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LLP Formation

Registration of Limited Liability Partnership (LLP) - As per Section 366 of the Companies Act, 2013

Limited liability partnership(LLP) is a partnershipin which some or all partners havelimited liabilities. It therefore exhibits elements of partnershipsand corporations. In anLLP, one partner is not responsible orliablefor another partner's misconduct or negligence. As per Section 366 of the Companies Act, an LLP is required to be registered under Companies Act, 2013.

Characteristics of an LLP
  1. The LLP hasa Separate Legal Entityi.e. the LLP and the Partners are distinct from each other and have perpetual succession.
  2. To form a LLP, minimum two partners are required. However, there is no limit on the maximum number of partners. Any individual or body corporate can be a partner of LLP.
  3. There is no requirementof Minimum Capital Contribution.
  4. It is easy to form.
  5. There are less restrictions and compliancesenforced on a LLP as compared to the restrictions enforced on a Company.
  6. As a Juristic Legal Person, aLLP can sue in its nameand be sued by others. Thepartners are not liable to be sued for dues against the LLP.
  7. The Partners arenot liable for the acts of each otherand can be held liable only for their own acts as compared to Partnerships wherein they can be held liable for the acts of their partners as well.
  8. Indian Partnership Act, 1932 shall not apply to LLP.
  9. All designated partners of the proposed LLP shall obtain "Designated Partner Identification Number (DPIN)".In case you already have a DIN (Director Identification Number), the same can be used as a DPIN.
Limited Liability Partnership (LLP) is a partnership in which some or all partners have limited liabilities. It therefore exhibits elements of partnerships and corporations.


Obtain DIN or DPIN
Step 1:
All designated partners of the proposed LLP shall obtain "Designated Partner Identification Number (DPIN)". You need to file eForm DIN-1( filing fee Rs. 100/- each) in order to obtain DIN or DPIN. In case you already have a DIN (Director Identification Number), the same can be used as a DPIN.

Step 2: Acquire/ Register DSC
The Information Technology Act, 2000 provides for use of Digital Signatures on the documents submitted in electronic form in order to ensure the security and authenticity of the documents filed electronically. This is the only secure and authentic way that a document can be submitted electronically. As such, all filings done by the LLP(s) are required to be filed with the use of Digital Signatures by the person authorised to sign the documents. Therefore partners/designated partners of LLP/proposed LLP has to obtain class 2 or class 3 Digital Signature Certificate (DSC) from any licensed Certifying Authority (CA). The Cost of getting class 2 DSC for 1 individual is Rs. 2500/-

Step 3: Reservation of LLP Name
Apply for the name of the LLP to be registered by filing Form 1 ( Application for reservation or change of name) for the same Select name of proposed LLP ( upto 6 choices can be indicated). Any partner/ designated partner (resident in India) in the proposed LLP may submit eform -1. Details of minimum 2 designated partners of the proposed LLP, one of them must be a resident of India is required to furnish therein with the proposed business activity, address of proposed LLP, contribution of the partners. Only individuals or nominees on behalf of the bodies corporate as partners can act as designated partners.

Step 4: Incorporation of LLP
After reservation of name by the Registrar file required incorporation Form 2 (Incorporation document and Subscriber's statement) with the prescribed fee based on the total value of contribution of Partners in the proposed LLP. Statement in the e-form 2 is to be digitally signed by a person named in the incorporation document as a designated partner having permanent DPIN and also to be digitally signed by an advocate/company secretary/chartered accountant/cost accountant in practice and engaged in the formation of LLP.
On submission of complete documents the Registrar after satisfying himself about compliance with relevant provisions of the LLP Act will register the LLP, maximum within 14 days of filing of Form-2 and will issue a certificate of incorporation.

Step 4: Filing of LLP agreement (Form-3)
Form 3 (Information with regard to LLP agreement and changes, if any made therein) may be filed with the prescribed fee simultaneously at the time of filing Form-2 or within 30 days of the date of incorporation. LLP agreement is a subject be stamped. As per Indian Partnership Act, 1932.

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