Limited Liability Partnership (LLP)

Introduction

A Limited Liability Partnership (LLP) is a partnership in which some or all partners have limited liability. It therefore exhibits elements of partnerships and corporations. In a LLP, one partner is not responsible or liable for another partners misconduct or negligence. This is an important difference from that of an unlimited partnership. In a LLP, some partners have a form of limited liability similar to that of the shareholders of a corporation.

Concept of "limited liability partnership"

LLP is an alternative corporate business form that gives the benefits of limited liability of a company and the flexibility of a partnership.
The LLP can continue its existence irrespective of changes in partners. It is capable of entering into contracts and holding property in its own name.
The LLP is a separate legal entity, is liable to the full extent of its assets but liability of the partners is limited to their agreed contribution in the LLP.
Further, no partner is liable on account of the independent or un-authorized actions of other partners, thus individual partners are shielded from joint liability created by another partner’s wrongful business decisions or misconduct.
Mutual rights and duties of the partners within a LLP are governed by an agreement between the partners or between the partners and the LLP as the case may be.
The LLP, however, is not relieved of the liability for its other obligations as a separate entity. Since LLP contains elements of both ‘a corporate structure’ as well as ‘a partnership firm structure’ LLP is called a hybrid between a company and a partnership.

Advantages of LLP form

LLP form is a form of business model which:

i. is organized and operates on the basis of an agreement.

ii. provides flexibility without imposing detailed legal and procedural requirements

iii. enables professional/technical expertise and initiative to combine with financial risk taking capacity in an innovative and efficient manner

Other countries where this form is available

The LLP structure is available in countries like United Kingdom, United States of America, various Gulf countries, Australia and Singapore. On the advice of experts who have studied LLP legislations in various countries, the LLP Act is broadly based on UK LLP Act 2000 and Singapore LLP Act 2005. Both these Acts allow creation of LLPs in a body corporate form i.e. as a separate legal entity, separate from its partners/members.

Difference between LLP & "traditional Partnership Firm"

• Under “traditional partnership firm”, every partner is liable, jointly with all the other partners and also severally for all acts of the firm done while he is a partner.

• Under LLP structure, liability of the partner is limited to his agreed contribution. Further, no partner is liable on account of the independent or un-authorized acts of other partners, thus allowing individual partners to be shielded from joint liability created by another partner’s wrongful acts or misconduct.

Difference between LLP & a Company

• A basic difference between a LLP and a joint stock company lies in that the internal governance structure of a company is regulated by statute (i.e. Companies Act, 1956) whereas for a LLP it would be by a contractual agreement between partners.

• The management-ownership divide inherent in a company is not there in a limited liability partnership.

• LLP will have more flexibility as compared to a company.

• LLP will have lesser compliance requirements as compared to a company.

Formation of LLP

- Once the name is reserved by the Registrar, it is available for registration of LLP for three months.

- fill up LLP_FiLLiP “Incorporation Document and Subscribers Statement”

- Pay the prescribed registration fee as per the slab given in Annexure A of the LLP Rules, 2009, based on the total monetary value of contribution of partners in the proposed LLP

- Subscribers Statement in the e-form 2 is to be digitally signed by a person named in the incorporation document as a designated partner having permanent DPIN and also to be digitally signed by an advocate/company secretary/chartered accountant/cost accountant in practice and engaged in the formation of LLP.

- On submission of completed documents the Registrar after satisfying himself about compliance with relevant provisions of the LLP Act will register the LLP, maximum within 14 days of filing of LLP_FiLLiP and will issue a certificate of incorporation in Form-16.

Have separate legal entity?

Yes, have a separate legal entity like partnership

Minimum requirements to establish

Minimum 2 partners required

Name of establishment

First search the name and reserve for 3 months

Minimum Capital Required

No limit

Minimum & Maximum members required

Minimum 2 and no limit for maximum

Transfer to other

As per agreement

Registration required

Yes, under the Limited Liabilities Partnership Act 2008

Registration optional

Applicable some other registration-

- in Shop and Establishment act from the Municipal Corporation

- in GST if applicable by your turnover from the GST portal

- in PF & ESI from Provident Fund & Employees State Insurance Corporation

- in Fire Safety from Fire Department

- in FSSI as FSSI license etc

Required documents to starting business

- PAN of partners

- Aadhar of partners

- Passportsize photograph

- LLP Agreement or Memorandum & Rules

- DSC class 2

Bank Account

Open a bank current account just after registration of the LLP. Every transaction will be made through companys account instead of personal bank account.

For the opening of bank account following document required-

- A copy of registered agreement of LLP

- A copy of Incorporation Certificate

- DPIN authority

- PAN of LLP

- Partners PAN & Aadhar

Winding up

As per mutual agreement.

Start your business within 7 days, we are ready to assist you

Days	Step	Process
Day 1	Step 1	Discussed with necessary formalities, registration process and minimum requirements
	Step 2	Apply and collect DSC (Digital Signature Certificate) of designated Partners
	Step 3	Apply & Collect for DIN/DPIN (Directors Identification Number/ Designated Partners Identification Number)
Day 2	Step 4	Apply for approval of the name of LLP (The Ministry of Corporate Affairs will be the final authority to approve the name based on the availability rules and regulations)
	Step 5	Draft Agreement of LLP/LLP Deed
	Step 6	Apply for incorporation of LLP with form FiLLip with required documents
Day 3	Step 8	Collect the Certificate of Incorporation
	Step 9	Finalization Agreement of LLP/LLP Deed
	Step 10	Submit Agreement of LLP with other documents
	Step 11	Approved by MCA
Start	Step 10	Start Your Business

Our experts will provides full assistance and professional guidance on many of the processes involved in registering your business, GST, import/export code, PF/ESI or Shops and Establishments License, draft any deed, accounting method, returns formalities & filing etc.

>> Start/incorporate Your LLP at Rs. 9,999/- only <<

Other links

The Limited Libilities Partnership Act --- LEGAL SAFE ---

OUR SPECIALIZATION IN COURT CASES
Arbitration ! Civil ! Company ! Contract ! Criminal ! Educational ! Matrimonial ! PIL ! Recovery ! Service

OUR PRESENCE