Limited Liability Partnership

A partner, in relation to a limited liability partnership, means any person who becomes a partner in the limited liability partnership in accordance with the limited liability partnership agreement.

A private company may convert into a LLP by complying with the requirements of the LLP Act, 2008

Any change in the partners of a limited liability partnership shall not affect the existence, rights or liabilities of the limited liability partnership.

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ezyLegal can help you get your LLP registered and provide you with the right legal guidance. You can schedule your Consultation with an ezyLegal Lawyer and know the detailed process and advantages of registering a LLP Company.

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Yes, the LLP Act 2008 allows foreign nationals, as well as foreign companies, for LLP incorporation in India provided at least one designated partner is resident of India. However, the members of the LPP would have to comply with all relevant Foreign Exchange Laws/Rules/Regulations/Guidelines and register LLP deeds in accordance with these provisions.

Parties who were mentioned in the incorporation document at the time of LLP incorporation shall be in LLP partnership. Subsequent to LLP incorporation, new partners can be admitted in the LLP as per the conditions and requirements given in the LLP agreement.

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When it comes to liability of partners in partnership firms, every partner is liable, jointly with all the other partners, and also severally for all acts of the firm done while he is a partner. Under the LLP structure, the liability of partners in partnership is limited to their own actions. Further, no partner is liable on account of the independent or unauthorized acts of other partners, thus allowing individual partners to be shielded from joint liability created by another partner’s wrongful acts or misconduct.

LLP formation formalities shall be deposited with the Registrar of Companies (ROC) (appointed under the Companies Act, 1956) after following the provisions specified in the LLP Act. Every LLP shall have a registered office. An incorporation document has to be subscribed by at least two partners in an LLP partnership agreement and shall have to be filed with the Registrar in the prescribed form. Contents of LLP filing may also be required to be filed through the given procedure of LLP registration online.

A person may cease to be a partner in accordance with the limited liability partnership documents or in the absence of agreement, by giving 30 days notice to the other partners. A person shall also cease to be a partner of a LLC partnership –

(a) on his death or dissolution of the limited liability limited partnership or

(b) if he is declared to be of unsound mind by a competent court or

(c) if he has applied to be adjudged as an insolvent or declared as an insolvent. Notice is required to be given to ROC when a person becomes or ceases to be partner or for any change in partners.

Following are the details of the fees levied by the Government for LLP company registration.

• Digital signature (DSC) – Rs. 1500-2000 (Depending on the Agency)
• Application for Director Identification Number (DIN) – Rs. 1000 for two partners
• Name reservation through ‘Reserve your Unique Name’ service (RUN) – Rs. 200
• Incorporation of LLP – Rs. 500-2000, depending on the amount of capital contribution
• File Limited Liability Partnership Agreement – Varies based on capital contribution
• Rs 50 for filing Form 3 and stamp duty based on the state where LLP company registration is done

LLP registration online must be filed in form 3 on MCA Portal. Form 3 for the LLP agreement has to be filed within 30 days of the date of incorporation. The LLP Agreement has to be printed on Stamp Paper.

There are numerous benefits to be had from trading through an LLP, two of which are –

• Limited liability protects the member’s personal assets from the liabilities of the business. LLP’s are a separate legal entity to the members.
• Flexibility. The operation of the partnership and distribution of profits is determined by written agreement between the members. This may allow for greater flexibility in the management of the business.

As with all formats of business there will be disadvantages as well as advantages. The following may be considered disadvantageous in some cases.

• Public disclosure is the main disadvantage of an LLP company registration. Financial accounts have to be submitted to Companies House for the public record. The accounts may declare income of the members which they may not wish to be made public.
• Income is personal income and is taxed accordingly. There may be tax advantages in LPP company registration, but this will depend on your personal circumstances.