Limited Liability Partnership (LLP) is a legal business structure. It is a partnership in which 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. Limited liability partnerships differ from ‘traditional’ business partnerships, and also from the limited company structure, and are regulated under Limited Liability Act, 2008. Professional firms such as solicitors and accountants often choose to set up as limited liability partnerships, but the structure can also be a beneficial option for other types of business.
CHARACTERISTICS OF LLP
- Separate legal entity: Like a company, LLP also has a separate legal entity. So the partners and the LLP in are distinct from each other.
- Perpetual Succession: Unlike a general partnership firm, a LLP can continue its existence even after the retirement, insanity, insolvency or even death of one or more partners. Further, it can enter into contracts and hold property in its name.
- No requirement of minimum capital: There is no minimum capital requirement in LLP. An LLP can be formed with the least possible capital. Moreover, the contribution of a partner can consist of tangible, movable or immovable or intangible property or other benefits to the LLP.
- Minimum number of partners: To start a limited liability partnership at least two members are required initially. However, there is no limit on the maximum number of partners.
- LLP Agreement: An agreement between all partners governs the rights and duties of all the partners. Also, the partners can devise the agreement as per their choice. If such an agreement is not made, then the Act governs the mutual rights and duties of all partners.
INCORPORATION OF LLP
LLP shall incorporate through Ministry of Corporate Affairs Portal (MCA) portal i.e. https://www.mca.gov.in/
Step: I To register a LLP, applicant need to apply for name of LLP through RUN on MCA portal. After Login on portal, user has to click on the “RUN” in MCA Service. An online form shall be open. Applicants have to fill the information online. (This form can’t be download). The fees of the Form is Rs. 1000/-
Step II: After approval of name, download the Form LLP_FiLLiP. Once the name is approved it shall be reserved for the period of 20 days from the date of approval.
Information requires to fill in Form LLP_FiLLiP:
- Proposed Address
- Business Activity and Main division of industrial activity
- NIC Code 2004
- Total no. of Designated Partners and Partners including Body corporate (if any).
- Amount of Contribution individually and jointly
- Details about Partners and Designated Partners (Name/Address/ fathers Name etc.)
- Proof of Office address (Conveyance deed/ Lease deed/ Rent Agreement etc. along with rent receipts);
- NOC from the owner of the property
- Subscriber Sheet including Consent in Form 9
- Utility Bill not older than 2 months
- Id and address proof of designated partners/ partners
- Detail of LLP(s) and/ or company(s) in which partner/ designated partner is a director/ partner
- Where the appointed partner is a body corporate, copy of resolution on the letterhead of such body corporate to become a partner in the proposed LLP and a copy of resolution/ authorization of such body corporate also on a letterhead mentioning the name and address of an individual nominated to act as a nominee/designated partner on its behalf.
Step III: File the Form after affixing the DSC of any one Designated Partner and professional (CA/CS/CWA/Advocate) and the fees of the form is based on the contribution made by the designated partners
Step IV: If the Form is approved the Registrar shall issue the Certificate of Incorporation (COI) and if not, applicant need to resubmit the form after made the changes suggested by the Registrar.
Step V: Form 3: After receiving the COI, LLP require to register its LLP Agreement in the Form 3 within 30 days of incorporation.
Form 11: Annual Return: It contains the details of all the partners, their contributions towards the LLP, etc. The company requires to file within 60 days from the end of financial year i.e. 30th May every year.
Form 8: Statement of Accounts and Solvency: It consists of information related to the statement of assets of the LLP and liabilities and statement of income and expenditure of the LLP. Statement of account and solvency shall be filed with the registrar within 30 days from the end of 6 months of the financial year to which the statement relates. The due date for LLP annual filing is 30th October every year.