Step wise
Registration Process for Limited Liability Partnership (LLP)
Recently
most entrepreneurs have started opting for Limited Liability Partnership,
considering it has most positive features of Partnership and Companies. It is
hybrid form which incorporates benefits of both partnership and companies. It
has the following features:
·
The liability of each partner is limited to the
contribution mention in agreement.
·
The cost of formation is limited.
·
Less restriction and compliance.
·
Separate Legal Entity
Following
is Step wise Registration process for incorporation of Limited Liability
Partnership (LLP)
Step 1) Obtain Designated Identification
Number (DIN)
Every
individual intending to be appointed as designated partner of a limited
liability partnership has to make an application for allotment of Director
Identification Number. MCA has vide its notification amended the limited
liability partnership rules, 2009. Now instead of DPIN, every partner who will
be appointed as designated partner , will need to apply for DIN and not DPIN.
There
is a fixed fee of Rs 100 for this eForm and it can only be paid through online
mode (credit card/ internet banking). There shall be no requirement for
physical submission of the documents at the DIN cell. All the necessary
documents shall need to be scanned and attached in the eForm and submitted
online.
While
filing DIN form ensure following:
·
Single alphabet is not allowed in field ‘first
name’ and ‘last name’.
·
Prefixes like Mr. / Ms. / Kumari / Shri etc. are
not acceptable.
·
The name should be filled exactly as given in
the identity proof, including the spelling.
·
It is mandatory to attach photograph giving
front view of the full face of the applicant.
·
Income tax PAN is mandatory for Indian
nationals. Applicant’s name (first, middle and last name), applicant father’s
name (first, middle and last name) and date of birth should be as per the
income-tax PAN details.
·
Passport number is mandatory for foreign
nationals.
·
Proof of Identity of applicant - In case of
Indian nationals, Income-tax PAN is a mandatory requirement for proof of
identity. In case of foreign nationals, passport is a mandatory requirement for
proof of identity.
·
Proof of residence of applicant - Address proofs
like passport, election (voter identity) card, ration card, driving license,
electricity bill, telephone bill or bank account statement shall be attached
and should be in the name of applicant only.
·
In case of Indian applicant, documents should
not be older than 2 months from the date of filing of the form
·
In case of foreign applicant, address proof
should not be older than 1 year from the date of filing of the eForm.
·
Affidavit need to made by the applicant as per
Annexure - 1 of the DIN Rules on Stamp paper which shall be notarized
·
DIN application needs to be by signed
professional
Submit
the application form online. The system will generate a provisional DIN.
Step 2) Register Digital Signature of
Designated Partner
Partner/Designated
partner of LLP/proposed LLP, whose signatures are to be affixed on the e-forms
has to obtain class 2 or class 3 Digital Signature Certificate (DSC) from any
authorized certifying agency. Register Digital Signature of Designated
Partner on the website of Ministry of
Corporate Affairs. Fill in the registration form. Fields marked * in the form
are to be mandatorily filled. Upload digital signature certificate. On
successful registration, system will give a message that you have been
registered successfully.
Step 3) Filing of Form 1 for Name
Availability
Free
name search facility (of existing companies / LLPs) is available on MCA portal.
The system will provide the list of similar/closely resembling names of
existing companies/LLPs based on the search criteria filled up. Download and
fill Form-1 for reservation of name and fill in the details. Select name of the
proposed LLP (upto 6 choices can be indicated).
State the significance of the key or coined word in the proposed name in
brief
Enter
the details of the applicant. Select whether applicant is an ‘Individual as
partner’ or ‘Nominee of a body corporate’. Enter DIN of the applicant. DIN
should be an approved DIN. On clicking the Pre-Fill button, system will
automatically display the name, present residential address, phone, mobile, fax
and e-mail ID of the applicant. Any partner or designated partner in the
proposed LLP may submit Form-1.
