The centre’s drive to promote MSMEs includes LLP registration in India. Find out how to register an LLP in India.
LLP Registration:
What Is It? A Limited Liability Partnership (LLP) is a form of association between entrepreneurs.
This type of company combines the advantages of a partnership company with a private limited company. India introduced the concept of the LLP through the Limited Liability Partnership Act, 2008, which legislates LLPs in India.
LLP registration suspended in India?
The LLP Registration procedure is not suspended; however, due to the temporary suspension of the Director Identification Number (DIN), partners without a DIN are not eligible to register an LLP.
Limited Liability Partnerships in India: How to Register
Registering an LLP in India is crucial. In order to register an LLP in India, the experts at Vakilsearch recommend following these steps.
Step 1: Get a digital signature certificate (DSC).
The designated partners should apply for digital signature certificates at the beginning. This is primarily because the documents of the LLP are only available online.
- Partners must obtain their DSCs from a government-recognized authorizing agent
- Charges will be assessed by the certifying agency for obtaining DSCs.
Step 2: Get a Director Identification Number (DIN)
Next, all designated partners must apply for DINs.
- Acceptance to be designated partners of the assigned LLP
- Fill out Form DIR-3 to request a DIN
- A company secretary must sign and scan the form.
Step 3: Approval of the name
- For registration of a proposed LLP, a LLP-Reserve Unique Name is documented
- The Central Registration Centre will process it under non-STP
- A list of almost identical names of occurring firms will be given by the committee.
Expert tip from Vakilsearch: Use the free name search option on the MCA portal before quoting the name in the application. You’ll be able to choose a unique name.
Step 4: Incorporating the Limited Liability Partnership
The FiLLiP form is used to create a limited liability partnership, and it is recorded with the registrar at the firm’s headquarters. Payments must be made in accordance with the attachment. At least two signatories must cosign the petition for quotation. FiLLiP may also be used for registration. If the subject name has been registered, then it has been approved and the leased name will be reinstated as the proposed name for the corporation.
Step 5: File the LLP agreement
- LLP agreements should be documented in form 3 on the MCA Portal
- LLP agreements must be documented within 30 days of incorporation using Form 3.
- LLP agreements must be documented within 30 days of incorporation using Form 3.
- The value of the stamp paper varies from state to state.
Benefits of an LLP
Like companies, an LLP is a unique legal entity. LLPs can sue and be sued in their own names. They sign agreements in the name of the LLP.
Partners are limited in their liability
An LLP’s partners are not personally liable for the firm’s debts. If the company goes bankrupt, the partners will not be required to cover the company’s losses out of their own pockets.
Low compliance costs and low costs
- Comparing the cost of forming an LLP with the cost of incorporating a company, it is much less
- The LLP also has fewer compliances to attend to.
There is no minimum capital contribution requirement
- There are no required paid-in capital amounts for establishing an LLP, which is an important benefit.
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The disadvantages of LLPs
One of the disadvantages of an LLP is the penalty for non-compliance
- If these compliances are not completed on time, the LLP will have to pay a heavy fine
- When the LLP does not conduct any business during a business year, it is expected to record and provide a document to the Ministry of Corporate Affairs.
Dissolution and winding up of an LLP
- The minimum number of partners in an LLP is two
- If the lowest number of partners is less than two for six months, the LLP will be dissolved.
Raise of Capital Difficulty
Angel investors and venture capitalists cannot be shareholders of the LLP.
Since the shareholders must be partners of the LLP and bear all the responsibilities, this is a major disadvantage when it comes to the long-term functioning of the firm.
LLP registration in India takes how many days?
An LLPs must have a minimum of two partners. Two of these partners must be Indian citizens who have resided in India for at least 182 days immediately preceding the year of registration. It takes approximately 10 days to register an LLP in India. Contact Vakilsearch if you have any further questions.