A Limited Liability Partnership can be considered as an “Ideal Partnership” as it assures the flexibility claimed under the Partnership Firm combined with the benefits claimed by a corporate entity, company such as separate legal entity, perpetual succession and limited liability. Thus it combines the characteristics of a Partnership and Company in a beneficial way.
A Limited liability partnership (LLP) is registered as under the Limited Liability Partnership Act, 2008, which binds the Partners and LLP through LLP Agreement executed between them.
The forms and documents regarding Incorporation of LLP are to be filed online on MCA (www.mca.gov.in) with the Registrar of Companies under jurisdiction of which the Registered Office of the proposed LLP will be situated.
Incorporation Process of LLP:
A detailed process is prescribed under the Act, which is to be followed for Incorporation of LLP, which can be bifurcated in following main heads:
- Acquire DSC for Designated Partners;
- Obtain DIN for Designated Partners.
- Incorporation process:
- Name approval Application;
- Application for Certificate of Incorporation;
- Registration of LLP Agreement.
Acquire DSC for Designated Partners
The first and foremost step is to acquire the DSC of the Designated Partners. DSC stands for Digital Signature Certificate. Any e-form is filed with the Ministry after affixing the DSC of the Authorised Signatory for LLP Incorporation, being designated Partner. Also, it is required for the application of DIN.
Obtain DIN for Designated Partners
DIN is abbreviation of the term Director Identification Number. It is a number allotted by the Ministry to the Individual for acting as Director in a company or as Designated Partner in a LLP. DIN is unique such as PAN Card to any person and which is applied and allotted once in the lifetime.
Name approval Application
Before making an application for Incorporation, one is required to apply for the name approval in order to reserve the name of the proposed LLP. The application is to be made by the Applicant in LLP form 1. One can apply for maximum 6 names in one application in order of the priority. One shall keep in mind that the names applied are not identical or nearly resembling with any existing Company or LLP or Registered Trademark.
Once the name applied is approved, it is reserved for the applicant for a period of 90 days, in span of which one has to apply for the Incorporation of LLP, non-compliance of which leads to withdrawal of the name granted by the Ministry.
Application for Certificate of Incorporation
The application for obtaining the Certificate of Incorporation of the proposed LLP is to be made with required documents in the LLP Form 2 with the Ministry. The application shall be accompanied with registered office address proof (including the NOC and/or rent agreement with the owner) and other documents.
The Certificate of Incorporation (COI) is a conclusive evidence of the existence of the LLP, wherein the date of Incorporation and LLP Identification Number (LLPIN) is mentioned with the sign and seal of the Registrar. Besides, PAN application is to be made in the name of the LLP within a period of 30 days by providing the Certificate of Incorporation along with the application in Form 49A with concerned authority.
Registration of LLP Agreement
Once the LLP is Incorporated, the partners need to execute the LLP Agreement, wherein the all the right and duties of Partners related to the operations of the LLP and related matters are mentioned. The LLP Agreement can either be executed on stamp paper or franked through bank. The stamp duty for the Agreement is to be paid in accordance with the concerned State Stamp Act. The same is to be filed within 30 days of issuance of Certificate of Incorporation in LLP Form 3 otherwise one has to pay penalty as prescribed under the Act.
Once the approval of the LLP Agreement is obtained, the process regarding the Incorporation of LLP is completed.
You may go through our blog “Documents Required for Limited Liability Partnership (LLP) Formation” to know about the Document Requirements for Incorporation of the LLP.