Article by Aryan Khanna.
The First
Step to Register Your Limited Liability Partnership
Limited Liability Partnership, LLP for short is a legal entity, which
is formed and registered under the Limited Liability Partnership Act, 2008
(hereinafter, the “Act”). It is a form of partnership.
An LLP has its liability limited to the
complete extent of its assets; however, the partners are only liable to the
extent of the financial contribution in the LLP.
The Act provides the nature of
the partnership, as well as elucidates the mutual rights and obligations of the
partners.
In recent times, several entrepreneurs have begun to
incorporate their new ventures as LLP’s, this is because of certain salient
features that attract potential individuals to incorporate their ventures in
this particular form.
These Salient Features of a Limited Liability Partnership are-
1. They have a perpetual
existence like a company. It can continue irrespective of change of the
partners. (Section 3(2) of the Act)
2.
Under an LLP, if the
partnership fails that creditors will not be able to go after the personal
assets of the partners.
3.
They have a separate
legal entity similar to companies.
4.
They can be
incorporated at a comparatively lower price in comparison to a company.
5.
There is no
requirement to meet a minimum capital contribution.
6. A minimum of two
partners are necessary for incorporation, but there is no particular for the
maximum number of partners.
7.
There are tax
benefits given to an LLP.
8.
Such a partnership
structure ensures that no partner is liable for the independent actions of the
other partners; thereby they are protected from joint liability that maybe
imposed owing to the misconduct or wrongful actions of any other partner.
A Limited Liability Partnership shall be registered as per the requirements
mentioned in Limited Liability Partnership Act. It requires approximately
fifteen days to complete the entire obtaining a digital signature certificate
and LLP registration. (Refer to Section 11-21 for the rules regarding
incorporation and registration).
Section 11-21 provides for the procedure and
requirements for the incorporation of a Limited Liability Partnership. While,
Sections 11-16 have been explained profoundly in the form of steps and
pre-requisites that need to be fulfilled, later in the article.
Selection of a name for an LLP must abide by the two
requirements mentioned under Section 15 of the Act-
·
firstly, it should
not be undesirable and
· secondly, it should
not be identical or resemble the name of any other firm, or a registered trade
mark, which is subject of an application for registration, of any other person
under the Trade Marks Act, 1999.
Under Section
17, the Central Government may order a change in the name of the LLP if it
violates the criteria set by Section 15 of the Act. Moreover, if the proposed
LLP refuses to comply with the direction, shall be penalized under Sub-section
2 of Section 17.
Section 18 permits another entity to apply to the
Registrar to order a change in name of another LLP, which has been incorporated
subsequently. However, such an application shall only be considered, if it is
made within 24 months from the date of registration of the subsequently
incorporated LLP under the similar name. Furthermore, Section 19 provides for
the voluntary change in the Registered Name of the LLP, through an application
to the Registrar and payment of necessary dues.
Section 20 provides for penalty in the case of
improper use of the term “Limited Liability Partnership or LLP”. Any firm shall
be punished under this section, if they are conducting their business, using
the term “Limited Liability Partnership” or “LLP” or any contraction or
intimation, without having duly incorporated their business as an LLP.
The Ministry of Corporate Affairs published a
notification in 2009 that provides all the requirements for the registration
and incorporation of the LLP. (For further reference, you can check this out).
An individual who
wishes to incorporate his venture must refer to these rules and fulfill the
requirements for the successful registration.
The Pre-Requisites for Setting up an LLP are as Follows-
(Refer to Notification by the Ministry of Corporate
Affairs):
1.
The designated
partners, at least two of them, must have a valid digital signature certificate
or obtain a new one.
2.
Two selected partners
must obtain the Director’s Identification Number (DIN).
3.
Documents of partners
that must be kept ready for submission are as follows:
4.
PAN Card/ ID Proof of
the Partners
5.
Address Proof of the
partners
6.
Residence Proof of
Partners
7.
Photograph
8.
Passport (in case of
Foreign Nationals/ NRIs)
9.
Documents of the
company that must be kept ready for submission are as follows:
10. Proof of Registered Office Address
11. Digital Signature Certificate
The applicant must utilise form FiLLiP (Form for incorporation of
Limited Liability Partnership) for the purposes of incorporation. The form’s
listed here. Such an applicant shall provide the required form to the Registrar,
who has the jurisdiction over the particular state where, the LLP is located.
Fees as per Annexure ‘A’ must be paid. Annexure A provides the amount of
fees that must be paid for the registration of the LLP. This differs according
the capital contribution of the LLP. It
ranges from Rs. 500 and goes up to Rs. 5000.
