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May 12, 2020

Online Step wise process to form a Limited Liability Partnership – LLP in India

by Mahesh Mara in Corporate Law

Online Step wise process to form a Limited Liability Partnership – LLP in India

Limited liability partnership or LLP is a form of partnership where some or all partners have limited liability. It is a combination of partnership firm and a company which gives limited liability of a company and a flexibility of a company. LLP is a separate legal entity and the liability of the partner are limited to the extent of their contribution in the firm. LLP continues its existence irrespective of change in partners. LLP is capable of entering into contract and can hold property or assets in his own name.

To register an Indian LLP, you need to first apply for a Designated Partner Identification Number (DPIN), which can be done by filing e-Form for acquiring the DIN or DPIN. You would then need to acquire your Digital Signature Certificate and register the same on the portal. Thereafter, you need to get the LLP name approved by the Ministry. Once the LLP name is approved, you can register the LLP by filing the incorporation form.

Step wise process to form an LLP in India
Step wise process to form an LLP in India

Procedure to form an LLP in India

The below is the step wise procedure to form an LLP in India:

Step 1: Acquiring Digital Signature of Designated Partner.

The 1st step of formation of LLP the designated partner must obtain or register for digital signature certificate. As per the Information technology Act, 2000 in order to submit and authenticate e form electronically digital signature certificate must be used for signing such documents. Signing through DSC is the only secure and authentic way that a document can be submitted electronically. All filings done by the LLP(s) are required to be filed using Digital Signatures by the person authorized to sign the documents.

Step 2: File Form FiLLiP

After acquiring the DSC the LLP has to file form FiLLiP. Earlier the LLP has to first obtain DPIN for designated partner and later file the incorporation form. Now LLP has to fill Form FilliP, it is a simple 5 page form where the LLP has to give the following details:

  1. Whether name is already approved by Registrar of Companies, select whether yes or no.
  2. If answer to point 1 is yes, then provide service request number obtained from MCA.
  3. Select whether the LLP is:
    • New incorporation, or
    • Conversion of firm into LLP, or
    • Conversion of private company/ unlisted public company into LLP.
  4. Provide registered address of the LLP.
  5. Name of the office of Registrar in which the proposed LLP is to be registered.
  6. Business activities to be carried out by the LLP on incorporation.
  7. Based on business activities, provide main division of industrial activity of the LLP.
  8. Provide total number of partner in the LLP.
  9. Provide Particulars of the proposed or approved name.
  10. Select, Whether the proposed name is based on a trademark registered or is subject matter of an application pending for registration under the Trade Marks Act. If yes, furnish particulars of trade mark or application.
  11. Provide Total monetary value of contribution by partners in the LLP.
  12. Select, whether addendum to FiLLiP is required to be filed. Addendum to FiLLiP is required when there are more than 2 designated partners.
  13. Attach the documents of the LLP as below:
    • Where the appointed partner is a body corporate, copy of resolution on the letterhead of such body corporate to become a partner in the proposed LLP and a copy of resolution/ authorization of such body corporate also on a letterhead mentioning the name and address of an individual nominated to act as nominee/designated partner on its behalf.
    • Proof of address of registered office of LLP.
    • Subscribers’ sheet including consent.
    • Detail of LLP(s) and/ or company(s) in which partner/ designated partner is a director/ partner.
    • Approval of the owner of the trademark or the applicant of such application for registration of Trademark.
    • Copy of approval in case the proposed name contains any word(s) or expression(s) which requires approval from central government.
    • Copy of approval from the competent authority in case of collaboration and connection with the foreign country or place.
    • Copy of Board resolution of the existing company or consent of existing LLP as a proof of no objection.
    • Proof of identity and address of Applicant 1.
    • Proof of identity and address of Applicant 2.
  14. After uploading document select the verification box
  15. Now, enter the details of the CA or CS or CMA or Advocate in practice in declaration form

After entering all details click on “Check form” the details of the form will get checked and the form will give you message if any error is made in the form. Once check form step is done, you have to attach the DSC of the designated partner and the DSC of CA or CS or CMA or Advocate mentioned in the declaration form. After the DSC is attached, click of “Prescrutiny” button the form will get scrutinized for the purpose of uploading on the MCA portal.

