LLP registration in India is a critical element of the centre’s drive to encourage MSMEs. Learn about the LLP registration process and its present state in India.
Limited Liability Partnership (LLP) is a form of association among entrepreneurs. This form of company contains the advantages of both a partnership company and a private limited company in a single organisation. The concept of the LLP was first introduced in India by the Limited Liability Partnership Act, 2008, which legislates LLP Registration in India. At least two partners are required to assign an incorporated LLP. Is LLP Registration Temporarily Suspended In India
Is LLP Registration Temporarily Suspended in India?
The LLP Registration procedure is not suspended; however, due to the temporary suspension of the Director Identification Number (DIN), partners not having a DIN are not qualified to register a Limited Liability Partnership.
Steps to Register LLP in India
It is crucial for LLP Registration in India. These are the steps recommended by the experts at Vakilsearch when it comes to registering an LLP in India.
Step 1: Obtain a Digital Signature Certificate (DSC)
Initially, the designated partners should apply for digital signature certificates. This is primarily because the documents of the LLP are available only online.
- The partners need to procure their Digital Signature Certificate from government-recognized authorizing agents
- The price of obtaining DSCs will depend upon the certifying agency.
Step 2: Apply for Director Identification Number (DIN)
The very next step is to apply for DINs for all the designated partners.
- It indicates acceptance to be designated partners of the assigned LLP
- The request for DIN has to be filled in Form DIR-3
- The form has to be scanned and signed by a company secretary.
Step 3: Name Approval
- An LLP-Reserve Unique Name is documented for LLP registration of the proposed LLP
- It will be processed by the Central Registration Centre under non-STP mode
- The committee will give a list of almost matching names of occurring firms.
Vakilsearch expert’s tip; Before quoting the name in the application, as a suggestion, you can use the free name search option on the MCA portal. It will help you to choose a unique name.
Step 4: Incorporation of LLP
- The Form For Incorporation Of Limited Liability Partnership (FiLLiP) is used for incorporation and it will be recorded with the registrar in the registered office
- The payment has to be paid as per the terms of the annexure
- The petition for quotation shall be authorised for at least two people
- One can also do the LLP registration process using FiLLiP
- If the name that is involved is authorised, then it has been approved and the leased name shall be restored as the proposed name of the LLP.
Step 5: File LLP Agreement
- The LLP agreement must be documented in form 3 online on the MCA Portal
- Form 3 for the LLP agreement has to be documented within 30 days of the date of incorporation
- The LLP agreement has to be drafted on a stamp paper
- The required value of the stamp paper varies for every state.
Advantages of an LLP
An LLP is a unique legal entity, just like companies. An LLP can sue and be sued in its name. The agreements are signed between them in the name of the LLP Registration.
Limited Liability of the Partners
The partners of the LLP have limited liability. In case of a partnership failure one cannot claim the personal assets of the individual. If an LLP is insolvent at the time of winding up, the partners will not have any personal liabilities.
Low Cost and Limited Compliance
- The price of forming an LLP is low when compared to the price of incorporating a company
- The compliances to be attended by the LLP are also less.
No Requirement for Minimum Capital Contribution
- The LLP can be formed without any capital and this is a major advantage
- There is no regulation regarding the minimum capital paid-up before starting the incorporation
- It can be established with any amount of capital contributed by the partners.
Disadvantages of an LLP
An LLP also has a few disadvantages the first one is a penalty for non-compliance
- If these compliances are not finalised on time, the LLP Registration will have to pay a heavy penalty
- If the LLP does not do any business during a business year, it is expected to record and provide a document to the Ministry of Corporate Affairs.
Winding up and Dissolution of an LLP
- At least two partners of the company are required to form an LLP
- If the lowest number of partners is below two for six months, the LLP will be dissolved.
Difficulty to Raise Capital
Angel investors and venture capitalists cannot fund the LLP as shareholders.
This is because the shareholders must be partners of the company in the LLP and have to take up all the responsibilities, and this is a major disadvantage when considering the long-term functioning of the firm.
How Many Days Does LLP Registration Take in India?
An LLP is required to have a minimum of 2 partners. Of these two partners, one must be an Indian citizen who has stayed in India for at least 182 days immediately preceding the year of registration. Approximately it takes around 10 days to register an LLP in India. For more queries on LLP Registration, please reach out to the experts at Vakilsearch.
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