LIMITED LIABILITY PARTNERSHIP REGISTRATION
LIMITED LIABILITY PARTNERSHIP REGISTRATION IN CHENNAI
What is a Limited Liability Partnership?
A limited liability partnership is an upgraded form of partnership firm the LLP which has as a feature of limited liability from a private limited company and flexibility from a partnership firm.
The LLP was launched in India via the “Limited Liability Partnership Act, of 2008”. The main advantage of a “Limited Liability Partnership” is that one partner is not liable for the misconduct or negligence of another partner. The LLP is preferred by Professionals, and micro and small businesses which are family-owned or closely held.
A limited Liability partnership offers the benefit of “limited liability” to its owners and at the same time, it requires very minimal maintenance. The owners of a “Private limited company” have limited liability to their creditors. And in the case of a default, banks/creditors can only sell the assets of the company, not the personal assets of the directors. An LLP also provides “limited liability protection” to the owners from the debts of the LLP. Accordingly, all partners in an LLP enjoy the benefit of limited liability within the partnership. LLP Registration can be done through “LegalRaasta”, which has offices in Delhi NCR, Mumbai, Bengaluru, Chennai and all other Indian cities.
What are the advantages of being a Limited Liability Partnership?
Flexibility to operate: As compared to the Private limited or public limited company the operation of Limited Liability Company is easier because the terms and conditions can be drawn by the LLP according to their convenience.
- how to manage
- how to operate or
- how to distribute of the business
can be flexibly operated by the limited liability partnership based upon the written agreement made by the shareholders who are the designated partners.
Capital: Unlike a Partnership Firm or Public Limited Company, a Limited liability Partnership Firm does not demand partners to provide a minimum paid-up capital.
No audit is required: private limited company and public limited company has a compulsory audit, whereas A limited liability partnership follows only the rules and regulations mentioned and agreed upon in the limited liability partnership agreement and, therefore, there is no mandatory requirement to file or maintain an audit unless and until if the annual turnover of Limited Liability Partnership reaches above 40 lakhs, then it is compulsory to file an audit.
Uninterrupted existence: Unlike a Partnership Firm, a limited liability Partnership Firm can exist even after the death or retirement of the partners because the partners and the firm are treated as separate person so that the death or retirement of the existing partner never affect the existence of the business unless and until the limited liability company comes to the process of winding up.
Raising capital: In LLP minimum two members as a shareholder or designated partner but there is no limit on the maximum number of partners, so there is no need to worry about investment or capital. Simply, partners can obtain capital by joining new partners or raising a little contribution from an existing partner.
Separate legal entity: A limited liability partnership is considered as separate legal entity as same as private limited company and public limited company the LLP is a separate legal person has certain certain rights to
- Own the property
- Separate bank account
- Hire employees etc in the name of company
whereas the partners are not responsible for the liability of the firm. If any third party wants to sue the LLP name of the firm or In LLP, partners can sue suppliers or partners in the name of the firm, or even sue third parties for late payment with its own name.
What is the Reason to Choose Limited Liability Partnership Registration?
- Limited liability to the partners
- The Formation and operation of LLP is easier when compared to the private limited company
- The LLP is legal entity that exist independently even if the partners change time or time or even after the dead or retainment of the partners
- LLP can be contributed with minimum 2 members and there is no upper limit for partners when compared to the partnership firm.
- LLP is a separate legal entity
What are the ground requirements to form a Limited Liability Partnership?
- At least 2 partners are required
- At least 2 designated partners are required
- Office location should be within the territory of India
- No minimum paid up capital but each partners need to contribute the capital of LLP
DIFFERENCE BETWEEN LLP AND PARTNERSHIP FIRM
Limited Liability Partnership | Partnership Firm |
1.Separate entity: |
a Partnership Firm does not possess any such legal status.
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2. Protection from liability: |
a Partnership Firm does not give protection against liability to its partners.
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3. Name of the entity: |
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4.Non-Residents of India: |
While an NRI cannot form a Partnership Firm in India.
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5. Contracts: |
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6.Documents: |
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7.Registration: |
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How to register a Limited Liability Partnership?
Step 1: Name Approval
The name approval by the Registrar of companies is a must for limited liability partnership because, according to the Ministry of Corporate Affairs, the limited liability Partnership Firm should have a unique name, But before quoting the it is recommended to check with the MCA portal to facilitate the name chosen by is not similar to already existing names ROC will approve the name it does not resembles any equivalent firms names
- The company name should be easy to pronounce and easy to remember.
- It should not reflect the names of competitors/other popular companies
- It should be unique
- It should not have any abusive names or terms that violate public morals
- It should not be against the policies of the Trademark Act and Rules
Step 2: Digital Signature Certificate
Digital signature is an encoded electronic signature equivalent to physical documents (driving license) provided by the Government of India. It has been shortly known as DSC. It prevents the forgery of signatures. The Ministry of Corporate Affairs has administered and issued the digital signature.
There were three different classes for the registration of digital signatures. The 2020 class 2 certificate is enough for the registration of digital signature but from January 2021 class 2 certificate will be no more whereas class 3 certificate is followed and this Class 3 certificate was costly compared to the class 2 certificate.
Step 3: Designated Partner Identification Number (DPIN)
The person who intends to become a Designated Partner of the Limited Liability Partnership company should obtain the Designated Partner Identification Number. It serves as the identity of the designated partners and helps to track them. It has been issued by the Ministry of Corporate Affairs.
Only a natural designated partner of an LLP can apply for a DPIN number; no artificial person cannot get a DPIN Number.
Step 4: Incorporation of LLP
After you have completed all the steps and received the name approval. Log in to the official portal and fill in Form 2. Submit the required documents and pay the necessary fee. You can obtain a registration certificate within 14 working days. You must submit the LLP agreement to the Registrars of Companies (ROC) within 30 days from the registration date.
Step 5: LLP Agreement:
The LLP agreement contains the rights and duties among the partner and also the LLP and its partner. The LLP Agreement need to be filed with form 3v online on the MCA Portal and that form 3 for the LLP agreement need to be filed within 30 days from the date of incorporation with proper completion of every stage the LLP agreement will be printed on the stamp paper and the value of stamp paper differs state to state.
FAQ
FAQ on Limited Liability Partnership :
1.Whether existing partnership firms can be converted to Limited liability Partnership?
Yes, the existing partnership firm can be converted to limited liability partnership with provision of clause 58 and schedule II of the LLP act 2008. Form 17 needs to be filed with Form 2 to convert partnership firm to limited liability partnership.
2.Can a company be a shareholder in a Limited Liability partnership?
Yes, the company can be be a shareholder of the limited liability partnership company but the legal person needs to be nominated as nominee to represent the company and such legal person can also be a director of the company
3.what is the percentage of foreign direct Investment in limited Liability Company?
The government permits 100 % of foreign direct investment to the Limited Liability Partnership companies and that only for LLP because they are mostly in the service sector, 100% of foreign direct through the automatic route and there are no FDI linked conditions.
4.Whether Memorandum of Association (MOA) and Articles of Association (AOA) is required for LLP?
No, the Memorandum of Association (MOA) and (AOA) is not important for the LLP whereas they were the important documents of companies which are registered under the companies act 2013. The LLP agreement is represented for LLP not MOA or AOA. There is a need for LLP to Draft AOA or MOA they need to draft only LLP agreement.
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