A limited liability partnership (LLP) is a partnership in which some or all partners (depending on the jurisdiction) have limited liabilities. It therefore exhibits, elements of partnerships and corporations. In an LLP, each partner is not responsible or liable for another partner’s misconduct or negligence.
The procedure for formation of a LLP is very similar to that of a Private Limited Company incorporation procedure. A minimum of two Partners are required to start the LLP formation procedure and a registered office location is required within India. It is important to remember that FDI in LLP is allowed only with the prior approval of the Reserve Bank of India (RBI). Therefore, it is recommended that NRI’s and Foreign National promoters opt to incorporate a Private Limited Company, where 100% FDI is allowed under the automatic route
LLP Formation Documents Required
- PAN Card of the Partners
- Address Proof of the Partners
- Utility Bill of the proposed Registered Office of the LLP
- No-Objection Certificate from the Landlord
- Rental Agreement Copy between the LLP and the Landlord (If any)
STEPS TO INCORPORATE LLP
Step 1: Obtain Digital Signature Certificate (DSC) for the Partners
For obtaining DIN (Director Identification Number or Designated Partner Identification Number) for the Partners of the LLP, a Digital Signature Certificate (DSC) is required.
REQUIRED DOCUMENTS TO APPLY FOR THE DSC
- PASSPORT SIZE PHOTO
- MOBILE NO
- EMAIL ID
- PAN CARD
- AADHAAR CARD OR VOTER ID CARD OR DRIVING LICENSE OR PASSPORT
Step 2:Obtaining Director Identification Number for the Partners
Once, Digital Signatures are obtained for the Partners, application for Director Identification Number (DIN) can be made. Further, once a DIN is obtained, there are no renewals required and each person can have only one DIN.
Step 3: Obtaining Name Approval
Once two DIN’s are available, application for reservation of name in Form 1 can be made to the MCA. It is important for the promoters to keep in mind the LLP Naming Guidelines and suggest appropriate names for the LLP in the application, to ensure a speedy approval.
The approved name shall be available for 3 Months
Step 4: Filing for Incorporation
- After approval of name, Form 2 is filed with ROC to incorporate LLP
- If the application for LLP Registration is acceptable, the Registrar would issue the incorporation certificate. Once, the incorporation certificate is issued, the LLP will be considered to be registered and application for PAN for the LLP can be made.
Step 5: LLP Agreement
The Partners of the LLP then have 30 days time to file the LLP Agreement in Form 3 of the LLP with the MCA. In case, the LLP Partnership Deed is not filed within 30 days, a fine will be applicable.
Your LLP is incorporated now and you can start Your Business.