The concept of limited liability Partnership was introduced as an improvement over the traditional form of partnership firm under the LLP Act (2008). It is a form of partnership firm but with the liability of members limited to their only.
Limited liability Partnership is the form of partnership in which two or more persons agree to come together and carry out the business. One feature of the limited liability partnership which discriminates LLP from the traditional form of partnership is that the legal identity of the LLP is separate from its members. Thus the liability of the members is limited to their share only. Limited Liability Partnership also provides the protection to the owners from the debts of the Limited Liability Partnership and the personal assets of the partners cannot be utilized for discharging the liability of the firm.
Features of Limited Liability Partnership
1. The legal identity of the LLP firm is distinct from its members.
2. The liability of the members of LLP is limited to their share only.
3. The minimum number of members required to incorporate a partnership firm is two. However, there is no limit on the maximum number of members.
4. A private limited company or an unlisted public company can be converted into LLP.
5. The rights and duties of the LLP are governed by the LLP agreement.
Minimum requirements for forming an LLP
• Two partners.
• Two designated partners out which at least one should be Indian resident.
• DPIN (Designated partner identification number) for all partners.
• DSC (Digital signature certificate) for one of the designated partner.
Documents required for incorporating LLP
• Self- attested copy of PAN Card of all the partner
• Self -attested copy of Address Proof of all the partners (Electricity bill/Gas bill/Telephone/mobile bill/Bank Statement)
• Property papers copy in case of owned property or Rent agreement copy in case of rented property
• Electricity/ water bill/Gas bill of registered office
• Statements by an Advocate/ CA/ CS/Cost Accountant in Practice that all requirements of LLP Act, 2008 and Rules made there under are complied with.
• Consent of Designated Partners/ Partners to act as such
Procedure of forming a New Limited Liability Partnership
1. Acquire and Register DSC of all partners- Having digital signature certificate of all the partners is essential for obtaining the director’ s identification number or the designated partner’s identification number. Further digital signature certificates assist in authenticating the documents to be filed by the ministry.
2. Obtaining Director’s Identification number- The Designated Partner Identification Number (DPIN)or director’s identification number of all the partners of Proposed LLP shall be obtained in form DIR-3
3. Application for name reservation- In E-form 1 the application for the reservation of the name of the LLP shall be submitted. In order to ensure the speedy approval by the ministry, the applicant shall adhere to guidelines issued by the ministry in this regard.
4. Filing the incorporation document and Subscriber’s Statement- After receiving the name approval from the Ministry the partners are required to file the incorporation documents within 60 days and register the LLP. The various details of registered office, partners, etc has to be filed in E-form 2.
5. Drafting LLP agreement- After the incorporation of the company the LLP agreement shall be drafted and filed in form 3 within 30 days of incorporation of LLP