In the dynamic landscape of business, Limited Liability Partnerships (LLPs) have emerged as a popular choice for entrepreneurs due to their flexibility and limited liability structure. If you are considering establishing an LLP in India, this comprehensive guide will walk you through the essential steps, requirements, as well as the documents needed for LLP formation in India.
Understanding LLP (Limited Liability Partnership)
An LLP is a hybrid structure combining the features of a traditional partnership and a private limited company. It provides its partners with limited liability while also allowing them the flexibility of organizing their internal structure as a partnership. Here’s a step-by-step guide to registering an LLP in India.
Step 1: Decide on Partners and Designated Partners
- Partners: An LLP must have a minimum of two partners. These can be individuals or corporate entities. There is no upper limit on the number of partners in an LLP.
- Designated Partners: Among the partners, at least two must be designated partners, and one of them must be a resident of India. Designated partners are responsible for regulatory compliance.
Step 2: Obtain Digital Signatures (DSCs)
The first step in the LLP registration process involves obtaining Digital Signatures for the designated partners. DSCs are necessary for digitally signing the incorporation documents.
Step 3: Obtain Director Identification Numbers (DINs)
Designated partners must apply for Director Identification Numbers (DINs) from the Ministry of Corporate Affairs (MCA). DIN is a unique identification number assigned to individuals intending to become directors of a company or, in this case, designated partners of an LLP.
Step 4: Choose a Unique Name for Your LLP
Select a unique name for your LLP, keeping in mind the rules laid out by the MCA. Check the availability of the chosen name on the MCA portal.
Step 5: Document the LLP Agreement
Draft an LLP agreement defining the rights, duties, as well as the responsibilities of partners. You must file it with the MCA within 30 days of incorporation. The agreement can be notarized on non-judicial stamp paper.
Step 6: File Incorporation Documents
Prepare the required incorporation documents, such as Form-2 (Incorporation Document and Subscriber’s Statement), Form-3 (Details of LLP Agreement), and Form-4 (Consent of Partners). Submit these forms to the MCA along with the necessary fees.
Step 7: Certificate of Incorporation
Once the MCA verifies the documents, it will then issue the Certificate of Incorporation. This serves as conclusive proof of the LLP’s existence.
Documents Required for LLP incorporation
Here are the key documents required for LLP incorporation in India:
Identity and Address Proof of Partners:
- Voter ID card
- Aadhar card
- Driver’s license
Proof of Registered Office:
- Recent utility bill (not older than two months)
- Rent agreement with a ‘No Objection Certificate’ from the landlord
Digital Signature Certificates (DSCs) of Designated Partners:
- You can obtain DSCs from certifying authorities and are essential for digitally signing documents.
Director Identification Numbers (DINs) of Designated Partners:
- The application for DIN can be made online, providing proof of identity and address.
- A drafted agreement outlining the rights, duties, as well as the responsibilities of the partners.
Consent of Partners (Form-4):
- This document declares the consent of each partner to become a part of the LLP.
Incorporation Document and Subscriber’s Statement (Form-2):
- Includes details of LLP name, registered office, partners, and capital contribution.
Political Details of LLP Agreement (Form-3):
- Provides information about the LLP agreement.
Photographs of Partners:
- Typicvssly you need Passport-sized photographs of all partners.
PAN Cards of Partners:
- Copy of the PAN card of each partner is a mandatory document.
Proof of Registered Office Ownership:
- If the registered office is owned, then you also need documents like sale deed or property tax receipt.
No Objection Certificate (NOC) from the Landlord:
- If the registered office is rented, then you need a NOC from the landlord.
Affidavit and Consent of Partners:
- Partners also need to submit an affidavit declaring their consent to become partners. Additionally, they must submit an affidavit that affirms that they are not disqualified from being partners.
Common Seal (Optional):
- While not mandatory, an LLP may choose to have a common seal. If so, the details of the common seal must be provided during registration.
Address Proof of Registered Office:
- Apart from utility bills and rent agreement, you may need additional documents like a property tax receipt or a municipal khata copy.
Registering an Limited Liability Partnership in India is a strategic move for those seeking a flexible business structure with limited liability. By understanding the steps and ensuring that you have the necessary documents required for LLP incorporation, you can navigate the registration process smoothly. The flexibility offered by LLPs makes them an attractive choice for various businesses, from startups to small and medium enterprises. So, if you’re considering establishing an Limited Liability Partnership in India, follow the outlined steps, gather the required documents, and embark on your entrepreneurial journey with confidence.