Limited Liability Partnership
Limited liability partnership firm is a new business structure in India formed under the Limited Liability Partnership Act, 2008. A hybrid of existing partnership firms and full-fledged companies, it is a separate legal entity, liable to the full extent of its assets with the liability of the partners being limited to their agreed contribution in the firm
Registration of LLP Minimum requirements
- Minimum 2 Designated Partners. At least 1 has to be an Indian resident
- If a body corporate is a partner, it has to nominate a natural person
- The Partners and Designated Partners can be same person
- There is no concept of share capital, but there has to be some sort of contribution from each partner
- DIN (Director Identification Number) for all the Designated Partners
- DSC (Digital Signature Certificate) for any one of the Designated Partners
- LLP registration process: Estimated Registration Time Frame 4-6 weeks
Limited Liability Partnership (LLP) Features
- LLP is a separate legal entity, can own assets in its name
- Unlike corporate shareholders, the partners have the right to manage the business directly
- One partner is not responsible or liable for another partner’s misconduct or negligence
- Minimum of 2 partners and no maximum
- Should be ‘for profit’ business
- The rights and duties of partners in LLP are governed by the agreement between partners. The duties and obligations of Designated Partners shall be as provided in the law.
- Liability of the partners is limited to the extent of his contribution in the LLP. No exposure of personal assets of the partner, except in cases of fraud.
- LLP shall maintain annual accounts. However, audit of the accounts is required only if the contribution exceeds Rs. 25 lakhs or annual turnover exceeds Rs.40 lakhs
FAQ
A partner in relation to an LLP means any person who becomes a partner in the liability partnership in accordance with the LLP agreement.
An individual (who is capable of entering in to an agreement) or a body corporate can become a partner in an LLP. A body corporate means an LLP registered under the LLP Act, limited company registered under the Companies Act, a registered legal entity in any country registered under relevant laws of that country. However, it does not include a society or a corporation sole
An individual (who is capable of entering in to an agreement) or a body corporate can become a partner in an LLP. A body corporate means an LLP registered under the LLP Act, limited company registered under the Companies Act, a registered legal entity in any country registered under relevant laws of that country. However, it does not include a society or a corporation sole
A designated partner of an LLP means the partner who is responsible for carrying out all acts and things that are required for the functioning of the LLP in respect of compliance of provisions, filing of documents/returns/statements under the LLP Act and things as may be specified in the LLP agreement.
An LLP should have a minimum of two designated partners who are individuals and at least one of them should be resident in India
Contribution means the amount contributed by each partner in the LLP as per the LLP agreement. The contribution is the liability of each partner and an LLP can recover the agreed contribution from the partner. A partner can contribute to the capital by cash, goods or services subject to applicable valuation
LLPIN is a 7-digit alpha numeric registration number allotted by Ministry of Corporate Affairs, Government of India, to an LLP.
Yes, non-resident Indians and foreign nationals who are willing to enter into an LLP partnership can do so, provided they submit the necessary documents after getting it notarized by the concerned authorities. Although, at least one of the designated partners in an LLP should be an Indian national.
Any group of persons who have or want to invest money in a business can start an LLP. A person or an investor becomes a partner, according to the LLP agreement, as provided in the Act of 2008. Also, the investors/partners are owners of the business started under the LLP.
An LLP agreement is one that is made between the partners and the LLP regarding the relationship between the individual partners in the LLP. An LLP agreement usually consists of management policies, inclusion of new partners, policy making strategies, and so on.
According to the LLP Act, a minimum of two designated partners are required to start an LLP. The designated partners are responsible for fulfilling all the essential requirements involved in starting and running an LLP.
Typically, only start-ups that will not be looking for venture capital funding register LLPs. This is because venture capitalists only invest in private and public limited companies.