Limited Liability Partnership (LLP) is seriously gaining popularity among businessmen and entrepreneurs alike owing to the fact that it combines the benefits of a company as well as that of a partnership firm. A lot of people intending to form a business are now looking towards a limited liability partnership. If you are one of those yearning to set up an LLP, then this article is for you. Sit back and relax, while we walk you through the process of registering a new Limited Liability Partnership (LLP).
WHAT IS A LLP?
An LLP is a form of partnership whereby all or some of the partners involved have limited liabilities. An LLP has the features of both a corporation and a partnership firm. The operation of an LLP does not require a partner to be held responsible for the negligence or misconduct of another partner.
THE FEATURES OF A LIMITED LIABILITY PARTNERSHIP
Now that you understand what an LLP is, we would now consider its features. Below are the features of an LLP;
- An LLP has its own legal body similar to that of a company
- Setting up an LLP is relatively low in terms of cost
- Regulations and compliance are actually less in an LLP
- The operation of an LLP does not require the contribution of a minimum capital
- Formation of an LLP requires a minimum of two partners
- The maximum number required to form an LLP is not specified (no limit)
- One of the partners must be an Indian resident
- An LLP has an agreement where all the duties and rights of individual partners are clearly stated
- All the partners must comply with the LLP Act 2008, as well as the LLP agreement
- A new LLP must be registered in line with the provisions of the Limited liability Partnership Act, 2008 for it to be legal
HOW TO REGISTER A NEW LLP?
Generally, there are 5 steps when you want to register an LLP. Here, we shall explain the 5 steps/procedures you need to follow for your LLP to be registered.
Step 1: A Digital Signature Certificate (DSC) must be obtained
This is the first step to take towards registering a new LLP. You must apply and obtain a digital signature certificate of all the interested partners for the new LLP to enable the filing of your documents online. All the partners are required to visit a government-owned certifying agency, pay the appropriate certificate fee and obtain the digital signature certificate. The fee varies depending on the agency. There are several classes of a DSC, ensure you obtain either class 2 or class 3.
Step 2: Apply for a Director Identification Number
All the intending partners in the new LLP must apply and obtain a DIN. Before now, the procedure was to obtain a Designated Partner Identification for all partners, but the procedure has changed. Currently, all the intending partners must apply for a DIN. The application to obtain a DIN should be done using FORM DIR-3. After completing the form, you will attach all the relevant documents (usually PAN and Aadhaar). Finally, the completed form would then be signed by a Cost Accountant or a Company Secretary.
Step 3: Name Suggestion and approval by the Registrar
Here is the stage of selecting a name for your new LLP. Usually, the process of selecting a name is done using Form 1. However, before completing Form 1, ensure you carry out a proper research to ensure your proposed name is unique. Form 1 contains six (6) slots for you to suggest at least 6 names. It is now at the discretion of the Registrar to pick a name from the 6 suggested names after running a check to ensure the name is unique.
Step 4: Registration of the new LLP
To incorporate a new LLP, you will fill Form 2. However, before completing Form 2, the following points should be taken note of.
- Ensure you fill all details correctly without any ambiguity or incorrect information. Columns like “numbers of partners, partner’s contribution, and designated partners” should be clearly specified.
- The appropriate registration fees must be paid based the partner’s contribution in the new LLP
- Form 2 must be signed digitally by a designated partner, as well as a Company Secretary or an advocate. The designated partner will be the one with a DIN.
- After all the required signatories have signed, Form 2 should be submitted.
- The Registrar will consider the application and register the new LLP is he/she is satisfied.
- Usually, it takes between 15 to 20 days to complete the registration process depending on the document submitted and the processing time of government.
Step 5: File LLP Agreement
An LLP agreement is a document which details all the rights and responsibilities of individual partners. To file an LLP agreement, you will fill and complete Form 3 on the website of MCA. Please note that the LLP agreement must be submitted on the portal of MCA within 30 days from the date the new LLP was registered. The next stage is to print the LLP agreement on a Stamp paper after payment of the Stamp Paper fee. The fee varies on a state by state basis.
REQUIRED DOCUMENTS TO REGISTER AN LLP-
The Partner’s Documents
The following are the documents required of each partner;
- ID proof or PAN card: It is required that all the intending partners should provide a proof of identification when registering a new LLP. The PAN card can serve as a proof of ID.
- Proof of partner’s address: The intending partners can submit any of these documents – Passport, Voters’ ID, Aadhaar Card or Drivers’ license. The information of these documents should tally with the ID proof document. Any discrepancy should be corrected before submission; else, the Registrar will reject the application
- Proof of a partner’s residence: The intending partners can submit any of these documents – Telephone bill, bank statement, electricity bill, mobile bill, and gas bill. The names on these documents must also tally with the names on the PAN Card and the documents should not be more than 3 months old.
- Photograph: Intending partners must make available a passport-sized photograph on white background.
- Passport (For foreign partners): Intending partners that are foreigners but resident in Indian must submit their passport. The passport shall be apostilled or notarized by relevant Indian government agencies. A proof of address (bank statement, drivers’ license or residency card) is also required from a foreign partner. If these documents are not written in English, an apostilled or notarized copy that is translated must be attached.
Documents Required For The New LLP-
- Office address proof: The new LLP’s proof of address must be submitted during the incorporation process on or before the expiration of 30 days from the date the new LLP would be registered. In the event that the office is on rent, the rent agreement, as well as a landlord’s non-objection certificate, should be submitted. Other documents to be submitted are any of these – electricity bill, gas bill or telephone bill. The bill must capture the full address of the office location and must not be more than 2 months old.
- Digital Signature Certificate: A digital signature certificate is required from one of the designated partners. Therefore, one designated partner should endeavor to obtain the digital signature certificate.
THE COST OF REGISTERING A NEW LLP-
The table below shows the cost of registering a new LLP from step 1 till the last stage
|STEP ONE||The Digital signature certificate costs around 1500 to 2000 Ruppes for two partners|
|STEP TWO||The cost of DIN for two partners is about Rs. 1000|
|STEP THREE||Selection of the new LLP’s name goes for Rs. 200|
|STEP 4||Registering the new LLP;
– Depends on the contribution of each partners
– Contribution up to 1 lakhs to Rs. 500
– Between Rs. 1 and 5 lakhs to Rs. 2000
|STEP 5||Filing the new LLP agreement;
– Depends on the contribution of each partners
– Rs. 1 lakhs to Rs. 50 (capital contribution) filing Form 3 and printing the agreement on a Stamp paper
THE DURATION TO REGISTER A NEW LLP
Usually, the time it takes to register a new LLP from start to finish is approximately fifteen (15) days. This time depends on the required documents available and the government processing time.