Unlike a partnership company, a limited company contains the strengths of both a private limited company and a partnership company. Limited Liability Partnership Act, 2008, which legislated LLPs in India, introduced the LLP concept to India. Incorporating a LLP requires at least two partners.
Are LLP registrations temporarily suspended in India?
The procedure for LLP registration in India is not suspended; however, because Director Identification Number (DIN) registration has been temporarily suspended, partners lacking a DIN cannot register an LLP.
LLP Registration in India: Steps
Registering an LLP in India is crucial. Listed below are the steps recommended when it comes to registering an LLP in India.
Step 1: Get a Digital Signature Certificate (DSC)
The designated partners should first apply for digital signature certificates. As a result, the LLP’s documents can only be accessed online.
- Partners must obtain their DSC from an authorized agent recognized by the government
- DSCs can be obtained for a fee, depending on the certifying agency.
Step 2: Obtain a Director Identification Number (DIN)
The next step is to obtain DINs for all designated partners.
- Acceptance as designated partners of the assigned LLP
- Fill out Form DIR-3 to request a DIN
- The form must be scanned and signed by the company secretary.
Step 3: Approval of the name
- An LLP-Reserve Unique Name is developed for the registration of the proposed LLP
- It will be processed by the Central Registration Centre in non-STP mode
- A list of companies with almost matching names will be provided by the committee.
Vakilsearch expert’s tip: Before quoting a name in the application, as a suggestion, you can use the free name search option on the MCA portal. A unique name will be the result.
Step 4: Incorporating the LLP
- It is necessary to use the Form for Incorporation Of Limited Liability Partnership (FiLLiP) for incorporation, and it will be recorded with the registrar in the registered office.
- Payment must be made according to the annexure
- It is required that at least two people sign the quotation petition
- FiLLiP can be used to register
- LLPs must restore the leased name as the proposed name of the firm if the name involved in the dispute has been approved by the court.
Step 5: File the LLP agreement
- Form 3 on the MCA Portal must be completed to document the LLP agreement
- The LLP agreement must be documented using Form 3 within thirty days of incorporation
- LLP agreements must be drafted on stamp paper
- Every state has a different stamp paper value requirement.
An LLP has several advantages
LLPs are unique legal entities, just like companies. An LLP may sue or be sued on its own behalf. The terms of the agreement are written between them in the name of the LLP.
Partners’ Limited Liability
The limited liability applies to the partners of an LLP. If a partnership fails, individuals cannot claim their personal assets. As long as an LLP is insolvent at the time of winding up, its partners will not be held personally liable.
Low compliance costs and low costs
- Comparing the price of forming an LLP with that of incorporating a company, the cost of an LLP is much lower
- The LLP also has fewer compliances to attend to.
Minimum capital contribution is not required
- It is possible to form an LLP without spending any capital, and this is a major advantage
- Currently, there are no regulations regarding the minimum capital paid upon incorporation
- Any amount of capital contributed by the partners can be used for the establishment of the partnership.
LLPs have disadvantages
An LLP has a few disadvantages as well, the first being a penalty for non-compliance
- If these compliances are not completed on time, the LLP will have to pay a heavy penalty
- In the event that the LLP is not conducting any business during a business year, the Ministry of Corporate Affairs is expected to receive a document from it.
Winding up and dissolving an LLP
- In order to form an LLP, two partners are required
- A LLP will be dissolved if it has fewer than two partners for six months.
Raising Capital Is Difficult
LLPs cannot be funded by angel investors and venture capitalists.
Due to the fact that the LLP shareholders have to be partners in the company, and therefore have to carry the majority of the responsibilities, this is a major disadvantage when considering the long-term functioning of the LLP.
In India, how long does LLP registration take?
An A LLP must have at least two partners. Both partners must be Indian citizens and have lived in India for at least 182 days immediately prior to registration. The registration process usually takes about 10 days in India.