Incorporation of Limited liability Partnership (LLP)

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.