How to register a Limited Liability Partnership (LLP) in India
A hybrid organisation called Limited Liability Partnership (LLP) is presented as ideal partnership. The flexibility assured by partnership and benefits of a corporate entity is combined in this structure. Thus, it combines the characteristics of a partnership and company in a beneficial way.
An LLP registered in India is incorporated and governed by Limited Liability Partnership Act, 2008. After re-engineering of the process in recent past, it is streamlined with implementation of new forms and an integrated application. The new process is implemented with effect from 2nd October, 2018. Here is the step-smart manual on new LLP registration process.
Five Steps Registration Process for LLP:
Step 1: Procurement of DSC
The applications filed to register LLP in India are signed by Digital Signature Certificate (DSC) of the authorised signatory. Hence, the class 2 DSC with 2 years validity is procured by the Designated Partners. The DSC is allotted after OTP and video verification by the applicant.
Step 2: Reserve LLP Name
This step is the most important of all. Choosing a business name is crucial for all as it is linked with the brand name at later stage. The new form RUN-LLP (Reserve Unique Name – Limited Liability Partnership) has replaced the old LLP Form 1 for name reservation. The application under this web-form is made with maximum 2 names in preference order providing their significance. It is verified whether the names applied are in conformity with provisions applicable for LLP name reservation. If the MCA does not approve the names, the applicant gets another chance to give two more different names. Upon approval, the name is reserved for a period of 90 days to make an incorporation application.
Step 3: Incorporation of LLP and DIN Application
In the new process, the application for DIN allotment and incorporation are has been integrated into one. The application form is now called as FiLLiP (Form for incorporation of Limited Liability Partnership). Following are the features of the new e-from FiLLiP:
- Where an individual is required to be appointed as Designated Partner but do not have DPIN/DIN, the allotment application can be made in this form subject to maximum of 2 applications.
- An application for name reservation can also be made under this form. However, the applicants are given a choice to reserve name either through LLP-RUN or through FiLLiP.
The application is field on MCA portal with documents like subscriber’s sheet and proof of registered office address and other required documents. After attestation of application by the partner’s DSC, a practising professional (CS/CS/CWA) will certify it.
Upon filing, the application is moved for approval to the Central Registration Centre (CRC). It would call for additional documents or information, if required and direct the applicant to re-submit within 15 days. Upon its satisfaction to application, CRC will issue the Certificate of Incorporation (CoI) in Form 16 which consist the Limited Liability Partnership Identification Number (LLPIN) and its date of incorporation. The LLP s in existence since the date of incorporation and now can commence the business in its name. Although the incorporation certificate is received, the process does not end here.
Step 4: Apply for PAN and TAN
The application for PAN and TAN allotment is made directly to Income tax Department through physical or online filing. Application for PAN allotment is filed in form 49A with CoI as an attachment. For TAN allotment, the form is 49B.
Step 5: Drafting and Filing LLP Agreement
Next and final step is drafting, execution and filing of LLP Agreement. It requires utmost care while its drafting as establishes the relationship between partners and the LLP protecting their interest. The details of partners, business object, place of business, capital of the firm and the profit sharing ratio, etc. are prescribed in the Agreement. Since it acts as a prime document of the LLP it needs to be detailed and clear.
As the partners come to an agreement of the draft, it is finally executed. The partners put their signature in front of the witnesses after payment of applicable stamp duty. The amount to be paid as stamp duty depends on the place where the registered office is located.
Note: The agreement must be filed along in LLP form-3 with MCA within 30 days of the incorporation. Any delay leads to penalty of RS 100/day till the date of actual filing.
Major Key Points for LLP registration process that one should keep in mind:
- Instead of 6 names only 2 names can now be applied under the LLP-RUN form.
- Applicants should apply for names only after the name availability check as per guidelines.
- A fresh application is required to be made in case the names are not accepted in re-submission.
- The partners have a right for name reservation by giving one name under FiLLiP but they should do so only if the name is proved to be distinct and unique. In case of re- submission the documents of incorporation would be required to be filed again in another form, creating further delays.
- The name allotted under LLP-RUN will be reserved for a period of 90 days. If the LLP registration application i.e. FiLLiP is not filed in given period, the name will be expired which can be reserved again through new application.
- Only 2 DPIN/DIN are allotted by through FiLLiP. For the other individual to become designated partner will need to apply for DIN allotment in form DIR-3 post incorporation. And they should be added in LLP as designated partners accordingly.
- The LLP Agreement will continue to be processed by concerned RoC instead and not CRC, which is processing name and incorporation application applications.
There is a much-required change brought in the process of LLP registration which is witnessed to make the LLP incorporation process smoother and quicker, bringing great relief to the applicants. It also deals with the issue of inactive and multiple unused DIN numbers by homogenising the incorporation application with DIN application by abandoning the inactive ones.
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