Limited Liability Partnership

Limited Limited Partnership

An Overvew of Limited Limited Company in India.

Limited Limited Partnership Company: An Overview


Limited Liability Partnership (LLP) is a new corporate structure that combines the flexibility of a partnership and the advantages of limited liability of a company at a low compliance cost. The world wide recognized form of business organization has been introduced in India by way of Limited Liability Partnership Act, 2008.

Advantage of Limited Liability Partnership are numerated Below:


Limited Liability: First and foremost benefit of trading/doing business via Limited Liability Partnership is the limited liability conferred upon the partners. As a sole trader or partnership business, personal assets of the proprietor or partners can be at risk in the event of a failure of the business, but this is not the case for an Limited Liability Partnership Company. Unfortunate events like business failures are not always under an entrepreneur's control; hence it is pivotal to secure the personal assets of the businessman in the event of crises Unlike proprietorship and partnership, if an Limited Liability Partnership becomes insolvent and is wound up, only the assets of the Limited Liability Partnership are used to clear its debts. The partners of Limited Liability Partnership have no personal liabilities and are not made bankrupt and are free to operate as credible businessmen.

Cost effective: Limited Liability Partnership in many ways reduce the overall cost of operations, for e.g. cost of formation is very low, no requirement of minimum capital contribution, less compliance level, fewer requirement of maintenance of statutory records.

No Audit Requirement: In case of Limited Liability Partnership (LLP) No Audit is required unless capital exceeds Rs. 25 Lacs or Turnover exceeds 60 lacs.

Legal Status / Recognition : An Limited Liability Partnership (LLP) is a legal entity, a juristic person established under the Act. It has its existence separate from its partners. Corporate entity status enables LLP to be taken more seriously than a proprietorship/partnership status. Operating as a corporate entity / LLP often gives suppliers and customers a sense of confidence in a business. Larger organizations in particular will prefer in dealing with corporate entities than proprietorship / partnership organizations. Easy to attract quality workforce and achieve strategic motivation of employees by using flexible and wide range of management designations

Other Advantages:

  • No exposure to personal assets of the partners except in case of fraud.

  • Easy to dissolve or wind-up.

  • Professionals can form Multi-disciplinary Professional Limited Liability Partnership (LLP), which was not allowed earlier.

  • No restrictions as to maximum number of partners.

  • Body corporate can be a partner of an Limited Liability Partnership (LLP).

  • Renowned and accepted form of business worldwide in comparison to Company.

Steps involved in Registration of Limited Liability Partnership(LLP)


Step No.

Steps

Timeframe (Working days)

Processing

1

Digital Signature Certificate(Getting DSC for all of the Directors for digital authentication of the Incorporation documents)

2

Documents required Self attested:

  • Address proof

  • Identity proof

2

Obtaining DIN( Director Identification Number)Approved DIN is a pre-requisite for incorporation process

2

Apply for DIN and get a provisional DIN

  • Certification/Attestation of Director’s personal details

  • Sending the same to the DIN Cell and getting it approve

3

Preparation of Main Object & Name Application Search

3

  • The Promoters have to provide at least 6(Six) names in the order of priority.

  • To make an online search of availability of names as desired by the Promoters.

4

Application for Name Availability

5

Filing of INC 1 with the concerned ROC.

5

Incorporation Process

6

  • After ROC's approval for name of the Company, filing all the Incorporation documents with the ROC.

  • Online uploading of e-Forms.

  • Payment of Registration fees.

  • Receiving Incorporation Certificate.

6

Application for Commencement of Business CertificateProviding Proof of Subscription Money/Capital paid by Subscriber/Shareholder to Company Online uploading of e-Form Receiving Commencement Certificate form ROC

Upon bringing Capital into Company(Anytime within 6 months of incorporation)

Limited Liability Partnership: FAQ


Does a Limited Liability Partnership require a registered office?

Yes, a registered office is required for a Limited Liability Partnership.

Whether Limited Liability Partnership Agreement would be mandatory for all Limited Liability Partnership's?

An Limited Liability Partnership Agreement is not mandatory. However, in order to ensure better understanding among the partners and governance, it is always advisable to enter into a well drafted legal agreement.

What are the restrictions in respect of minimum and maximum number of partners in an LLP?

A minimum of two partners will be required for formation of an LLP. There will not be any limit to the maximum number of partners

What is the manner in which a partner of an LLP can bring his contribution? How will it be recorded/disclosed in the accounts?

Partner's contribution may consist of both tangible and/or intangible property and any other benefit to the LLP. The monetary value of contribution of each partner shall be accounted for and disclosed in the accounts of the limited liability partnership in the manner as may be prescribed in the rules.

Whether any Annual Return would be required to be filed by an LLP?

Every LLP would be required to file with ROC, every year, an Annual Return, contents of which would be prescribed under rules.

Whether an entity which has objectives like "charitable or other not for profit objectives" would be able to set up under LLP Act?

No. One of the essential requirements for setting LLP is 'carrying on a lawful business with a view to profit'.

Can an existing partnership firm be converted to LLP?

Yes, an existing partnership firm can be converted into LLP.

Can an existing company be converted to LLP?

Yes, any existing private company or existing unlisted public company can be converted into LLP.