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A Guide to Smooth LLP Registration in India

A Limited Liability Partnership (LLP) brings the combination of limited liability along with a partnership in India. LLP registration comes under The Limited Liability Partnership Act, of 2008. It is a common form of business in India and has fewer compliances than the Private Limited Company.

What is LLP?

In simple terms, a Limited Liability Partnership (LLP) imposes limited liabilities on every partner, which means every partner is only liable for the amount they contribute to the LLP. The minimum number of partners here is two, while the maximum number has no limit. The partners must operate according to the LLP Agreement.

This structure is suitable for businesses of all sizes and the company may continue to exist no matter if the partners change. Not just individuals, but a minimum of two companies can also be partners here.

The 6-Step Process of LLP Registration

Before moving on to the registration process, ensure that you have all the required documents. and that your LLP meets the eligibility criteria.

Step 1: Obtaining a DSC

Incorporate the LLP using the Digital Signature Certificate (DSC). It is mandatory for all online transactions on the MCA portal. Also, obtain the Class 3 DSC which comes with higher security and is used to sign several applications related to the LLP.

Step 2: Obtaining a DIN/DPIN

LLP has designated partners that require a Designated Partner Identification Number (DPIN). However, it can be interchangeably used with the DIN and MCA provides the same number for both. Only a natural person can hold this position and an application for a DPIN should be made by filing Form DIR-3 on the MCA portal. This form should also be signed by the CA, Cost Accountant and the Company Secretary.

Step 3: Choosing a Name for the LLP

The MCA portal lets you know whether the name you have chosen for your LLP is available. However, the name will be approved by the registrar from the Central Government. For that, you must file the RUN LLP form. At most, you can apply for two available names.

Step 4: Incorporating the LLP

Fill out the FiLLiP for incorporating the LLP and submit it to the registrar of the same state where your LLP is located. This important form has information about the registered office address of the LLP, proposal, agreement and partners. Don’t worry if you have not yet applied for a DPIN because FiLLip allows at most two designated partners to apply for a DPIN. Submitting this form also means that the designated partners have no issues with the LLP regulations.

Step 5: Response from the ROC

The ROC issues you the certificate of incorporation if your application has been approved. Besides that, it also provides you with the PAN, TAN and LLPIN (a 7-digit ID for an LLP).

Step 6: Drafting the LLP Agreement

The LLP Agreement defines the restrictions, rights and responsibilities of the designated partners. You may draft it by filling out Form 3 on the MCA portal. Further, get it notarized within 30 days of LLP incorporation and print it on stamp paper.

Documents for LLP Registration

Passport-size photographs of the partners.
Passport and proof of address (for NRIs or foreign nationals).
Registered office address proof of the LLP (NOC from the landlord and recent utility bills with the owner’s address).
PAN card, ID proof (passport, Aadhaar card, voter ID and driving license) residence proof (bank statement, electricity bill, gas bill, telephone bill and mobile bill) and registered address proof (electricity bill, gas bill, telephone bill and mobile bill) of the designated partners.
DSC of one of the designated partners.

Eligibility Criteria for LLP Registration

Before moving on to the registration process, ensure that you have all the required documents and that your LLP meets the eligibility criteria.

You need at least two partners to form an LLP while there is no upper limit.
Any Indian citizen, resident and natural person can be a partner in an LLP.
Foreign nationals and foreign companies can also be partners, but they should comply with additional requirements.
All partners must be 18 years of age or above and should be legally ready to step into the legal formalities.
All designated partners should have DSC and DPIN.
Partners must contribute some capital to start the business.
There should be a registered office address for the LLP.
The LLP and the partners should follow the Limited Liability Partnership Act, 2008 and other relevant regulations.

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Features of Limited Liability Partnership

Limited Liability Partnerships (LLPs) have a unique business structure and the following are the features of Limited Liability Partnership:

Partners' assets are shielded from liability for business debts in an LLP.
An LLP is a separate legal entity from its partners which means the LLP itself can own assets, enter into contracts, and be sued (or sue others) in its own name.
New partners can be brought in without affecting the ongoing business operations.
LLP offers flexibility in how profits and losses are distributed among partners.
You, as a partner, may choose the management structure.
LLPs have more operational flexibility than companies.

Advantages and Disadvantages of Limited Liability Partnership

ADVANTAGES	DISADVANTAGES
The partners are not liable for the losses to the company but only for what they contribute.	LLP still has to comply with the Registrar of Firms, filing annual reports and maintaining statutory records.
An LLP is a separate legal entity and can even get sued.	Disagreements among partners may arise and will be difficult to solve if there is no LLP agreement.
New partners can be brought in during ongoing operations and profit sharing is flexible among the partners.	Limited growth opportunities for certain businesses.
Only 2 annual returns are to be filed and no requirement for minimum paid-up capital.	Large amounts of funds can be hardly generated.
LLP runs on partners’ tax returns and there is no need to pay separate business tax.	Dissolving an LLP can be complex, especially without an agreement.

Conclusion

It is easier to find creditors such as financial institutions and banks for a registered Limited Liability Company in India. This is because LLP registration provides the partnership with financial status and credentials. Similarly, investors can analyse the partnership’s information before investing if it is registered. If you decide to proceed, consider consulting a professional to ensure a smooth registration process and compliance with regulations.

FAQs

Who Cannot Be Partners in an LLP?

A person declared bankrupt by the court, a minor and physically or mentally challenged ones who cannot handle the business cannot be partners in an LLP.

Can a Single Person Continue to Run an LLP?

A single person can continue to run an LLP if all members are gone. But, it can be done only for six months and might be shut down by the National Company Law Tribunal after that.

Who Makes Decisions in an LLP?

Designated partners make decisions in an LLP as it does not have a board of directors.

What If I Do Not Register My LLP?

Your LLP won’t be legally valid till you get an LLP registration done. Moreover, there will be no limited liability for partners. However, there will be restrictions on opening bank accounts and finding investors.

What Forms Should be Filled to Register an LLP?

Forms to be filled to register an LLP are Form 3 (LLP Agreement), FiLLiP (for essential information regarding the LLP), RUN LLP (to reserve a name for an LLP before approval), Form 8 (for annual filing requirement), FiLLiP Form 11 (for annual return) and Form 24 (formal dissolution of an LLP).