LIMITED LIABILITY PARTNERSHIP STRUCTURE

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WHAT IS LIMITED LIABILITY PARTNERSHIP?

A limited liability partnership is a form of business partnership where all of the owners have limited personal liability for the financial obligations of the business.

DOCUMENTS REQUIRED FOR LLP REGISTRATION?

  1. For Indian citizens
  2. PAN Card
  3. Address proof and identity proof
  4. A landlord of registered office premises must provide NOC for having a registered office in his/her premises, identity proof, and address proof.

ADVANTAGES OF LIMITED LIABILITY PARTNERSHIP

  1. Liability for repayment of debts and lawsuits incurred by the LLP lies on it and not an owner.
  2. An LLP as a legal entity is capable of owning its funds and other properties.
  3. They are not liable for the individual act of other partners in LLP.
  4. The partners are not liable to be used for dues against the LLP.
  5. No minimum capital requirement.

REQUIREMENTS TO FORM LLP

  1. Minimum of two persons as Partners and Designated Partners.
  2. Partners are not restricted by citizenship but should be aged above 18.
  3. LLP cannot be incorporated into ‘Not-for-Profit’ activities.
  4. Tangible or intangible property or any other benefit can be shown as partner’s contribution.
  5. Mandatory to obtain Designated Partner Identification Number for all existing and proposed.
  6. Existing unlisted partnership firm can be converted to LLP.
  7. No requirement for auditing if both conditions are fulfilled: turnover < Rs.40 Lakhs and capital contribution < Rs. 25 Lakhs.
  8. At least one Designated Partner should be resident in India.
  9. Foreign residents are also allowed as Designated Partners after obtaining Designated Partner Identification Number.

REGISTRATION REQUIREMENTS

  1. Digital Signature Certificate (DSC) and Designated Partner Identification Number (DPIN) is obtained for the proposed Partners of the LLP.
  2. Select an LLP name and must be submitted to the MCA.
  3. Incorporation documents can be submitted to the MCA along with an application for incorporation.

LIMITED LIABILITY PARTNERSHIP REGISTRATION STEPS

Step 1: Apply For Digital Signature

Step 2: Apply For DIN Number  

Step 3: Filling Of Name Application

Step 4: Preparation Of Incorporation Documents

Step 5: Filling Of Form For Incorporation Certificate

Comparison: Private Limited Company | One Person Company | Limited Liability Partnership

Factors Of Comparison Private Limited Company One Person Company Limited Liability Partnership
Governing Law & Regulatory Authority The Companies Act 2013 & the Ministry of Corporate Affairs(MCA) The Companies Act 2013 & the Ministry of Corporate Affairs(MCA) The LLP Act 2008 & the Ministry of Corporate Affairs(MCA)
Minimum Requirement for formation 2 Shareholders
2 Directors
Directors & Shareholder can be the same person
1 Shareholder
1 Director
1 Nominee of sole member
Director & Shareholder can be the same person
 at least 2 partners
Maintenance of books of accounts Mandatory Mandatory Mandatory
Maintenance of basic statutory records
  • Minutes of the Board Meetings (min. 4 annual) & General Meetings
  • Share Certificates
  • Statutory Register
  • Share Certificates
  • Statutory Register

         Optional

  • Minutes of the Meetings
Board Meetings First meeting within 30 days from the date of incorporation
Minimum 4 board meetings in a calendar year
No meetings required if the company has only one director

Not compulsory meeting.