Having explained the basics of the LLP and prerequisites
for incorporation, the following steps indicates the steps of Registration and
associated tasks, that one needs to fulfill for successful incorporation.
Registration of LLP
In this article, we are going to talk about a lot of
forms. You can find the entire list of forms here.
The First
Step to Register Your Limited Liability Partnership
User Registration: One must register oneself on the
Website of the Ministry of Corporate Affairs, dedicated for LLP related
services and assistance. The tab for Registration can be found on the top
right-hand corner of the webpage.
This shall open a “Registration Form”. You can go to the Registration form directly via this link.
You must
fill all the mandatory fields and choose a username and password for future
usage. After this, you need to upload a “Digital Signature Certificate”.
You will receive an indication, once the registration is successful.
The next two steps are more akin to directions that
one can follow to procure certain prerequisites.
Second Step for LLP Registration
All the partners of the LLP must obtain a Designated
Partner Identification number (DPIN) or the Director’s Identification
Number (DIN). The same can be applied for through the Ministry’s
website, via the link shared above. An application must electronically made in Form-7
for obtaining the D-PIN number.
Third Step for LLP Registration
Designated Partner of the
proposed LLP, whose signatures need to be affixed on the e-forms, have to
procure a Class 2 or Class 3 Digital Signature Certificate (DSC) from an
authorised certifying agency. Details for the same can be found on the webpage
of the LLP Portal under heading of
“Certifying Authorities”.
Fourth Step for LLP Registration
Reservation of a Name: This
particular step can be accomplished through Form-1. This form can be procured
from the LLP portal after logging in using one’s user name and password. After
logging in, one must go to the E-forms link. Any designated partner of the LLP
has the authority to submit Form-1.
Once the form is opened, the
applicant must fill in the necessary details and indicate 6 choices for the
name of the proposed LLP. One needs to append the necessary digital signatures
and then only shall submit the e-form. Post this, an applicant must also pay
the necessary dues for the Reservation of the Name.
The
Ministry of Corporate Affairs Portal also provides a free tool to search for LLP names. This shall provide the names of similar names of existing LLP’s or
Companies, based on the search criteria.
One must fill the details of the proposed LLP's two appointed partners,
one of whom must be an Indian resident in the application for the Reservation
for Name. Only nominees appointed by the proposed LLP’s or corporate entities
can serve as designated partner of such corporate entity.
Finally, one can check the status of
his or her application by logging in on the portal.
Fifth Step: Incorporation of the LLP
Once the name has been reserved by the Registrar, the applicant must log
on to the LLP portal and complete Form-2 “Incorporation Document and
Statement”.
This shall be followed by the requirement to furnish the mentioned
registration fee according to the slabthat has been given in Annexure ‘A’
(Refer to Limited Liability Partnership Rules, Notification 2009). The
specified registration fee varies according to the total capital of the
contribution of partners in the proposed LLP.
Similar to previous forms, the designated partners of the proposed LLP,
who are named in the incorporation document and having procured a permanent
DPIN, must digitally sign the statement in the e-form. The same must also be
digitally signed by the Lawyer or Company Secretary, who has been engaged in
the incorporation of the LLP.
Upon submission of the necessary documents and forms, the Registrar
after satisfying himself with the compliance of all the requisites of the act,
shall register the LLP, within 14 days of completing and submitting Form-2 and
a Certificate of Incorporation shall be issued through Form-16
Finally, one can check the status of his or her application by logging
in on the portal.
Sixth Step: Final Step for Registering an LLP
Form 3 (Information related to the LLP
agreement and alterations, if any have been made therein) and Form-4
(Notice of Appointment of Partner/ Designate Partner, their consent [as giving
under Rule 8 of the LLP Incorporation Rules] and etc.) may be submitted along
with the mentioned fee simultaneously along with the submission of Form 2
or within thirty days, since the date of incorporation or within 30 days of any
subsequent alterations.
Limited Liability Partnerships are relatively recent means of
incorporation, that are being used across India to incorporate many upcoming
ventures like Start-ups, Law firms and etc. The various benefits associated
with this legal entity like tax Benefits, less personal liability, perpetual
succession and etc. make it an attractive option for many entrepreneurs.
That’s all. If you have any
questions, leave it down in the comments and I’ll get back to you.
However, if you’re thinking about starting a private company or a One Person Company, read this article to learn how those types of businesses are registered.
Aryan Khanna is a law (BA,LLB Honours) student from NALSAR University of Law. Connect with him on LinkedIn.
However, if you’re thinking about starting a private company or a One Person Company, read this article to learn how those types of businesses are registered.
Aryan Khanna is a law (BA,LLB Honours) student from NALSAR University of Law. Connect with him on LinkedIn.
Comments
Post a comment