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Introduction
Many individuals desire to become their own boss and gain freedom by starting their own businesses but it requires a lot of effort to do so. Limited Liability Partnerships are the right choice as it provides the features of the company structure and partnership firm. Incorporating your business as LLPis a very simple process as it consists of 5 steps. Keep reading this blog and you will get to know the process of incorporating a new LLP.
What is a Limited Liability Partnership?
A Limited Liability Partnership is a combination of a company structure as well as a partnership firm. LLP also limits the liability of partners to the capital amount contributed by them and that is governed by LLP Agreement. The incorporation, compliance and other regulation are governed by the Companies Act, 2013 and LLP agreement created at the time of LLP registration as per the Limited LiabilityAct, 2008.
Requirement for incorporation of LLP
There should be a minimum of two designated partners and one of them should be residing in India.
Each selected partner is required to have a DPIN and a digital signature certificate (DSC).
LLP should have a registered office where all notices and communications are made and forwarded.
The name of the LLP must contain words either s "Limited Liability Partnership" or the abbreviation LLP at the end of it.
Registration of an LLP
Let us learn the various steps involved in registering an LLP.
1. Obtain DSC -The first step is to obtain a digital signature certificate (DSC) if you do not have one. This DSC is required at further steps during the process of LLP registration. Therefore, you must prepare it before applying for registration. You will also need to enter your DSC for each document because almost all of these documents are available online when it comes to registering an LLP. The DSC can be received from any of the authorized institutions that have the authority to distribute them.
2. LLP name reservation-According to the revised procedure, applicants have to submit a web form named RUNN-LLP (Reserve Unique Name – Limited Liability Partnership) for name reservation. The outdated LLP Form 1 has been replaced with RUN-LLP. The new form has shortened the requirement to the preferred name, its importance, and other essential characteristics.
The applicant can submit a maximum of two names in preference order with their significance. The names should comply with the relevant provisions for name reservation. In case the names are rejected by MCA, another chance is provided to the applicant for applying 2 more names for the proposed LLP. If one of the names is approved, then it should be allotted by the Registrar to the proposed Limited Liability Partnershipfor a period of 90 days. It should be noted that having an account on MCA portal is mandatory.
3. Prepare documents for incorporation of LLP-Once the name is approved, the proposed LLP is required to prepare certain documents which are as follows:
Proof of office address (Conveyance/Lease Deed/Rent Agreement etc. along with rent receipts)
NOC from owner of the property
Copy of utility bills (not older than 2 months)
Subscription sheet including consent
In case, a designated partner does not have a DIN, it is mandatory to attach: Proof of identity and the residential address of the subscribers
All the DPs should have a digital signature certificate
Detail of LLP(s) and/or Company(s) in which partner or designated partner is a director/partner
Copy of approval in case the proposed name contains any word(s) or expression(s) which requires approval from the Central Government.
4. Application for LLP incorporation- This step and application represent the major change in the new procedure. The LLP Form 2 is replaced by FiLLiP (Form for Incorporation of Limited Liability Partnership) for filing the incorporation application. The applicant should fill in all the information required in FiLLiP along with the necessary documents. The most important part of this application is the integration of the DIN allotment application with it.
A maximum of two Designated Partners (DPs) can apply for DPIN/DIN under the application. If there are more than two DPs, they can be added later by making the appropriate filings. This form can also be used for name reservations. The applicants have the option of reserving the name of the proposed LLP partnershipvia FiLLiP or LLP-RUN.
The Central Registration Centre (CRC) will review the application before approving it. If the registrar thinks it is necessary to request for more documents or information, he may do so by directing a re-submission within 15 days. After the re-submission of the application, the CRC has to convey the decision within 15 days. It is specified that the total number of days for document re-submission cannot exceed 20 days.
Following approval of the online application for LLP registration, the Certificate of Incorporation (CoI) will be issued and the DPIN/DIN will be allotted to Designated Partners.
5. Draft and file LLP agreement- Draft the LLP agreement keeping in mind the requirements of the partners. The LLP agreement covers the mutual rights and duties amongst the partners and also between the Limited Liability Partnershipand its partners. The LLP agreement must be printed on the Stamp Paper and the value of the stamp vary from state to state. The agreement should be duly signed by Designated Partner, duly notarized, and also signed by with witnesses
Every LLP must file information regarding the LLP agreement executed in Form 3 with the Registrar within 30 days of incorporation or at the time of filing Form FiLLiP with the prescribed fee.
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