LLP Incorporation in India

Recently, everyone in the market/industry wants to turn up secure and safe and for that they want themselves worked under a registered legal system prescribed by the government to make their business grow.

Also, have you recently felt something different about new start-ups? Most of them have started opting for Limited Liability Partnership (LLP). So what really is Limited Liability Partnership or LLP? Why most of the new people in the industry try to choose LLP or whosoever working under any Legal entity tries to convert its legal entity into LLP.

What is an LLP?

As the law defines, an LLP is: Limited Liability Partnership

A corporate business facilitator 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”.

In simple words, if you choose to have your company registered as an LLP you have the freedom to drive the internal forces of your company operations as your like with limited liability and the members of your company can internally organize a partnership as well.

A Limited Liability Partnership is nothing but a mid-way between sole Companies and Partnerships.

Requirements to form a LLP

Being in an LLP means that the entity and the partners are two separate functions and to register an entity as an LLP, you must have minimum two partners.

The Benefits are described hereunder:

There is no minimum amount of capital required for contribution. While an LLP has these features, there are a few benefits as well. The liability of each partner becomes limited which may be written in the agreement at the time of registration, and the restrictions on an LLP is less as compared to a company by the government. The cost of formation is low, and the partners are only liable for their own acts and not for the acts of others.

Now that you know what an LLP is and how can it be beneficial to you, let us understand what the LLP formation procedure in India is. What all do you need for before the procedure begins:

• The first and foremost necessity is minimum of two Designated Partners one of which should be Indian resident.
• Photographs, Address Proof & Identity proofs of all the partners for obtaining DPIN
• Digital Signature of the designated partners

To form an LLP in India, you need to follow the steps:

1. Obtain a Director/Partner Identification Number: Designated Partners Identification Number or in short DPIN is a number issued by the Ministry of Company Affairs to all persons desirous of becoming partners in an LLP. This is a compulsory requirement for each partner to become a partner in an LLP.
    
2. Reservation of LLP Name: After obtaining DPIN Numbers the next step is to reserve the name of LLP. For this purpose Form 1 is filed along with at most 6 suitable names. If the names are found as per guidelines and is not taken by any other LLP or company then the same is reserved by the Registrar of Companies. Now, this name cannot be taken by any other LLP or company until it has expired.
    
3. Prepare & File Incorporation Documents: After name is reserved, the next step is preparation and filing of incorporation documents. The following forms are required to be filed for incorporation of LLP.
   • Form 2: Incorporation Document & Statement
   • Form 3: LLP Agreement
   • Form 4: Additional Partner’s Details

Form 3 & 4 can also be filed post incorporation within 30 days. Ensure that every detail that you have incorporated in your LLP agreement is already consulted with someone having a legal experience. Every clause such as the goodwill clause or the cessation of LLP partners and many more such clauses must be carefully included with no errors in the agreement.

4. Obtain Certificate of Incorporation: After the ROC is satisfied regarding the documents filed and procedure undertaken for registration of LLP, they will issue a Certificate of Registration of LLP which completed the LLP Formation India Process

It is not as such a complicated process, and definitely not especially when you are looking forward to having a luxurious entity of your own.