rights and duties.
- Limited liability: The liability of the partners is restricted to the extent of his/her contribution to the LLP. Unless fraud has been detected, the private assets of the partner are shielded from any liability of the LLP.
- Fewer compliance requirements: An LLP is far easier and cheaper to run than a personal Ltd. as there are just three compliances per annum. On the opposite hand, a personal Ltd. features a lot of compliances to fulfil and conduct an audit of its books.
- Easy to wind-up: Not only is it easy to start out, but it’s also easier to wind-up an LLP, as compared to a personal Ltd. While it still takes two to 3 months to finish this process, it can take over a year to shut a personal Ltd.
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