The Limited Liability Partnership Act, 2008 defines limited liability partnership (LLP) as a corporate structure formed under this act. Also, an LLP has its own separate legal identity that too distinct from its partners and moreover, has the feature of perpetual succession. Further, the changes in the partners count will not affect the rights, existence, and liabilities of the concerned LLP.

Furthermore, Limited Liability Partnership (LLP) is an alternative corporate business form that provides the benefits of the flexibility and ease of a partnership firm and limited liability of a private company. Lastly, LLP has the ability to enter into any contracts or agreements and can also hold property in its own name.

Hence, the limited liability partnership is an upgraded version of a Private Limited Company and Partnership. Moreover, the LLP Act 2008 was published on 07 January 2009 in the official Gazette of India and has been notified from 31 March 2009. 

Features of a Limited Liability Partnership

Following are the features attached with the concept of Limited Liability Partnership – 

  1. It has the feature of a separate legal entity just like companies

  2. The liability of each partner is limited to the extent of contribution made by partner

  3. The cost of incorporating an LLP is low

  4. Less compliance and regulations

  5. No minimum requirement of capital contribution

  6. A minimum number of two partners are required to incorporate an LLP 

  7. No upper limit is provided for the maximum number of members

  8. A minimum two designated partners are required for registration, who shall be individuals, and at least one of them must be resident in India

Documents Required for the Registration of a Limited Liability Partnership

Following listed are the documents for Limited Liability Partnership Registration– 

  1. PAN card details of all the working partners

  2. Identity Proof such as the PAN card, Voter Id, Aadhaar card, Driving License of all the designated and nominated partners

  3. Address Proof of all the proposed partners of the concerned LLP

  4. Obtain No-Objection Certificate from the landlord of the place being used as the registered office

  5. DSC (Digital Signature Certificate) of all the designated partners

  6. DPIN (Designated Partner Identification Number) of all the designated director

  7. Passport in the case where a partner is an NRI or foreign national

  8. Utility bill such as the telephone bill, gas connection, water tax receipt or the electricity bill of the registered office as a residential proof. Moreover, the said bill should not be older than two months

Steps Involved in the Procedure of LLP Registration

Following are the steps involved in the Procedure of LLP Registration – 

  1. The first step involved is to find and reserve a name for the proposed LLP. Filing of an e-form 1 by the proposed designated partner is to check the availability of the proposed name for LLP.

  2. The proposed name is then reserved by the Ministry of Corporate Affairs (MCA) for the applicant for a time duration of 90 days. Further, if the incorporation of the LLP is not completed by the applicant within a period of 90 days, it would be considered as rejected and will be made available for others.

  3. Then the concerned applicant files an e-form 2 for the LLP incorporation by mentioning all required details and particulars of the Nominated and Designated partners working in it.

  4. It is significant to note that an expressed consent is required from all the partners, including the Designated Partners for the particular role.

  5. After following the above mentioned procedure, the applicant is required to file an e-form 3 for the LLP Agreement within a period of 30 days of the LLP incorporation. Further, as per Section 23 of the Limited Liability Partnership Act, 2008, having an LLP agreement is a mandatory requirement.

Features of an LLP Agreement

Following are the features of an LLP Agreement – 

  1. Registered office

  2. The Objective of Limited Liability Partnership

  3. Designated Partners

  4. Rights and Duties of both the partners and designated partners

  5. Commencement of the Business of LLP and the Duration of LLP

  6. Role of Partners working in the Management together with the Contribution of partners

  7. Remuneration of Working Partners

  8. Up to 12 per cent interest to partners 

  9. The extent of the partner’s liabilities in the firm

  10. Accounting Year

  11. Profit-Sharing Ratio

  12. No Audit requirement up to rupees forty lakhs

  13. File Form 2 is required for the incorporation, and moreover, the subscription document has to be filed with Registrar of Companies after the name is reserved for the LLP by Registrar.

  14. File Form 3 is required for the LLP Agreement, and the same can be filed within 30 days of Incorporation of LLP.

Form Required for LLP Registration

Form name

Form purpose

RUN (Reserve Unique Name) – LLP (Limited Liability Partnership)

The Form required for the purpose reserving a name for the concerned LLP

FiLLiP

The Form required for incorporation of LLP

Form 5

Notice for the change of name

Form 17

Application and the statement required for the conversion of a firm into an LLP

Form 18

Application and the Statement required for conversion of a private company or unlisted public company into an LLP


Difference between a Limited Liability Partnership, Partnership Firm and Private Limited Company

Features

Company

Partnership firm

LLP

Registration

Compulsory registration with the Registrar of Companies (ROC). Certificate of Incorporation acts as conclusive evidence.

Not at all compulsory. But, the unregistered Partnership Firm will not have the ability to sue.

Compulsory registration is required with the Registrar of Companies (ROC)

Name

At the end of the company’s name, the word “limited” is to be written in case of a public company and “private limited” with a private company.

No guidelines.

Name of the company must end with “LLP” Limited Liability Partnership”

Capital contribution

Private Limited company must have a minimum paid-up capital as prescribed by the Companies Act, 2013

Not specified

Not specified

Legal entity

A separate legal entity

Not a separate legal entity

A separate legal entity

Liability

Limited to the extent of an unpaid capital.

Unlimited, and can extend to the personal assets of the partners

Limited to the extent of the contribution made by the partner to the LLP.

No. of shareholders / Partners

Minimum of 2 members are required in a private company, and a maximum of 50 shareholders Public Company

Minimum 2 partners

Maximum 20 partners

Minimum of 2. No maximum.

 

Foreign Nationals as shareholder / Partner

Foreign nationals can become shareholders.

Foreign nationals cannot form a partnership firm.

Foreign nationals can act as partners.

Meetings

Quarterly Board of Directors meeting and  the annual shareholding meeting is mandatory

Not required

Not required.

Annual Return

Annual Accounts and the Annual Return to be filed with the Registrar of Company (ROC)

No returns are to be filed with the Registrar of Firms

Annual statement of the accounts and solvency and Annual Return has to be filed with the ROC

Audit

Compulsory, irrespective of the share capital and turnover

Compulsory

Required, if the capital contribution is above Rs 25 lakhs or if the annual turnover is above Rs 40 lakhs.

How do the bankers view

High credit worthiness, due to the stringent compliances and disclosures required

Credit worthiness depends on the goodwill and the creditworthiness of the partners

Perception is higher in comparison to that of a partnership firm but lesser than a company.

Dissolution

Very procedural in nature. Voluntary or by the Order of National Company Law Tribunal (NCLT)

By an agreement among the partners, insolvency or by the Court Order

Less procedural as compared to a company. Voluntary or by the Order of National Company Law Tribunal

Whistle blowing

No such provision

No such provision

The Protection provided to all the employees and partners who provide useful information during the process of investigation.