|According to MCA Circular No. 13/2an13, dated 29/07/2013, only an individual or a body corporate may be a partner in a Limited Liability Partnership under Section 5 of the LLP Act, 2008. For the purposes of the LLP Act, 2008, a HUF cannot be considered a body corporate. As a result, a HUF or its Karta cannot join an LLP as a designated partner.
Prerequisites for Incorporating a LLP
A minimum of two partners is required (Individual or body corporate).
- There should be at least two designated partners who are individuals, with at least one of them residing in India.
- Certificate of digital signature
- LLP Agreement
- LLP Name
- Registered address
LLP Incorporation Process
The Limited Liability Partnership (Second Amendment) Rules, 2018, have made significant changes to the LLP incorporation rules. The Ministry of Corporate Affairs (MCA) announced a new LLP-incorporation procedure on September 18, 2018, in a Notification that went into effect on October 2, 2018.
The introduction of specified LLP-RUN services (similar to RUN services for Company Incorporation) for Reservation of Name for the proposed LLP is one of the major highlights of the amended LLP incorporation process. MCA also introduced Form FiLLiP, or Form for LLP Incorporation, in addition to LLP-RUN. Form FiLLiP is similar to the Company Incorporation form SPiCe.
Through FiLLiP, only two DPIN/DIN can be assigned. If there are more than two DPs, the respective partners will be required to obtain a DPIN/DIN after incorporation by filing DIR-3. The LLP must then continue to add Designated Partners or change Partner designations as needed. Get in touch with the experts at Zolvit to know more!
LLP Registration Process: Step by Step Guide
Step 1 – DSC is required to sign the LLP registration e-application. For DSC issuance, a photo, ID, and proof of address are required along with the DSC form. T
Step 2 – The approval of the LLP’s name is required before the application for LLP registration can be submitted. The name of the LLP should be unique and should not be confusingly similar to any other company, LLP, or trademark that is currently in use or has been applied for. Name approval can be applied in conjunction with an LLP registration application using Form LLP FiLLiP (eForm-2).
Step 3 – After submitting DSC, Name approval and LLP FiLLiP (eForm-2) incorporation documents to MCA for LLP registration, the Registrar issues the certificate of incorporation once he/she is satisfied. If Partners have already an approved DPIN, it can be used; if Partners do not yet have an approved DPIN, it will be approved concurrently with Registration.
Step 4 – Within 30 days of LLP incorporation, the partners of the LLP must enter into an LLP Agreement and file it with the ROC. For each day that the LLP Agreement is not submitted, a penalty of ₹ 100 is imposed.
Step 5 – PAN & TAN is required for the smooth operation of the business.
Step 6 – In order to conduct business, an LLP must have a current account in its business name.
Benefits of an LLP
- The LLP’s liability is limited to the amount of money contributed by the partners to the LLP.
- A limited liability partnership (LLP) is a separate legal entity and a juristic person from its partners, and both can sue and be sued.
- LLPs continue to exist even after the death of one of their partners. Regulatory compliance is much less in the case of LLPs than in the case of corporations.
- LLP has the legal right to own, enjoy, and transfer real estate. The LLP can exercise its rights in its own name.
- There is no requirement for an audit if the turnover is less than 40 lakhs and the capital contribution is less than 25 lakhs.
- An LLP’s ownership can be easily transferred to another person. The transferee, on the other hand, should be made a Designated Partner of the LLP.
- Partners and Limited Liability Partnerships (LLPs) can lend money to each other. In the case of an LLP, there is no dividend tax.
How to Register an LLP Company in India: The Bottom Line
Now that you know all about setting up an LLP in India, you can get started forming a private firm with ease! To get started, you will first need to find partners. Then you will have to find a location for your law firm. Next, you will have to choose a name for your law firm, but you can complete this step as well as the incorporation process with the help of Zolvit experts who are professional LLP incorporators.