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How to Register a Limited Liability Partnership (LLP) in India

Article by Aryan Khanna.

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. 

A partnership when forming a startup

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). 

Limited Liability Partnership Rules, 2009 pdf

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.

LLP form page to download all forms

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.

LLP Form Page

This shall open a “Registration Form”. You can go to the Registration form directly via this link.

LLP Registration form available at MCA website

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

Six steps to register your 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.

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