A Limited Liability Partnership (LLP) is a form of business structure in which partners have limited liability as defined by law. This means that each partner is not held personally responsible for the wrongful acts, negligence, or misconduct committed by another partner.
An LLP combines the operational flexibility of a traditional partnership with the benefits of limited liability similar to a company. It is considered one of the simplest and most convenient business structures to establish and manage.
A Limited Liability Partnership (LLP) is a business structure where each partner’s liability is restricted to the amount they have invested in the firm.
It allows partners to share business risks while utilizing their individual skills, expertise, and professional strengths through an effective division of responsibilities.
LLPs are widely preferred by professional service providers such as law firms, wealth management firms, and accounting consultancies.
he framework of LLP in India was formally introduced through the Limited Liability Partnership Act 2008.
The objective behind introducing this Act was to create a business structure that is simpler to operate and easier to manage compared to traditional companies, while still offering limited liability protection to its partners. An LLP blends the flexibility of a partnership firm with the benefit of limited liability typically associated with a company.
Limited Liability Partnerships (LLPs) are widely preferred by professionals and closely held, family-owned businesses due to their flexible structure and limited liability benefits. However, LLPs are generally not ideal for businesses intending to raise equity funding from venture capitalists, angel investors, or private equity firms, as investors typically prefer corporate structures.
Separate Legal Identity
An LLP has an independent legal existence, similar to a company, meaning it can own property and enter into contracts in its own name.
Limited Liability of Partners
Each partner’s liability is restricted to the amount of capital they have contributed to the LLP.
Lower Formation and Operational Cost
The cost involved in incorporating and maintaining an LLP is comparatively lower than that of a company.
Reduced Compliance Requirements
LLPs are subject to fewer legal formalities and regulatory compliances compared to companies.
No Minimum Capital Requirement
There is no mandatory minimum capital contribution required to establish an LLP.
Audit Requirement (Conditional)
Statutory audit becomes compulsory only if the capital contribution exceeds ₹25 lakhs or if the annual turnover surpasses ₹40 lakhs.
To establish a Limited Liability Partnership under the Limited Liability Partnership Act 2008, the following essential conditions must be fulfilled:
Minimum Two Designated Partners
An LLP must have at least two designated partners to be incorporated.
Digital Signature Certificate (DSC)
At least one designated partner must obtain a Digital Signature Certificate for online filing of documents.
DPIN for All Partners
Every designated partner is required to have a Designated Partner Identification Number (DPIN).
Capital Contribution
The partners must agree upon a contribution, which may include tangible assets, intangible property, or other agreed benefits provided to the LLP.
Resident Designated Partner
At least one designated partner must be a resident of India.
As per the Limited Liability Partnership Act 2008, the following documents are required for LLP incorporation:
Identity Proof
PAN Card is mandatory for Indian nationals. Foreign nationals must submit a valid Passport.
Additional identity proof may include Driving License, Aadhaar Card, Residence Card, Voter ID, or any other government-issued ID.
Address Proof
A recent Telephone Bill or Bank Statement (not older than three months) must be submitted as proof of residential address.
NOC from Owner
If the premises are rented, a No Objection Certificate (NOC) from the landlord permitting use of the property as the registered office is required.
Utility Bill or Ownership Proof
Any recent utility bill such as electricity, gas, telephone, water bill, property tax receipt, or sale deed showing the address of the premises (not older than two months) must be attached.
These requirements ensure proper legal compliance and smooth registration of the LLP.
The incorporation procedure of an LLP is regulated by the Ministry of Corporate Affairs under the provisions of the Limited Liability Partnership Act 2008. The registration process is carried out online through the MCA portal and involves the following steps:
The first step is to apply for reservation of the proposed LLP name through the RUN-LLP (Reserve Unique Name – LLP) service available on the MCA portal. Applicants can propose up to two names along with proper justification.
Before submitting the application, it is important to ensure that:
The proposed name is available on the MCA database.
No identical or similar trademark is registered under the relevant class of business.
Once approved, the name is reserved for 20 days from the date of approval.
Prior to filing incorporation documents, the designated partners must obtain their Digital Signature Certificates. Since all forms are submitted electronically, digital signatures are mandatory for authentication.
The incorporation of LLP is completed by filing Form FiLLiP (Form for Incorporation of Limited Liability Partnership). This is an integrated form that facilitates:
Allotment of DIN (if required)
Reservation of name
Incorporation of LLP
The form must be accompanied by necessary documents such as:
Subscriber’s sheet
KYC documents of designated partners
Consent of partners
Registered office address proof
The form must be digitally signed by one of the designated partners and certified by a practicing professional such as a CA, CS, or Cost Accountant.
After verification and approval of Form FiLLiP, the Ministry issues the Certificate of Incorporation via email. This certificate serves as legal proof of the LLP’s existence.
The final step is to execute and file the LLP Agreement, which defines the rights, duties, and obligations of partners and the LLP.
The agreement must be filed in Form 3 within 30 days of incorporation.
It should be executed on appropriate stamp paper and duly notarized.
The applicable stamp duty varies depending on the state and the amount of capital contribution.
An LLP is a modern and flexible business structure that does not require any minimum capital contribution and involves comparatively lower registration costs.
To legally operate as an LLP, registration under the Limited Liability Partnership Act, 2008 is mandatory. Seeking assistance from professional service providers ensures proper compliance with legal, tax, and regulatory requirements.
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