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A Limited Liability Partnership (LLP) is a business structure that provides the benefits of limited liability of a company and the flexibility of a partnership. An LLP limits the liability of its partners to their agreed contribution while allowing its partners the flexibility to organize their internal structure as a partnership based on a mutually arrived agreement.
A Limited Liability Partnership (LLP) is a relatively new business structure in India that came into existence after the LLP Act was passed in 2008. An LLP combines the flexibility of a partnership such as no requirement of minimum capital and ease of operations, with the advantages of the limited liability feature of a company. LLP limits the liability of its partners to their agreed contribution in the LLP. The partners are not personally liable for the debts and liabilities of the LLP, similar to the shareholders of a company. This enables entrepreneurs, professionals and enterprises providing services to operate in a flexible regulatory environment with lower compliance requirements as compared to a company.
Here are some key terminologies related to Limited Liability Partnerships (LLPs) in India:
The individuals or entities that own an LLP are called partners. They contribute capital, share profits, and have limited liability.
Some partners need to be nominated as Designated Partners who are responsible for compliance with LLP regulations.
The written agreement between the partners covering the operation and management of the LLP. It is similar to a partnership deed.
The capital contributed by a partner to become a member of the LLP. It determines their profit share and liability.
Partners’ liability is limited to their agreed contribution in the LLP. Personal assets of partners are protected.
The process of legally registering an LLP with the Registrar of Companies by filing required documents.
LLPs are required to get their accounts audited annually by a practicing Chartered Accountant.
An annual filing stating the LLP’s solvency status and audited financial statements.
The process of dissolving a non-operating LLP by filing an application for striking it off the LLP registry.
Here are the details on who can apply for LLP registration:
Both individuals and entities such as companies, LLPs, partnerships firms etc. can be partners in an LLP.
At least two designated partners must be Indian residents. Other partners can be foreigners resident in India or non-residents.
Minimum two partners are required for formation of an LLP. There is no limit on maximum partners.
If all partners are bodies corporate or Limited Liability Partnerships (LLPs), at least two individuals – either nominated by such bodies corporate or LLPs OR acting as individuals, must be designated as designated partners.
Undischarged insolvents cannot be designated partners. A body corporate or LLP under liquidation cannot nominate designated partners.
Professionals like CA, CS, CWA, lawyers etc. are allowed to form LLPs to practice their profession after obtaining necessary approvals.
So in summary – individuals, entities registered in India and foreigners residing in India are eligible to form LLPs as partners subject to meeting the above criteria. The LLP agreement governs the mutual rights and duties of partners.
The documents required for LLP registration in India:
To obtain DSC, partners need to submit identity and address proof.
A statement from partners consenting to join the LLP containing name, address, passport number (for foreigners).
Documents for registered office address in India such as electricity bill, rent agreement etc.
This contains proposed LLP name, registered office address, details of partners & designated partners, consent from partners, etc.
This describes mutual rights & duties of partners on aspects like – profit sharing ratios, salaries, meetings, capital contribution, roles of partners etc.
Chartered Accountants, Company Secretaries, Lawyers, Cost Accountants & others intending to practice their profession through the LLP needs to provide this statement.
Passport, PIO or OCI Card.
So in summary – DSC, address proof, partner consents, e-Form 2 and LLP Agreement are the key documents needed. Professionals need an additional statement too. Foreign nationals require extra proof of nationality.
As per the current laws, the government fees for LLP registration in India are as follows:
Additionally, there would be:
The entire process now takes 10-12 days for obtaining an LLP registration certificate. The incorporated LLP must also comply with annual filing norms.
**For further assistance**
Book a callHere are the key advantages of LLP registration in India:
Therefore, LLP offers significant benefits for entrepreneurs and professionals running joint business ventures. It provides limited liability with operational flexibilities of a partnership..
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