Limited Liability Partnership Registration in India

Introduction

A new form of business originated in 2009 in India after the adoption of this structure by other countries like US, UK, Singapore, Australia etc., which contains elements of both partnerships and corporations. LLP has become one of the popular media to do business in India. Since its origination, LLP concept got more recognition in Small and medium enterprises who looks for less compliance burden and various tax exemptions. Gradually owing to emerging international competition this structure is getting recognition in large enterprises as well.

What is LLP?

LLP is a body corporate and legal entity separate from its partners governed under Limited Liability Partnership Act, 2008 effective from 1st April 2008. Every Limited Liability Partnership shall use "LLP" as the last word of its name. LLP is a separate entity and it can own properties in its own name. Every LLP shall have at least 2 Individual designated partners and at least one of them should be resident in India. The scope of work and rights and duties of partners is governed by an agreement executed among them that can be altered time to time.

Need for LLP Registration?

A various committee like Naresh Chandra Committee on Private Companies and Partnerships 2003, Irani Committee for new company law 2005 analyzed the need for the professionals who are engaged in international transactions but exposed to unlimited liability thereby restricting the business from operating business on an international scale. Restriction in a number of partners to twenty also hinders the growth of professional firms to the large entities operating on an international scale.

This calls for the need of LLP Registration which would provide the flexibility of organizing the internal management on the basis of mutually formed agreement like in Partnership Firm. On the other side in terms of liability Limited Liability Partnership is itself liable for debts borrowed in running the business, rather than the individual members of the LLP. Also, LLP Partners are not liable for the negligence of other partners.

This hybrid form of the structure will facilitate entrepreneurs, service providers and professionals to organize and operate in an innovative and efficient manner for effectively competing in the global market.

Procedure for LLP Registration

1. Obtain Designated Partners Identification Number (DPIN) by the filing of form DIR 3.

2. Obtain Digital Signature Certificate of all proposed LLP Partners/Designated Partners.

3. Reservation of name for LLP by the filing of FORM 1 on payment of fees.

4. Once the name of LLP is reserved, proceed for Incorporation of LLP by filing FORM 2within 90 days based on a capital contribution by LLP Partners/Designated Partners in LLP.

5. On submission of complete documents, the Registrar maximum within 14 days of the filing of incorporation documents will issue a certificate of incorporation under his seal.

6.  Within 30 days of incorporation of LLP, since it is not mandatory to file at the time of registration, file LLP agreement executed between Partners/Designated Partners and LLP in FORM 3.