Step 3: Registering on MCA portal and Uploading Form FiLLiP:

In order to file e form or to avail any paid service relating LLP on MCA portal you are first required to register yourself as a user under the relevant user category, such as registered and business user on the MCA portal.

  1. To register now click Register tab on Home page of MCA and create your account.
  2. Once the account is created, Login to MCA website using the Login Id and Password from the home page.
  3. Click on “Upload e-Forms” button and
  4. Select, form type as Normal form and Browse the form file from system
  5. Now, click on “upload form” button

The form will get uploaded and you will be required to pay the required fees which is as below:

ParticularsFees
Limited Liability Partnership whose contribution does not exceed Rs. 1 lakhRs. 500/-
Limited Liability Partnership whose contribution exceeds Rs. 1 lakh but does not exceed Rs. 5 lakhsRs. 2,000/-
Limited Liability Partnership whose contribution exceeds Rs. 5 lakhs but does not exceed Rs. 10 lakhsRs. 4,000/-
Limited Liability Partnership whose contribution exceeds Rs. 10 lakhRs. 5,000/-

It usually takes 8 to 10 days for the form to get approved from the MCA department.

Step 4: Preparing draft LLP Agreement.

LLP agreement has to be drafted as per the LLP Act. The LLP is mandatorily required to file LLP agreement at the time of registration and the same can be filed within 30 days. The 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 for all the penalties imposed on the LLP by the MCA. The following are the important clauses to be mentioned in at the time of preparing the draft LLP agreement:

  1. Name, Objective and Register Office of LLP
  2. The initial Contribution by the Partners to the LLP
  3. The net profits or losses sharing ratios
  4. Detail of Designated Partners.
  5. Interest payable on Capital Loan prescribed as per 40(b) of the Income-tax Act, 1961
  6. Remuneration payable to the working partners or as prescribed u/s 40(b) of the Income-tax Act, 1961
  7. Mode of operation of Bank Accounts
  8. Maintenance of Book of Accounts
  9. Appointment of arbitrator
  10. Rights and Duties of Partners
  11. Rights and Duties of Designated Partners
  12. Indemnity clause
  13. Goodwill clause
  14. Clause for change in name
  15. Procedure to appoint Auditor
  16. Admission of New Partner
  17. Clause for meetings of the LLP
  18. Clause for cessation of Existing Partners
  19. Clause for winding up of LLP
  20. Clause for amendments of LLP
  21. Clause for extent of Liability of LLP
  22. Clause for liability of Partners in LLP
  23. Details of ancillary or other business carried over by LLP

The LLP agreement must be notarized and must be made on stamp paper exceeding Rs. 500 or Franking must be done on the LLP agreement exceeding Rs. 500.

Step 5: Filing of Form 3 – LLP Agreement

After Certificate of incorporation of LLP is received from the MCA the LLP has to file Form 3 on the MCA portal within 30 days from the date of incorporation of LLP. The user has to file the information in Form 3 (Information with regard to Limited Liability Partnership Agreement and changes, if any, made therein). This is a 5 pages’ form where the LLP has to give the details of the LLP which as follows:

  1. Select whether form is to be filed for Filing information with regard to LLP Agreement or for information with regard to changes in LLP Agreement
  2. Enter the LLPIN and click on “Pre-fill” button the details of the LLP will get prefilled from the MCA website
  3. Enter the email id of the authorized person
  4. Enter the Obligation to contribute details
  5. After entering the details attach the LLP agreement
  6. Now, enter the DPIN of the designated partner
  7. Now, enter the details of the CA or CS or CMA or Advocate in practice in declaration form

After entering all details click on “Check form” the details of the form will get checked and the form will give you message if any error is made in the form. Once check form step is done, you have to attach the DSC of the designated partner and the DSC of CA or CS or CMA or Advocate mentioned in the declaration form. After the DSC is attached, click of “Prescrutiny” button the form will get scrutinized for the purpose of uploading on the MCA portal.

After the form is ready for upload repeat step 3 and upload the form.

After following all the above steps your LLP is fully incorporated and is ready to perform the day to day activities.

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