February 03, 2024 at 07:30 AM
As the name suggests, LLP gives the partners, running a business limited liability, in simple terms, it means the partners involved in a business have limited liability, no individual partner is liable for the liability and misconduct created by another partner. The Limited Liability Partnership Act, of 2008 governs the rights and duties of the partners, and these partners and responsible for compliance with the provisions of this act.
It is an alternate form of business, which is different from sole proprietorship, partnership and company. LLP, gives limited liability to the patterns in a business and also flexibility in the independent decision-making to the partners who are operating a company besides that, it also has a very low compliance cost.
The provisions of Indian Partnership Act, does not apply to LLPs it is generally governed by the contractual agreement between the partners, and by compliance of the Limited Liability Parternship Act.
Companies having Limited Liability Partnership are generally suffixed with LLP after the name of the company.
Distinguishing LLP from a partnership from other forms of business, in Limited Liability Partnership there are more administrative duties that that of partnership business structure . LLP is generally used is small and medium enterprises and protects individuals and their personal assets, it acts like a shield , any loss that has been caused the business as a whole is liable, the personal assets of the partners are protected completely against any liability arising from the business as a whole, for which the entire business is liable. It is generally stated that LLP solves the problems faced in Partnership Business, where the Partners have unlimited liability, because in Partnership whenever there is default in the business, or unable to generate profit the creditors, try to confiscate from the personal assets of the partners but in Limited Liability Partnership, the shareholders cannot confiscate the personal assets of the partners.
An LLP as a whole provides many features like:-
Registration of Limited Liability Partnership requires certain documents as per section 11 of the Limited Liability Partnership Act, 2008. These documents are divided into two categories-
a) Document of Partners, which include Aadhar Card, Pan Card, Photograph and Proof of Residence, Address and Passport if the partners are foreign nationals.
b) Documents of LLP, which include are Proof of Registered Office Address and Digital Signature Certificate(DSC).
Following are the steps for registration:-
a) Obtaining Digital Signature Certificate(DSC):-
Before the beginning of the process, a digital certificate with signature of all the persons who want to be a partner to the business needs to be submitted. This is because all the details of the application are to be submitted digitally for the registration.
b) Apply for Director Identification Number(DIN):-
After the submission of the DSC, the Limited Liability Partnership must apply for DIN, this would contain all the identity details of those who want to be partner in the LLP. The DIN is a unique number to all the patterns who are involved in running of the business . It acts like a special ID for those who are going to be in-charge of running a business, and also helps to keep a track of persons running a business, and also makes sure that the partners are organized.
c) Approval of LLP Name:-
After applying for DIN, the applicant must reserve a unique name for the identity of the business which has not been registered, in the Ministry of Corporate Affaairs(MCA) website. After the applicant reserves a unique name, the name of the business would be registered in MCA.
d) Incorporation of LLP:-
After getting the name approved in the MCA, the Limited Liability Partnership incorporation form needs to be filled by the partners through the MCA portal. While filling in this form, the required documents must be submitted and the form has to be filled with the fee along with stamp duty as mentioned in the portal, the LLP fee depends upon the contribution that is made by each partner.
e) Incorporation of Application:-
After successful registration of LLP, the Registrar of Companies(ROC) issues an incporation certificate , the certificate contains the LLP Incorporation Number (LLPIN), the Registrar has jurisdiction over the place where the office of the company has been registered.
f) LLP Agreement:-
After following all the above steps, an LLP Agreement needs to be submitted on a stamp paper. LLP Agreement contains all the rights, duties as well as the liability shares, contribution as well as relationship of the partners to the business. It also contains the terms and conditions, and the way the business would carry on upon change in the partners, or their shareholdings. The LLP Agreement needs to be submitted with a fee and the fee structure varies depending upon the contribution of the partners in the business.
The passing of the LLP Act, 2008 by the Parliament has made remarkable changes in the Company Laws of India
A Limited Liability Partnership is a business organization that allows an individual partner to be protected form the join liability of all the other partners, they are only liable till the extent their share that they have contributed in the business and hence it is limited in nature, and the personal assets of the partners are also safe in their hands.
This is very different from other forms of business, the business here is managed directly by the partners who are registered themselves in the LLP, unlike to that in a non-LLP company, where the shareholder elect board of director and executives to run their businesses on a daily basis, with their sets of rights and regulations. But they are treated like a partnership firm for the purpose of taxation.
1) What is an LLP, how is it different from Private Limited company?
An LLP (Limited Liability Partnership) is a legal business structure that combines the flexibility of a partnership with the limited liability features of a company. Unlike a private limited company, an LLP doesn’t have shareholders but has partners. It provides limited liability to its partners, protecting their personal assets. It differs from a traditional partnership where each partner has unlimited personal liability.
2) Who can be partners, is there any limit on the partners?
Any individual or corporate entity can be a partner in an LLP. There is a minimum requirement of two partners, and there is no maximum limit on the number of partners.
3) Process of registering an LLP in India?
The process involves obtaining Digital Signature Certificates (DSC), Director Identification Numbers (DIN), approval of the LLP name, filing the incorporation documents, and drafting and filing the LLP agreement. The Registrar of Companies oversees the registration process.
4) Do all directors need to obtain a Director Identification Number(DIN)?
Yes, all designated partners in an LLP need to obtain a Director Identification Number (DIN) before or during the LLP registration process.
5) Documents required for LLP Registeration?
Documents include address proof, identity proof, and PAN card of partners. The LLP agreement outlines the roles, responsibilities, and profit-sharing arrangements among partners.
6) Can LLP be registered online?
Yes, the registration of a Limited Liability Partnership (LLP) in India can be done online through the Ministry of Corporate Affairs (MCA) portal. The online registration process provides a convenient and efficient way for individuals to establish an LLP.
7) Where can LLP be registered in India?
In India, the registration of LLP (Limited Liability Partnership) is managed by the Ministry of Corporate Affairs (MCA), Government of India. The process involves various steps and compliance requirements, and it is overseen by the Registrar of Companies (RoC).
8) Time taken to register LLP?
The LLP registration process typically takes 15-20 days, but it can vary based on document verification and government processing times.