New LLP Registration Procedure
Starting a new business comes with a long to-do list. In that list, choosing the right business structure is critical to their entrepreneurial journey. For many Indian entrepreneurs, an Limited Liability Partnership (LLP) has become a preferred form of business structure among entrepreneurs because it incorporates the benefits of both a partnership firm and a company into a single business structure.
In this article, we will focus on Limited Liability Partnership company registration. Recently, the government updated the LLP company formation procedure by introducing MCA21 Version 3. So, if you are a new-age entrepreneur who prefers a Limited Liability Partnership (LLP), it is essential to understand the new detailed LLP Registration Procedure in India before getting one for your business.
At the e-auditor office, we will take care of your complete business formation legalities starting from obtaining DSC to executing LLP agreement through filing form-3.
Let's start with a simple definition of LLP.
What is a Limited Liability Partnership (LLP)?
LLP is a business formation that gives the flexibility of a partnership firm along with the benefit of limited liability in a company. It is called a hybrid business structure.
A limited liability partnership firm is a newly introduced business structure regulated by the LLP Act of 2008. This type of business structure was introduced to ease business conduct and limit the risk of personal liability.
Key Features of an LLP:
- Just like a private limited company, LLP is also a separate legal entity.
- In LLP, the liability of each partner is limited to the agreed contribution made by them.
- Every partner is shielded from the misconduct or unauthorized act of the other partners.
- The LLP Partners' rights and duties are governed by the LLP agreement between the partners or between partners and the LLP.
- Irrespective of changes in partners, an LLP can continue to remain operational.
Eligibility Criteria For LLP Formation:
- To incorporate an LLP, you need a minimum of two partners. There is no upper limit on the number of partners a limited liability partnership firm can have.
- There should be a minimum of two designated partners, who must be an individual, not a corporate body.
- At least one designated partner must be a resident of India.
- Each partner in an LLP should contribute the agreed shared capital to the LLP.
Documents Required For LLP Registration in India:
For the proposed LLP registration, one must submit documents of both partners and the partnership firms.
Documents of LLP Partners
At the time of LLP registration, every partner must provide a PAN card as primary ID proof.
Address Proof of Partners:
The partners must submit any of the following documents as permanent address proof: Voter ID, Driving License, and Aadhar Card. The name and other details in the address proof have to match the PAN card.
If there is any issue in document details like your name, DOB, or father's name, then it should be corrected before submitting the same to the Registrar of Companies (RoC).
Proof of Residence:
The documents that can be submitted as current residence proof: latest bank statement, telephone bill, mobile bill, electricity bill, or gas bill.
Those bills shouldn't be more than two to three months old and should contain the names of partners as mentioned in the PAN Card.
Travel Passport: (For Foreign Nationals)
If any foreign national or an NRI wants to be a partner in LLP, he must submit their passport. The relevant authorities must notarize the passport in the country of such foreign nationals and NRI. If not, the Indian embassy in that country can sign the relevant documents.
Other than a passport, NRI and foreign nationals must submit an address proof. It can be a bank statement, driving license, or any document with residential address details issued by the government.
If the submitted documents are in a language other than English, the authorized person of the proposed LLP should submit the notarized translation copy and other documents.
Documents of LLP:
Proof Of Registered Office Address:
The LLP partners must submit the registered office address proof either at the time of registration or 30 days after LLP registration.
The partner/authorized person has to submit utility bills like gas, electricity, or telephone bill must be submitted. The bill must contain the complete address of the premise and the owner's name. Most importantly, the bill shouldn't be more than two months old.
Other than the documents mentioned above, it is important to note that if the registered office is in the rented space, the partners must get the rental agreement and No Objection Certificate (NOC) from the landlord.
The landlord's NOC must specify that the mentioned address is allowed to be used as a registered LLP office.
Digital Signature Certificate(DSC):
One of the designated partners of LLP has to opt for DSC. Since all the documents are submitted digitally, they must be duly attested by an authorized signatory.
How To Incorporate A New Limited Liability Partnership Firm Online?
