Author: Abhay Saxena, 2nd Year, BBA LL.B, New Law College, Bharati Vidyapeeth Deemed to be University, Pune.
In today’s era of start-ups, the businessman and entrepreneurs have resorted to LLP as a form of business organisation. An LLP or Limited Liability Partnership is a corporate law vehicle which aims to attain the benefits of two forms of business organisation i.e. Partnership and Company. This has been achieved since the members of an LLP have granted the flexibility of internal managerial structure as that of Partnership (as a mutual agreement) and the limited liability of every member of the LLP as in case of a company. In India, the LLP form is governed by the Limited Liability Partnership Act, 2008.
Now let’s move towards the features and the registration process of an LLP.
Features of an LLP:
The features of an LLP are as follows:
- Easy Formation: The LLP can be formed very easily. Only a minimum amount of Rs 500 is required for the incorporation of an LLP and therefore the process of formation is additionally not time-consuming.
- Liability: Section 26 of the LLP Act, 2008 talks about the limited liability of every partner in an LLP. It states that every partner becomes an agent of LLP but not of the other partners. Thus, a partner will not personally liable for any obligation arising in contract, torts, or otherwise, solely by reason of being a partner of the LLP and he/she shall also not be personally liable for the wrongful act or commission of any other partner of an LLP.
- Perpetual Succession: Death, Insanity, Insolvency, or retirement of any of the partners doesn’t affect the lifetime of an LLP. The LLP can only be dissolved in accordance with the LLP Act, 2008.
- Management: All the choices and various management activities are performed by the Board of directors of the LLP. Shareholders have little power as compared to the Board of Directors.
- Transferability of Ownership: There’s no restriction on the joining and leaving of an LLP. It’s easy to admit as a partner or to simply transfer the ownership of others.
Documents required for registering an LLP:
Here are the documents required for registering as LLP:
A. Documents of the Partners
- PAN Card/ID proof of the partners: All the partners are required to submit their PAN Card at the time of the registration of an LLP. A PAN Card is thought to be a primary ID Proof.
- Address proof of all partners: All the partners are required to submit a proof of address whether it’s Voter ID, Passport, Aadhaar, or driver’s licence. The address on the address proof must be identical as on the PAN Card.
- Residence proof of partners: All the partners are required to submit a Proof of residence whether it’s an invoice, financial statement, mobile bill, etc. Such a bill should not be older than 2-3 months and must contain the name of the partner as on the PAN Card.
- Photograph: All the partners should provide for the passport size photograph and it should be preferably in white background.
- Passport:The passport may additionally be required necessarily because it should be presented by those partners who are either foreign nationals or NRIs.
B. Documents of the LLP
- Proof of Registered Office: The proof of registered office needs to be submitted within 30 days of registration or incorporation. If the property is taken on rent then the rent agreement and a no-objection certificate signed by the owner need to be submitted. Besides this, any document out of utility bills like electricity, gas, or bill has got to be submitted. The bill must contain the complete address of the premise similarly because of the owner’s name.
- Digital signed certificate: One of the designated partners must go for a digital signature certificate since all the documents are digitally signed by the authorized signatory.
Process of registration of LLP:
The steps which are involved for the registration of LLP are as follows:
Step 1: Obtain DSC
Before the starting of the registration process, the partners must choose a digitally signed certificate (DSC) as all the documents are signed digitally. They’re to be obtained from certified government agencies. The value may differ from agency to agency.
Step 2: Director positive identification (DIN)
After you’ve obtained the DSC, now you would like to use the DIN for all the designated partners of the proposed LLP. The application for allotment of DIN must be done through a form called DIR-3. For this one needs to connect the Aadhaar Card and PAN Card together with the form. The form is signed by the corporate Secretary or the decision-maker of the present company and thus the applicant is going to be appointed as a director.
Step 3: Reservation of Name
After the DIN is received, the method of reservation of names starts. LLP-RUN (Limited Liability Partnership-Reserve Unique Name) is filed for the reservation of name for the proposed LLP and is processed by the Central Registration Centre under Non-STP.
The form of RUN-LLP should be filled and is in the midst of fees as per Annexure ‘A’ which can either be accepted or rejected by the registrar.
Step 4: Incorporation of LLP
After the name has been reserved for the proposed LLP, the step of incorporation should be performed. For this:
(a) The form used for incorporation, called “FiLLiP” needs to be filed with the registrar who has jurisdiction over the state within which the registered office of the LLP is situated.
(b) Fees to be paid as per Annexure ‘A’
(c) The application of allotment is proscribed to 2 individuals at a time.
(d) The application for reservation may be filed through FiLLiP and if the name is approved then it shall be reserved for the proposed LLP.
Step 5: Filing of the LLP Agreement
This is the last step within the process of registration of an LLP. An LLP agreement governs the mutual rights and duties amongst the partners and also between the LLP and Partners.
(a) The LLP agreement must be filed in line with form 3 online on the MCA Portal.
(b) The form- 3 has got to be filed within 30 days from the incorporation of the LLP.
(c) The agreement needs to be printed on a stamp paper whose value is different in every state.
Time and Costs involved within the registration process:
An LLP formation ranging from the primary step i.e. obtaining a DSC to filling form -3 takes approximately 15 days subject to availability of all the documents.
The Fee structure of an LLP includes conversion of a firm or a company into a Limited Liability Partnership consists of various slabs which are as follows:
- Limited Liability Partnership whose contribution does not exceed Rs.1 lakh – Rs.500/-
- Limited Liability Partnership whose contribution exceeds Rs.1 lakh but does not exceed Rs.5 lakhs – Rs.2000/-
- Limited Liability Partnership whose contribution exceeds Rs.5 lakhs but does not exceed Rs.10 lakhs – Rs.4000/-
- Limited Liability Partnership whose contribution exceeds Rs.10 lakh – Rs.5000/-
In my opinion, the LLPs are the future of India since the requirement of providing flexibility to small enterprises to compete with the bigger organizations like joint ventures is the need of the hour. The Start-ups and SMEs would benefit from this once the loopholes are rectified by the Government. Once rectified, the corporate sector of our country will reach new heights in the global level as well.
 Limited Liability Partnership Act, 2008, S. 26
 LLP Registration Procedure, <https://www.legalmantra.net/index.php?/blog-detail/LLP-Registration-Procedure>.
 Everything you need to know about LLP Registration, <https://www.taxreturnwala.com/everything-need-know-llp-registration>.