_Limited Liability Partnership (LLP)

1. Meaning of Limited Liability Partnership (LLP) The Law defines LLP registration as:- “A corporate business vehicle that enables professional expertise and entrepreneurial initiative to combine and operate in flexible, innovative and efficient manner, providing benefits of limited liability while allowing its members the flexibility for organizing their internal structure as a partnership” Features of LLP 1. The LLP has Separate Legal Entity i.e. the LLP and the partners are distinct from each other. 2. Minimum of 2 partners are required to form a LLP. However, there is no limit on the maximum number of partners. 3. No requirement of Minimum Capital Contribution. 4. The LLP Act does not restrict the benefit of LLP structure to certain classes of Professionals only and would be available for use by any enterprise. Benefits of forming an LLP The Liability of each partner is limited to his share as written in the Agreement filed at the time of creation of LLP as compared to Partnership Firms which have unlimited liability. It has a Low Cost of Formation and is Easy to Form. The Partners are not liable for the acts of each other and can be held liable only for their own acts as compared to Partnerships wherein they can be held liable for the acts of their partners as well. Less Restrictions and Compliance are enforced on an LLP registration by the Govt as compared to the restrictions enforced on a Company. As a Juristic Legal Person, a LLP can sue in its name and be sued by others. The partners are not liable to be sued for dues against the LLP. Step-by-Step Procedure for Registering LLP in India For an Indian LLP registration, you must first secure the Designated Partner Identification Number (DPIN). This can be done by filing an e-from for securing DPIN or DIN. You would then require obtaining DSC, i.e. Digital Signature Certificate, and register it on the MCA's portal. After that, you need to get name approval for the firm from the ministry. Once the name is acquired, you can incorporate the LLP by filing the prescribed application form.

2. Step 1: Application for DIN or DPIN All serving partners of the proposed firm shall secure DPIN. For this, you need to file an online application viz, DIR-3 to secure DPIN. For those who already have DIN, the same can be used as a DPIN. Step 2: Secure & Register DSC The Information Technology Act, 2000 emphasized the use of Digital Signatures on the dossiers furnished electronically to ensure the document's safety. Prevailing legalities mandate the proposed LLP to use the digital signature for signing the documents. Acquire DSC – The licensed Certifying Authority, i.e. CA, grants the digital signature. CA indicates a person who has been vested with the authority to grant DSC u/s 24 of the Indian IT-Act 2000. Register DSC - Role Check* Can Be Performed After Registering The DSC With The LLP Application. 'Role Check' functionality ensures that the MCA21 system shall validate whether the digital signatures affixed on the prescribed form belong to the company's signatory and/or of a practising professional (if applicable) Step 3: Create a login on the authority's portal Visit the concerned authority portal and register as a user in the relevant user category. This is necessary for getting access to e-form. Step 4: Incorporate an LLP Use Form 1 for registering the proposed LLP name. After name approval, proceed to address incorporation formalities such as facilitation of Incorporation document and Subscriber's statement. After form approval, you will come across an email relating to the same. It also shows the status " "Approved" to confirm the applicant. Step 5: Draft LLP Agreement After the incorporation process, an initial LLP agreement has to be filed within the duration of 30 days of the incorporation date. The user must file the detail in Form 3 (information about LLP agreement and change, if any, made therein. The user has to file the information in Form 3 ( Information with regard to Limited Liability Partnership Agreement and changes, if any, made therein). What type of Documents are Required to Register an LLP in India? Here are the listicles of mandatory documentation that are required during LLP registration in India;

3. PAN Card/ Identification Proof Of Proposed Partners: All proposed partners are mandated to furnish their PAN during registration time. PAN card serves as a fundamental ID proof. Partners' Address Proof: Proposed partner furnish any one document out of passport, Voted ID, DL, or Aadhar Card. Name as well as other information as per address proof & PAN card ought to be exactly the same. Any Flaws In The Details Of The PAN Can Be Corrected Before Furnishing To RoC. Partners' Residence Proof –Updated bank statement, utility bill, should be furnished as residence proof. Such bills should be the latest one, i.e. not older than 2-3 months & must entail the partner's name as cited in PAN card. Photograph – Partners must furnish the latest passport size photo, preferably on white background. Passport (In Case Of Overseas Nationals/ NRIs) – To become a partner of Indian-based LLP, overseas nationals & NRIs have to furnish their passport mandatorily. Passport must be notarized by the concerned authorities in the nation of such foreign nationals and NRI, else Indian Embassy located in the nation can also sign the documents. Foreign nationals or NRIs must facilitate address proof, bank statement, and legit identity proof enclosing the address.

4. If The Documents Exist In Any Other Language, The Applicant Must Facilitate The Notarized Translation Copy. Registered Office Address Proof: Registered office proof must be furnished during the registration process or within 30 days of incorporation. If the registered office is rented, a rent agreement and a NOC from the actual land owner have to be furnished. NOC shall be the landlord's consent to permit the LLP to use the premises as a registered office'. Also, anyone document out of gas, electricity, or telephone bill should be submitted. The bill should not be older than two months and must reflect the address of the premise and the owner's name. Digital Signature Certificate (DSC): One of the designated partners must hold DSC for signing the documents electronically. Benefits of an LLP There are numerous benefits to be had from trading through an LLP - Limited liability protects the member’s personal assets from the liabilities of the ● business. LLP’s are a separate legal entity to the members. Flexibility. The operation of the partnership and distribution of profits is ● determined by written agreement between the members. This may allow for greater flexibility in the management of the business.

5. The LLP is deemed to be a legal person. It can buy, rent, lease, own property, ● employ staff, enter into contracts, and be held accountable if necessary. Corporate ownership. LLP’s can appoint two companies as members of the LLP. ● In an LTD company at least one director must be a real person. Designate and non-designate members. You can operate the LLP with different ● levels of membership. Protecting the partnership name. By registering the LLP at Companies House you ● prevent another partnership or company from registering the same name. This is not an exhaustive list but covers some of the key benefits on an LLP. Disdvantages of an LLP As with all formats of business there will be disadvantages as well as advantages. The following may be considered disadvantageous in some cases. Public disclosure is the main disadvantage of an LLP registration. Financial ● accounts have to be submitted to Companies House for the public record. The accounts may declare income of the members which they may not wish to be made public. Income is personal income and is taxed accordingly. There may be tax ● advantages in registering as a company, but this will depend on your personal circumstances.

6. Profit can not be retained in the same way as a company limited by shares. This ● means all earned profit is effectively distributed with no flexibility to hold over profit to a future tax year. An LLP must have at least two members. If one member chooses to leave the ● partnership the LLP may have to be dissolved. Residential addresses were historically recorded at Companies House. Whilst the ● use of ‘service addresses’ now allows for home addresses to be kept out of public view, any address previously supplied to Companies House is still part of the public record unless you pay for the records to be suppressed. For many businesses this is not a problem. However, there are some examples where this may not be desired. Consider solicitors and partners of law firms that may not want their home address so freely available if their work involves sensitive cases. This is not an exhaustive list but covers some of the key issues that some may feel are disadvantageous for LLP registration.