The role played by entrepreneurs as well as its professional and technical manpower, in the Growth of economy, has been internationally acknowledged. The limited liability allows flexibility to its members in LLP. According to Section 3 of the Act, LLP is defined as:
“A limited liability partnership is a body corporate[1] formed and incorporated under this act and is a legal entity separate from that of its partners.
Limited liability partnership shall have perpetual succession.
Any change in the partners of a limited liability partnership shall not affect the existence of rights or liabilities of the limited liability partnership.[2]
In brief, LLP is a separate legal entity , which is majorly useful for the small and medium sized enterprises. The liability of the partners is restricted by the LLP Agreement. The agreement consists of terms and conditions of the partnership and also called as “ Partnership Deed” or “ Deed of Partnership”. The cost of formation of an LLP is also limited.
Pre-requisites for Registration:
The pre-registration requirements are important for the registration process, these includes:
1. The Minimum number of partners required for incorporation is 2. However, there is no limit on maximum numbers of partner.
2. The minimum number of designated partners required is also 2, and at least one of them must be an Indian- resident.
3. The designated partners are bound by the provisions of the act and are directly responsible for non-compliance.
REGISTRATION / INCORPORATION OF LLP:
The incorporation of a Limited Liability Partnership is an easy process in India. The basic requirement for incorporation of an LLP is the presence of two or more persons as partners. All the requirements of the act and rules must be complied with in order to register the LLP. There must be registered office through which all the communications shall be made and received. At the end, the act has imposed on every LLP, an obligation to suffix "limited liability partnership" or "LLP", with its name.
1. Applying for digital signature certificate and DPIN:
An application for a digital signature certificate shall be made by a person who intends to be appointed, as a designated partner of an LLP. In order to obtain DIN/DPIN, an individual needs to file e-form DIR-3, but if you already have a DIN the same can be used as DPIN. To electronically file forms on the MCA portal it is mandatory to digitally sign all the forms. A Designated partner has to obtain class 2 or class 3 DSC, whose signature are to be affixed on the e-form. One can obtain DSC only from a Government recognised certifying agencies. The person applying must attach a proof of Identity with the residential 2 while filing Form DIR-3. The system will generate message of successful registration, if no defects are found.
2. Name approval/Reservation of name:
The second step in the process of registration of an LLP is the reservation of name. The name should not resemble to any existing company or LLP, or to an applied registered Trademark. By filing RUN-LLP (Reserve Unique Name-LLP) form, application for reservation is made. After this, the name will be checked and approved by Central registration centre, if found viable. The form RUN-LLP must be along with the fees prescribed under Annexure 'A'. It can also be either approved or rejected by the registrar, and then within 15 days after rectifying the errors re-submission can be made. The name must meaningful, unique, short & simple, a bit descriptive and must not be illegal and offensive.
3. Registration/incorporation of LLP:
After reserving the name, FiLLiP form i.e., form for incorporation of limited liability partnership, has to be filed with the registrar, MCA portal[3]. It is an integrated form. Along with the FiLLiP form, the prescribed fee along with the applicable stamp duty is to be paid. The form required details such as:
· Name of the LLP
· Business to be carried out
· Address proof of registered office of LLP.
· Details of the designated partners, such as name, address, etc and of partners such as:
Ø PAN card/ID proof
Ø Address proof
Ø Residence proof
Ø Photograph
Ø Passport (in case of NRI or Foreign citizen)
· Designated partner’s identification number.
· Capital contribution by partners in LLP
· Other requirements, etc.
4. Certificate of incorporation from ROC:
After the successful registration of LLP, Certificate of Incorporation in Form 16, shall be issued by ROC, under the seal of Registrar. With this PAN application is also to be made within 30 days in the name of LLP in form 49A with concerned authority.
5. Agreement of LLP:
After the registration of LLP the partners can enter into this agreement. It defines the relationship between partners and their rights and duties with the LLP. The agreement consists of several terms and conditions such as removal of partners, sharing profit and loss, admission of partners, duties and responsibilities etc. The LLP agreement has to be filed within 30 days from the date of Incorporation in Form 3 on MCA portal. It has to be in print on stamp paper. But if no agreement has been done, the relationship will be governed by the first schedule of the limited liability partnership act.
CONCLUSION:
LLP is a new concept in the world of company formation. The process of registration approximately takes 15 days from application of DSC to the last step, and is also subject to the availability of all the document. There are strict penalties for the non-compliance of the provisions in the act. In order to do a successful registration one has to be prepared with, and aware of, all the documentation process. The Pre-registration eligibility must be kept in mind while applying otherwise the registrar has the power to reject the application in his jurisdiction. As a suggestion, the process should be made more digitally secured and the contents such as address in the documents required must be checked in person, to avoid the future inconvenience.
[1] ‘body corporate’, as per section 2(11),Companies Act, 2013
[2] The Limited Liability Partnership act, 2008.
[3] Ministry of Corporate affairs, India
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