Limited Liability Partnership
A limited liability partnership is a partnership in which some or all partners have limited liabilities. It therefore can exhibit elements of partnerships and corporations. In an LLP, each partner is not responsible or liable for another partner’s misconduct or negligence.
Q. WHAT IS LIMITED LIABILITY PARTNERSHIP (LLP) ?
Limited Liability Partnership is one of the fastest growing form of business in India. LLP contains the elements of a Private Company as well as of the Partnership Firm. It Gives the Benefits of Limited Liability Company and flexibility of a Partnership, so it may also be said as the hybrid of a corporate Structure & a Partnership Structure.
Q. WHAT ARE THE BENEFITS OF A LLP ?
LLP form is a form of business model which:
- LLP is organized and operates on the basis of an agreement.
- LLP provides flexibility without imposing detailed legal and procedural requirements.
- LLP enables professional/technical expertise and initiative to combine with financial risk taking capacity in an innovative and efficient manner.
- 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.
Q. What are the documents required of Limited Liability Partnership (LLP)?
Here is the list of documents required for a LLP:
For Designated Partners and Partners:
- PAN Card
- ID Proof (Anyone of Aadhar Card/ Voter Card/ Driving License and Passport)
- Address Proof (Anyone of Latest Bank Statement/ Electricity Bill/ Mobile Bill and Telephone Bill)
For Registered Office:
- In case the premises are Rented
- Rent agreement (Notarized)
- Latest Electricity bill
- NOC from the Owner in the name of any Designated Partner or Proposed Company
- In case the premises are Owned by any Designated Partner or any Relative
- Latest Electricity bill
- NOC from the Owner in the name of any Designated Partner or Proposed Company.
Q. How many members and director are needed to incorporate a LLP ?
Minimum two (2) members are needed to incorporate a LLP. Those 2 members may be the proposed Designated Partner cum promoters of the LLP.
Q. What is the procedure to incorporate a LLP?
Procedure to incorporate a private limited company as follows:
- Apply for DSC (Digital Signature Certificate)
- Apply for DIN (Director Identification Number)
- Apply for Name (LLP-1)
- Apply for Incorporation of the company (LLP-2)
- Get Certificate of Incorporation.
- File LLP Agreement with ROC (LLP-3).
Q. How long does it take to incorporate a LLP ?
It takes around 10-15 days to incorporate a LLP, if every documents, Name of company, and others are in order.
Q. Is it mandatory to keep the minimum capital as Rs. 1,00,000?
As per the LLP Act, 2008 it was mandatory to keep the minimum paid-up capital to be Rs, 1,00,000. But, as per the latest notification from the Ministry of Corporate Affairs, such minimum criteria have been removed. So, now there is no such compulsion to have the minimum capital to be Rs. 1,00,000. Now, you may incorporate a LLP with any minimum capital you want.
Q. Do we need to deposit the capital introduced of LLP somewhere?
Such Capital of the LLP needs to be deposited in the current account of the LLP within 2 months of incorporation of the LLP against the AGREEMENT signed by the promoters.
Q. Can a NRI/Foreigner be the Designated Partner of the LLP ?
Yes, a NRI/Foreigner can be a Designated Partner in a LLP but he/she needs to get all his/her documents appostiled from the Indian Embassy where he/she resides.
Q. Is it possible to incorporate a LLP with all the NRI/foreigner as its Designated Partners?
No, As per the LLP Act, 2008 it is mandatory to have one resident Indian to be the designated Partner in the LLP with others NRI/Foreigners.
Q. How many persons can be the members of LLP ?
Ans: As per LLP Act, 2008, there is no limit on members in a LLP.
Q. Can we use the residence address as the registered office of the LLP ?
Yes, there is no such restriction in the law to keep the resident address as the registered address of the LLP.
Q. Can we change Limited Partnership Partnership (LLP) Address after the incorporation?
Yes, we can change the Company Address within the local city according to our wish after anytime of company incorporation just by passing a resolution and filing of required Form with the ROC.
Q. Can we change the designated Partners of the LLP ?
Yes, there is no such restriction on changing the designated Partners of the company. You may Add/Remove the directors from the company with their wish just by passing a resolution, preparing of some documents and filing of required Form with the ROC.
Q. Can we give documents related t0 registered office address after incorporation?
No, You need to provide the registered office details with incorporation application. The clause is present in other corporate forms to provide documents after incorporation like Pvt Ltd, etc.
Q. Will we receive Certificate Of Incorporation in hard?
No, Ministry Of Corporate Affairs issues the Certificate Of Incorporation in soft only. Now, there is no document which needs to send or receive in hard for incorporation of the company. The Ministry is following the initiative of Digital India where there is no need for hard documents.