Introduction:
A Limited
Liability Partnership (LLP) combines the advantages of both the Company and
Partnership into a single form of organization. In an LLP, one partner is not
responsible or liable for another partner's misconduct or negligence. In an
LLP, all partners have a form of limited liability for each individual's
protection within the partnership, similar to that of the shareholders of a
corporation.
Features
of LLP :
·
The LLP has a separate
single entity.
·
Minimum two partners
are required.
·
No requirement for
minimum capital contribution.
·
The mutual
rights and duties of LLP and its partners shall be governed by LLP
agreement between
the partners or between LLP and its partners.
·
Provision for Firms/
Private Limited Companies/ Unlisted Companies to convert into LLPs.
Steps
to Incorporate a Limited liability Partnership(LLP):
1.
Obtain Directors Identification Number (DIN):
Minimum
two designated partner is required to Incorporate LLP and they are required to
apply for DIN in order to become a partner in LLP. DIN is a unique number being
allotted to every partner in a LLP.
2. Register Digital
Signature Certificate (DSC):
Class II
digital signature of all the designated partners is required. The digital
signature is a mandatory requirement for filing online documents with the
Registrar of Companies (ROC).
3.
File Form 1 for name approval:
After
completing the above mentioned criteria one needs to file Form 1 for getting
approval of name for the proposed LLP. For this four names (in order of
preference) which the partners propose to keep for the LLP is required to be
filled. After getting approval of name, draft the LLP agreement through
which mutual rights of partners are governed and it needs to be filed along
with other forms.
4.
File Form 2 for Incorporation document & Subscriber’s Statement:
After
getting name approval, Form 2 for incorporation should be filed along with the
Registered Office Address Proof.
5.
File Form 3 for LLP agreement:
After
Form 2 has been filed, Form 3 is to be filed within 30 days along with the LLP
agreement from the date of registration.
6.
File form 4 to provide details about designated partners:
Form 4 is
required to be filed for providing complete information regarding appointment,
cessation or changes made if any in respect of the Designated Partners.
7.
Receipt of Certificate of Incorporation from ROC:
Once all
aforesaid formalities have been completed, ROC shall issue the certificate of
incorporation to the LLP. Once the certificate of incorporation has been issued
by ROC, the LLP is geared up for functioning.
Conclusion:
The passing of the Limited Liability Partnership Act, 2008 is
recognition of the changing needs of the businesses in today’s times. The
Government of India has made an endeavor to create a facilitating environment
for entrepreneurs, service providers and professionals to meet the global
competition; however it needs to be seen how far the change is useful.