In
case the Designated Partner is nominee of a body corporate, select the type of
body corporate. Enter the corporate identity number (CIN) or foreign company
registration number (FCRN) or Limited Liability Partnership Identification number
(LLPIN) or Foreign Limited Liability Partnership Identification number (FLLPIN)
or any other identification number, as applicable.
Details
of minimum two designated partners of the proposed LLP, one of them must be a
resident of India, is required to be filled in the application for reservation
of name. Only individuals or nominees on behalf of the bodies corporate as
partners can act as designated partners.
Ensure
that correct details have been provided as the same shall be automatically
pre-filled in Form 2 for incorporation of LLP. Append digital signatures and
submit the e-form. Pay the necessary fee of Rs 200/- by credit card
(master/visa).
Once
the name is reserved by the Registrar, log on to the portal and fill up
Form-2
Step 4) Filing of Form 2 for Incorporation
and Subscription Document
Mention
Total Number of Partners and Designated Partners. Fill up details of same. Enter
the amount of proposed monetary value of partner’s contribution in figures and
system will automatically display the amount in words. Attach details in
respect of names of partners/ nominees/ witnesses and their signatures in the format
as Subscribers' sheet attachment. Attach proof of register office address of
LLP. An individual has to give prior consent to become a designated partner and
LLP to file consent in format prescribed. Select the state and office of
registrar in which registered office of the proposed LLP is to be situated.
In
case the name includes banking, insurance, venture capital, mutual fund, stock
exchange, Chartered Accountant, Company Secretary, Cost Accountant, Advocate,
CA, CS, CWA, asset management, non banking financial, architect, merchant bankers, chit fund, securitization and
reconstruction etc, a copy of the in-principle approval of the regulatory
authority or council governing concerned profession should be attached with
Form 2
Pay
the prescribed registration fee as per LLP Rules, based on the total monetary
value of contribution of partners in the proposed LLP
On
submission of complete documents the Registrar after satisfying himself about
compliance with relevant provisions of the LLP Act will register the LLP and will
issue a certificate of incorporation
Step 5) Drafting of LLP Agreement
LLP
agreement has to be drafted line with LLP Act. It is not mandatory to file LLP
agreement at the time of registration and same can be file within 30 days. Designated
partners are responsible for doing all acts, matters and things that are
required to be done for complying with the provisions of the LLP act. They are
liable to all penalties imposed on the LLP. So it is very important to draft
LLP agreement with professional help.
The
following clauses are important to be incorporated in agreement:
·
Name, Object and Register Office of LLP
·
The initial Contribution of the LLP by Partners
·
Methodology of valuation of Non Monetary
contribution
·
The net profits or losses sharing ratios
·
Detail of Designated Partners
·
Interest
payable on Capital Loan prescribed u/s. 40(b) of the Income-tax Act,
1961
·
Remuneration payable to the working partners or
as prescribed u/s. 40(b) of the Income-tax Act, 1961
·
Mode of operation of Bank Accounts
·
Maintenance of Book of Accounts
·
Appointment of arbitrator
·
Rights and Duties of Partners
·
Rights and Duties of Designated Partners
·
Indemnity clause
·
Goodwill clause
·
Procedure for change in name
·
Procedure to appoint Auditor
·
Admission of New Partner
·
Meeting
·
Cessation of Existing Partners
·
Winding up of LLP
·
Amendments of LLP
·
Extent of Liability of LLP
·
Liability of
Partners in LLP
·
Ancillary or other business carried over by LLP
Step 6) Filing of Form 3 – LLP Agreement
The
LLP agreement has to be uploaded. Once it gets approved all the formalities for
registration gets completed.
BY : CA CHIRAG CHAUHAN
For
any query you can write to Chirag@cachauhan.in
. Before making any decisions do consult your Professional / tax advisor. Author does not take any responsibility for
misrepresentation or interpretation of act or rules. Neither the author nor the
firm accepts any liability neither for the loss or damage of any kind arising
out of information in this document nor for any action taken in reliance there
on.