For incorporating a limited liability partnership firm in India, here is the step-by-step procedure for you:
Step 1: Apply For Digital Signature Certificate (DSC)
To complete the LLP registration process online, it is important to get a Digital Signature Certificate (DSC) for at least one designated partner of the proposed LLP.
An authorized person has to affix a DSC on all the electronic documents submitted to the Ministry of Corporate Affairs (MCA). Attaching DSC ensures authenticity on all the submitted documents.
To obtain DSC, a partner/designated partner has to approach government-recognized certifying agencies. Make sure that the obtained DSC should be Class-3* category.
Click here to get the list of certifying agencies.
Class-3 category DSC is the most secure one that one can use for affixing all the documents. Once you apply for DSC with government-approved certifying agencies, it will take around 3 to 7 days to obtain one. And an obtained DSC is valid for one or two years, depending upon the category of DSC.
Step 2: Apply For DPIN/DIN
The terms DPIN and DIN are used interchangeably. DIN is applied for company registration, and DPIN is applied for LLP registration. So, if the designated partner already has a (Director Identification Number)DIN, the same can be used as DPIN. In case, the designated partner does not have DIN/DPIN he can get it through LLP registration form.
Step 3: Reservation of Unique Name For Business(RUN LLP Form)
After obtaining DSC and DPIN, the next step is to reserve a unique name for your proposed LLP. RUN LLP is a post-user registration service.
So, after successful login/registration, visit MCA services tab > LLP e-filing > select RUN-LLP.
Now, choose the purpose of filing any one of the following:
New Corporation; Conversion of a firm into LLP; Conversion of Pvt company/unlisted public company into LLP; Change of name of existing LLP;
Enter all other relevant details, such as NIC codes, CIN, and LLPIN, and propose two unique LLP names in the proper format as requested.
After that, you can check the form details by clicking on the "Auto-Check the form" tab. The system will list all the error details on LLP name similarity, Trademark similarity alerts, etc. Upon correcting those errors, you will be able to submit the form and proceed to pay the fee of Rs.200 per RUN LLP submission. The submitted form will be processed under the non-STP method.
Once the form is processed, an approval/rejection letter is sent to the registered Email ID of the user.
If approved, it remains valid for three months from the approval date. If rejected, you can do RUN LLP resubmission.
After that, the name shall expire unless it has been taken up by the applicant/ LLP (that is, by the filing of the requisite forms like LLP Incorporation (FiLLiP) or Notice for change of name (LLP Form No. 5).
STEP 4: Incorporation of LLP
For incorporating your new LLP, file the webform FiLLiP (Form for incorporation of Limited Liability Partnership) with the Registrar of Companies (RoC), who has jurisdiction over the state in which the proposed LLP is situated.
With the updated MCA21 version 3, an LLP can be incorporated with 500 Partners through the webform FiLLiP. There is no requirement to file Addendum to webform FiLLiP.
As per the new update, form 9 has been integrated with the FiLLiP for incorporation of LLP. So, after successfully submitting webform FiLLiP, the user must file the consent of Designated Partners who have DIN/DPIN in linked webform-9 under Section 7(3) of LLP Act 2008 and Rule 7 and Rule 10(8) of LLP Rules, 2009.
However, for the Designated Partners whose DIN/DPIN is applied through the webform, FiLLiP shall file the said consent in Form 9 as a separate attachment to FiLLiP.
To complete the FiLLiP form submission, affix DSC in the PDF document and pay the fees within seven days of SRN generation. Upon successful incorporation, registration certificates are issued for the LLP.
STEP 5: Filing of LLP Agreement (FORM-3)
One has to file form-3 within 30 days of incorporation of LLP. Form 3 is a limited liability partnership agreement that lays down the partners' rights, liabilities, and duties.
The partners must execute the LLP agreement and file with the RoC. The LLP agreement covers information such as,
- The registered office of the LLP.
- Nature of business of the LLP.
- Rights of the partners.
- Contribution and profit share of the partners.
- Voting rights.
- Process for change in partner.
- Transfer/ assignment of rights; and
- Dispute resolution
If there is no LLP agreement, the mutual rights and duties of the partners inter-se and those of the LLP and the partners are determined by the provisions of the First Schedule of the LLP Act.
Author : Dharani
Date : 05-Sep-2022