Limited Liability Partnership (LLP)
LLP denotes as a Limited Liability Partnership. Limited Liability Partnership (LLP) is the combination of Partnership & Private Limited Company. It is a separate legal entity & a juristic person who is established under the act. Limited Liability Partnership Act, 2008 Contains the rules & regulations related to limited liability Partnership (LLP).
The minimum number of Partner requires forming a LLP is Two while there is no bar (limit) on the maximum number of partners. There should be a minimum of two designated partners required who shall be an individual. If a body corporate wants to participate as a partner in LLP it wants to appoint one of its members as a partner in LLP who act on behalf of such body corporate.
E.g. 1) Mr. A & Mr. B (both are individuals) form LLP as AB LLP 2) Mr. X & Y Pvt. Ltd wants to form LLP, in this case, Y Pvt. Ltd must appoint one of its members as (as an individual) a partner in LLP who acts on behalf of Y Pvt. Ltd.
As the partners in LLP, out of two designated partners at least one of them should be resident in India (It means He must satisfy the Residential status conditions for individuals of Income Tax Act, 1961).
Following are Some Features of Limited Liability Partnership (LLP) : -
- Separate Legal Entity: - Limited Liability Partnership (LLP) is a separate legal entity & juristic person established under the act. (I.e. Limited Liability Partnership Act, 2008)
- Easy Transferability: - Ownership of LLP can be easily transferred to another person by introducing them as a designated partner of LLP.As it is a separate legal entity so it separate from its managing partners that’s why by changing the managing partners the ownership of LLP can be changed.
- Uninterrupted Existence: - As a separate legal person, it is unaffected by the death, retirement or other departure of any partner. It continues to be in existence irrespective of change in partnership.
- Ownership of Property: - Being a juristic person, LLP can acquire own property in its own name. No, any partner can make a claim upon the property of LLP.
- Limited Liability: - In Limited Liability Partnership (LLP), the liability of the members in respect of the LLP’s debts is limited. It means the status of being legally responsible only to a limited amount for the debts of a LLP, unlike proprietorship & partnership. The rights & duties of the partners of LLP are governed by the LLP agreement.
- Statutory Audit Limit for LLP: - LLP’s whose turnover exceeds Rs.40 lakh or whose contribution exceeds Rs. 25 lakh are required to annually get their accounts audited by any chartered accountant in practice. It means LLP’s whose turnover up to 40 Lakh & capital contribution less than 25 Lakh are exempted from statutory audit compliances.
DOCUMENTS REQUIRED REGISTERING AS LLP: -
1) Documents of Partners: - a) PAN
b) ID Proof
c) Residential Proof
d) Passport Size Photograph
e) PassPort (In case of NRI/ Foreign Nationals)
a) PAN – It is Primary proof of ID
b) ID Proof - 1) Voter ID 2) Passport 3) Aadhar Card 4) Driving License
c) Residential Proof – 1) Latest Bank Statement 2) Telephone Bill 3) Electricity Bill
d) Photograph – 2 Passport size photo
e) Passport (NRI Case) – NRI / Foreign Nationals have to submit their passport compulsorily,If documents are in other than the English language a Notarized or apostolic led transaction copy will also be attached.
2) Documents of LLP – 1) Proof of Register office 2) DSC
1) Proof of Register office - I) Electricity / Telephone Bill ( not older than 2 months
** If Register office is on Rent, Then
- Rent agreement & NOC from Landlord has to be submitted
- NOC will be the consent of the landlord to allow the LLP to use the place as a registered office
2) DSC – Digital Signature Certificate (DSC) of one of the designated partners is required
- Government Fees: - approximate fees required as follows for registration
Stage 1 = DSC = Rs. 1500-2000/- (for 2 Partners)
Stage 2 = DIN = Rs. 1000-2000/- ( For 2 Partners)
Stage 3 = Name Reservation = Rs. 200/-
Stage 4 = Incorporation (Form 3) – Depends on capital contribution
- Contribution up to 1 Lakh – Rs.500/-
-Contribution between Rs. 1 lakh – 5 lakh = Rs. 2000/-
Stage 5 = LLP agreement – Depend on capital contribution
- Approximate Time for Process: – From Obtaining DSC to filling form 3 it takes approx. 15 days subject to availability of all documents & process timing of Registrar of Companies (ROC).
- REGISTRATION PROCESS OF Limited liability Partnership: -
Following is the Registration process of LLP –
Stage 1 – Apply for DSC of partners
Stage 2 – Apply for DIN
Stage 3 - Apply for Name Reservation
Stage 4 - Apply for Incorporation
Stage 5 - LLP Agreement