Meetings of partners may be called for events such as:

  • Remuneration, Admission, Cessation or Expulsion of the partners
  • Induction of the heir of any existing partners as a partner(s) of the LLP
  • Amendment in the objects of the LLP
Annual general meetings(AGM) Mandatory No AGM required Not Applicable
Annual ROC filings Balance sheet, profit &loss account, cash flow statement, & statement of changes in equity in Form AOC-4
Annual return in Form MGT-7
Balance sheet, profit &loss account, cash flow statement, & statement of changes in equity in Form AOC-4
Annual return in Form MGT-7
Statement of account & solvency in e-Form 8
Annual return in e-Form 11
Annual Tax Filings Mandatory- tax return in form ITR-VI Mandatory- tax return in form ITR-VI Mandatory- tax return in form ITR-V
Statutory Audit Yes Compulsory. No turnover limit. Yes Compulsory. No turnover limit. Not Compulsory if turnover < Rs.40 Lakhs and capital contribution < Rs. 25 Lakhs
Alteration of name, address, objects etc
Conversion

Filing required with ROC approval from central govt in some cases

A Private Company can be converted into OPC subject to:

  • paid up share capital up to 50 lakh, or
  • Average annual turnover up to two crore

Filing required with ROC approval from central govt in some cases

An OPC shall be converted into Private Limited Company mandatorily, subject to:

  • paid up share capital more than 50 lakh, and
  • Average annual turnover more than two crores during preceding three financial years
Filing required with ROC

Cannot be converted into a Private Limited Company directly

Closures/Dissolution Can be initiated voluntarily,

  • By the Shareholder, or
  • By the creditors, or
  • By the Tribunal
Can be initiated voluntarily,

  • By the Shareholder, or
  • By the creditors, or
  • By the Tribunal
Can be initiated voluntarily,

  • By the Shareholder, or
  • By the Partners, or
  • By the order of the Tribunal
Taxation Taxed at 30% Taxed at 30% Taxed at 30%
Fundraising options High Low Low
Compliance cost High Medium Medium

Recommended For

 Start-ups and growing companies Sole promoters Professional services firms

Ease of Accommodating Investment

 Very easy to accommodate Possible, but severely unlikely Possible, but unlikely

Limited Liability Protection

 Yes Yes Yes

Tax Advantages

 Few benefits Few benefits Most efficient

Perpetual Existence

 Yes Yes Yes

FREQUENTLY ASKED QUESTIONS FOR LLP COMPANY

  1. Can an existing partnership firm be converted to LLP?

    Yes, an existing partnership firm can be converted into LLP by complying with the provisions of the LLP Act.

  2. Can an existing company be converted into LLP?

    Yes, any existing private company or existing unlisted public company can be converted into LLP.

  3. Is it necessary for a company to alter its name while converting into LLP?

    LLP shall take the same name as that of the company at the time of conversion.

  4. What is the validity period for an approved name of LLP?

    The approved name of LLP shall be valid for a period of 3 months from the date of approval and it will lapse if proposed LLP is not incorporated at the time.

  5. Whether the name of LLP can be ended with words like ‘limited’ or ‘private limited’?

    No, the name of the LLP shall end with either ‘Limited Liability Partnership’ or ‘LLP’.

  6. What will be the stamp duty in case of conversion from other forms of business into LLP?

    The stamp duty charges will depend upon the relevant Stamp Act prescribed by the State Government.

  7. Is it mandatory to file and get registered the partnership agreement under LLP?

    As per provisions of the LLP Act, in the absence of agreement as to any matter, the mutual rights and liabilities shall be provided as per Schedule I to the Act. Therefore, it is mandatory to execute and file LLP agreement.

  8. What are the documents required to be filed by LLP annually?

    LLP is required to file Statement of Account & Solvency and Annual Return annually.

  9. Can LLP give other address besides registered office address for the purpose of receiving communication from the registrar?

    LLP have the option to declare one more address within the jurisdiction of same ROC (other than the registered office) for getting statutory notices/letters etc. from Registrar.

  10. Whether a foreign LLP can establish a place of business in India?

    Foreign LLP can establish a place of business in India by filing Form 27 giving the particulars of incorporation of foreign LLP, details of designated partners/ partners of that foreign LLP and details of at least two authorized representatives for complying with the regulation of LLP act.

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