February 08, 2024 at 11:47 AM
LLP meaning Limited Liability Partnership, 2008, is a business structure chosen by business owners when they want to keep their business as a separate legal entity, have limited liability to extent of their contribution. This form of business is governed by the Limited Liability Partnership Act, 2008. In order to proceed with the same, there are certain requirements of documents for LLP registration.
In this blog we would be looking at the key requirement from the perspective from the perspective of business owners and the key requirements and documents required for the registration process, in this we would be discussing in detail, and the essential things to do and how essential documents are to be submitted while registering themselves as an LLP.
There are several requirements for LLP registration which needs to be fulfilled in order to successfully proceed ahead with the process. Few of such are as follows-
First and foremost, the most basic and essential step is that, having a business idea in mind with clear vision of the product/services. What would the product/service do, how it would work. Does it need a registration as a business, how many people involved in the management, partnership and profit- sharing structure in the business.
Basic and necessary compliance of LLP is that there is need of two partners, having partners in a business can be beneficial in many ways like- having multiple areas of expertise, having some better decision making for the business entity, as a whole.
The above steps discussed about having the mindset or the necessities to even take a step for registration, and this is the first step towards registration is that to apply for DSC ( Digital Signature Certificate) , this can be issued by the authorities, like MCA and the DSC need to be submitted with signatures of all the partners, who wants to register themselves as an LLP.
Following the application made for Digtial Singature Ceritificate, a DIN needs to be applied for each of the designated partners is a business, this is unique number to identify the point of contacts or the persons having authority, running, managing and owning the LLP.
Following the incorporation of the LLP, name for the LLP needs to be reserved. The name that , one wants to make the identity of their company, the name needs to be submitted digital in the form that is applicable. While making recommendations for the name there are certain guidelines that need to be taken care of, using of the name “Industries” in their LLP name, their minimum paid-up capital need to be atleast 1 crore.The name that is up for reservation of the LLP, will go through a basic examination that weather or not it is used by some other LLP or not.Hence, choosing a proper name and an identity to it is very essential. Also, the MCA has tools that check that if a name is used or not by anyother LLP.
After reserving a name, that is eligible , the next step involves incorporating the LLP, digitally, done with the RoC(Registrar of Companies). The member must use the MCA Portal to file an LLP Integrated Incorporation form following the name reservation. The information and documents needed for this FiLLiP (Form for Incorporation of LLP) include the approved or proposed name of the LLP, proof of address for the office registered under the LLP, the activity the LLP will carry out, the DPINs of the designated partners, a subscriber’s sheet with consent, the total contribution by the partners of the LLP with their monetary value, and more. The incorporation document of an LLP is discussed in Section 11 of the LLP Act. The reservation needs to be done in Form 1 of the MCA website.
The document for incorporation generally known as the Form 2 in the MCA website. This step is necessary because the government , need to recognise the LLP as properly incorporated formal business. The documents needs to be signed by the designated partners, in the presence of a witness, these witnesses are generally the CA( Chartered Accountant), CS(Company Secretary) or Lawyers, who help in the incorporation of the company. Incorporating the application is generally done after the verification of Form 1, done by the MCA website.
When this is done incorporation , a certificate is granted by the RoC( Registrar of Companies),with registered office and the names of the partners, the LLP would be considered to be under his jurisdiction.
One of the major requirements for LLP registration is the LLP Agreement which requires careful and diligent drafting. Following all the above steps, an LLP Agreement needs to be submitted digitally which contains all the rights, duties, functions and profit- sharing between the partners involved in the business. The LLP Agreement needs to be submitted to the Registrar of Companies(RoC)
While drafting an LLP Agreement, the following pointers need to be kept in mind:
– Duration of the LLP
– Contributions by partners
– Rights and Duties of each partner
– Voting Rights of each partner
– Profit-sharing structure
-Retirement/Death of any partner
– Salary and Remuneration of partners
– Terms and Conditions of the Agreement.
– Competitive Clause
– Vesting Clause
– Interest on capital or loan taken by any partner.
– Liability of LLP, by the act of each partner.
– Changes/Amendments in the LLP Agreement.
Note: These clauses needs to be drafted in the supervision of that of a lawyer, and these need to be drafted carefully to avoid future disputes among the partners in an LLP, and the terms need to be made clear to avoid future chances of litigation.
Following the above steps and the list of requirements for LLP registration, an LLP is good to go there is not other requirement other than the ones mentioned in the Limited Liability Partnership Act, 2008. An LLP Registration generally takes 15- 20 days but it may take more depending upon the application, like if there is anything that is not approved in the steps like name, incorporation documents, certain terms then it may take more than that of 15-20 days else, after these steps and having the key requirements an LLP, is ready to make profit or the main motive the purpose it was incorporated to do.
Key Requirement of LLP Registeration are- having business idea, finding a few partners to the business, obtaining Digital Signature Certificate, Reserving Name, Incorporation of LLP, Incorporation of Application, LLP Agreement.
Generally it takes 15- 20 days, but can very depending upon the complexity of the application.
In LLP, different categories of partners have different roles and responsibilities. The Designated Partner have duty to legal compliance like Obtaiinng DSC, and filling the necessary documents with RoC( Registrar of Companies) , in compliance with Limited Liability Partnership Act, 2008. Normal parters contribute to the business as per their roles but they do not have to adhere to specific legal compliance of duties.
The MCA( Ministry of Coporate Affairs) issues important documents for LLP Regsiteration. All these documents need to be filled digitally.
Drafting of an LLP Agreement properly is a crucial step in the registration of LLP, the partners have to adhere to its terms and conditions. It requires proper attention to detail for the clauses and they need to drafted properly in order to avoid any future issues in the business.
The Registrar of Companies(RoC) is the officer on charge of the Registeration Process. The certificate of incorporation of LLP is issued him.