INCORPORATION OF A LIMITED LIABILITY PARTNERSHIP

Introduction:

The Concept of Limited Liability Partnership(LLP) is new and is also a hybrid structure of partnership and company.  The Limited Liability Partnership is also gaining the status of body corporate. With the applicability of The Companies Act, 2013 and harsh provisions being applicable to small companies also, LLP has become the first choice for all the business persons for carrying on their small and medium scale businesses under the name of body corporate, thereby gaining the advantage of corporate structure and ease in compliance also.

Step-1

Requirement of Designated Partner Identification Number (DPIN) 

The persons who will become the designated partners of the LLP must have a DPIN. This number is same as the Director Identification Number. Hence the person possessing DIN shall not apply for DPIN.

Step-2

Name application for LLP

The name of the LLP shall be applied in form LLP-1. The form shall mention the name of two designated partners of the proposed LLP.

It shall be noted that the DPIN of the designated partners shall prefill the Residential status of the DP also. If the same is not prefilled, it shall be updated by filing form DIR-6.

At least one of the Designated partner shall be Resident of India.

Enter 6 names in order of preference in the form.

Ensure that there is no registered trademark in the same class similar to the proposed name of the LLP

Affix Digital signature of the applicant and Upload the form.

The Registrar of Companies shall process the form and if found that the name shall be made available, it shall approve the form and shall also issue  the certificate of name availability.

Step-3

Filing of details of LLP (Form LLP 2)

On getting the name available, the applicant is required to file form LLP-2.

The form shall contain;

1. Name of the partners(including designated partners)
2. Name of the body corporate becoming partners of the LLP including name of the nominee acting on behalf of the body corporate
3. Number of companies/LLPs in which he/she is already a director/designated partner
4. Registered office of the proposed LLP
5. Amount of contribution to be brought in by partners of the LLP
6. Form of contribution. If the form of contribution Is other than cash, valuation of such contribution shall be made from the registered valuer.

Note: Contribution cannot be zero.

Only an individual and body corporate can be partners to LLP. Hence a partnership firm or HUF cannot become partners of LLP.

Attachments to form LLP-2

1. Subscriber sheet containing names of subscribers, there designation(whether partners of DPs), name of the person representing on behalf of body corporate, signatures and a common witness to all the subscribers mentioning his/her name, address, occupation and membership no., if any
2. Consent  of the designated partners
3. Details of the entities in which he/she is already a designated partner/director
4. Proof of the registered office of the company(Utility bill not older than two months)
5. No Objection certificate from the owner of the property in case such property is owner by person not being designated partner/partner of the proposed LLP
6. Rent/Lease agreement in case such property is taken on lease/rent by the proposed LLP

Note: LLP can enter into an agreement on its own name before its incorporation(Preliminary  contracts). Such contracts are to be ratified after incorporation of the LLP by its designated partners.

The ROC shall process the form LLP-2 and on being satisfied, it shall approve the form and issue a certificate of incorporation of the LLP  which shall contain the LLPIN. This certificate is conclusive evidence of incorporation of LLP

Step-4

Filing of LLP Agreement (Form LLP-3)

The LLP is required to file form LLP-3 within 30 days of its incorporation to register its LLP agreement with ROC. LLP shall prepare a LLP agreement which may contain,

1. Name of LLP, its partners and designated partners
2. Amount of contribution of each partner.
3. Profit sharing ration between the partners
4. Registered office of the LLP
5. Rights and duties of the partners
6. Management and administration of the LLP
7. Clauses relating to meetings of LLP
8. Clauses relating to changes in partners
9. Indemnity clause
10. Clauses for resolving disputes amongst the partners(Arbitration and reconciliation)
11. Any other clauses as deemed fit by the partners

Such agreement shall be made on a  non judicial stamp paper of proper amount(Respective stamp acts shall be referred), signed by each partner and shall also be attested by at least two witness and must be duly notarised

Necessary details shall be entered in form LLP-3 and the agreement shall be attached to it .

On filing the form, ROC shall process the same and if it thinks fit, it shall approve the form.

Note: The LLP agreement can also be made before incorporation. However, such agreement shall be ratified after its incorporation.