LLP or Limited Liability Partnership is a recently developed legal business entity in India predominantly aimed at the small and mid-sized companies which wants to enjoy the benefits of a Private limited company without a lot of compliance and legal hurdles.
LLP as an entity is easier to maintain and less expensive to get registered thus making it the first choice of registration for the small and medium size businesses. The process followed in the formation of a limited liability partnership company is very similar to that of a private limited company. The basic necessity for the formation is the presence of minimum two partners and a registered office within India. However, this is only suitable to Indian citizens and NRIs and people with Indian origin need to opt for a private limited registration as FDI in LLP is not possible without prior RBI approval whereas in the Private limited companies, FDI is automatic process without any need for approval. However, ideally the requisite for registering as a LLP is the presence of at least one Indian citizen as a partner.
The following documents are mandatory for a LLP registration process in India:
The documents need to be submitted once the firm gets its name approval from the registrar of companies.
The first step in registering a firm as LLP would be to obtaining a Director Identification Number (DIN). For this all the partners require digital signatures. Once the partners file their DSC applications and they get their Digital Signature Certificates, application for DIN can be submitted. Every partner can have one DIN only which does not require any renewals.
The next step would be to get the firm name approved. The owners need to apply to reserve the name with the Ministry of Corporate Affairs (MCA). The promoters need to understand the guidelines for LLP firm naming and ensure that the names provided by them are appropriate and fitting the guidelines. The name(s) proposed would be processed by the Registrar of Companies in the state where the firm is incorporated.
After the name is approved, an approval letter would be issued to the partners confirming the name approval. The partners would get a window of 60 days to submit all the required documents necessary for registering the LLP. In case the LLP registration is not done within 2 months of name approval, the name approval would have to be re-done.
The Registrar of Companies would do a thorough review of all the submitted documents and issue the Certificate of Incorporation. After the LLP certification is issued, the partners can go ahead with applying for PAN card for the company and sign the partnership deed within 30 days of incorporation. Inability to do so would lead to penalty.