Limited Liability Partnership Act

Incorporation of an LLP

Limited Liability Partnerships have gotten quite popular in the last few years. In this article, we will focus on the process and steps along with the elements essential for the incorporation of an LLP (limited liability partnership).  The guidelines are provided by the Limited Liability Partnership Act (LLP Act), 2008.

Elements Essential for the Incorporation of an LLP

According to the LLP Act, 2008, the following elements are essential for the incorporation of an LLP in India:

  • Complete and submit the Incorporation document in the prescribed form, with the Registrar electronically.
  • Have at least two partners, either individual or body corporate
  • Have a registered office in India for sending and receiving communication
  • Appoint at least two individuals as designated partners. They will be responsible for doing all acts, matters, and things as required to be done by the LLP. Also, the designated partners should be resident in India.
  • Each designated partner should hold a Designated Partner Identification Number (DPIN) allotted by the Ministry of Corporate Affairs (MCA).
  • Execute the agreement between the partners or between the LLP and its partners. Further, if an agreement is not present, the provisions in the First Schedule of the LLP Act, 2008 are applied.
  • Name of the LLP. It is important to note that the name should be distinct. The LLP cannot have a name which another LLP or Partnership firm or Company is currently using.

Incorporation of an LLP:

(Source: QuickCompany)

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Process for the Incorporation of an LLP

The following things need to be ensured for the incorporation of LLP:

  • Appoint/nominate partners and designated partners.
  • Obtain the DPINs and Digital Signature Certificates (DSCs)
  • Register a unique LLP name (applicant can indicate up to 6 choices)
  • Draft the LLP Agreement
  • File the required documents, electronically
  • Apply for the Certificate of Incorporation along with LLPIN (Limited Liability Partnership Identification Number)

The contents of an LLP agreement

  • Name of the LLP
  • Names and addresses of the partners and designated partners
  • The form of contribution and interest on contribution
  • Profit sharing ratio
  • Remuneration of partners
  • Rights and duties of partners
  • The proposed business
  • Rules for governing the LLP

Steps for the Incorporation of an LLP

  • Reserve the name of the LLP. Applicant files e-Form 1 to ascertain the availability and register the name of the LLP. Once the Ministry approves the name, it reserves it for the applicant for a period of 90 days. Also, if the LLP is not incorporated within that time frame, the reservation is removed and the name is made available to other applicants.
  • Incorporation of a new LLP. Applicant files e-Form 2 which contains the details of the proposed LLP along with details of the partners and designated partners
  • Consent of the partners and designated partners to act in the said role.
  • File the LLP Agreement with the Registrar within 30 days of incorporation of the LLP. Applicant files e-Form 3. According to Section 23 of the LLP Act, 2008, execution of LLP Agreement is mandatory.

On obtaining approval of the LLP Agreement, the process of Incorporation of LLP is complete.

Solved Question on Incorporation of an LLP

Q1. What is the mandatory requirement with respect to designated partners for the incorporation of LLP?

Answer: The applicant has to appoint at least two individuals as designated partners. They should be resident in India. Also, they are responsible for doing all acts, matters, and things as per the requirements of an LLP.

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One response to “What is Limited Liability Partnership?”

  1. KULDEEP AGRAWAL says:

    What is llp

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