HOW TO INCORPORATE / REGISTER LIMITED LIABILITY PARTNERSHIP (LLP) IN INDIA

INCORPORATION OF A LIMITED LIABILITY PARTNERSHIP (LLP)

 

Meaning of Limited Liability Partnership (LLP)

 

Section 2 of Sub-section (n) of the Limited Liability Partnership Act, 2008 states that “Limited Liability Partnership (LLP)” means a partnership formed and registered under Limited Liability Partnership Act, 2008.

 

LLP is a corporate business vehicle that enables professional expertise and entrepreneurial initiative to combine and operate in flexible, innovative and efficient manner, providing benefits of limited liability while allowing its members the flexibility for organizing their internal structure as a partnership.

 

Procedure of Incorporation of a LLP

 

1.     Apply for Digital Signature Certificate (DSC)

 

The proposed partners of the LLP should first apply for the Digital Signature Certificate (DSC) from the certifying authority. The DSC is mandatory for the incorporation of a LLP.

 

2.     Apply for Name Approval

 

Name needs to be checked and applied in MCA portal for approval along with the draft main objectives.

 

The ROC may accept the name or reject the name. The name reservation will be valid for 3months from date of approval of the name.

 

3.     Documents to be prepared before Incorporation

 

After approval of name or for Incorporation of LLP applicant have to prepare the following below mentioned documents

 

a)     NOC from Owner of the proposed registered office premises

b)    Subscribers Sheet

c)     Consent from designated partner in Form-9

d)    ID and Address Proof of the designated partners who does not have valid DIN / DPIN

e)     Utility bill of the proposed registered office premises, which is not older than 2 months.

f)      Passport size photograph of Partners

 

4.     Fill the Form FiLLiP (Incorporation form)

 

Once the documents are ready, the next is to prepare the LLP incorporation forms i.e. FiLLiP and Form addendum to FiLLiP.

 

The some of the following details to be filled. They are

a)     SRN of the name reservation.

b)    Address, e-mail id and phone number of the office premises.

c)     Contribution made by the partners in monetary value.

d)    Attachments to be made

 

5.     Preparation and submission of the LLP Agreement

 

LLP Agreements mean any written agreement between the partners of the Limited Liability  Partnership or between the Limited Liability Partnership and its partners which determines mutual rights and duties of the partners and their rights and duties in relation to that limited liability partnership.

 

After incorporation of LLP, the partners shall execute LLP Agreement and a copy of executed agreement is required to be filed with the ROC in Form 3 LLP within 30 days from the date of incorporation of LLP.

 

 

ANNUAL COMPLIANCES FOR LIMITED LIABILITY PARTNERSHIP

ANNUAL COMPLIANCES FOR LIMITED LIABILITY PARTNERSHIP

 

Limited Liability Partnership (LLP) is a hybrid form of Business entity which entails features of a Partnership Firm and a Company. The LLP is managed by its partners and it is a separate legal entity from its partners.

 

The concept of Limited Liability Partnership has been brought by way of enforcing Limited Liability Act, 2008.

 

Annual Compliance of LLP

 

All LLPs Registered under the LLP Act, 2008 need to file

 

i.                 Annual Returns in From 11; and

ii.                Statements of Accounts in Form 8 for every Financial year.

 

 

It is mandatory for an LLP to file Annual Return and Statement of Accounts irrespective of whether it has any business or not.

 

I.                 Filing of Annual Return in Form 11

 

Ø  Annual return needs to be filed in the Form 11. This form is a summary of the management affairs of the LLP, Such as number of partner and their contribution etc.

 

Due Date for filing Annual Return

 

Ø  Form 11 needs to filed every year within 60 days of closure of the Financial year. Hence this Annual Returns should be filed on or before 30^th May every year.

 

Certification

 

The Form needs to Digitally signed by:

 

Ø  two Designated Partners;

Ø  in case the annual turnover of the LLP crosses Rs 40 Lakhs or the Capital contribution from partners exceeds more than Rs 25 lakhs the Annual return should be accompanied by a Certificate from Practicing Company Secretary.

 

Government Fees details

 

Ø  The filing fees for Form11 depend upon the Capital Contribution of the LLP. Minimum Filing Fees is Rs. 50/-

 

Ø  There is an additional Filing fees of Rs. 100/- per day per form, if there is any delay in filing the form beyond the due date.

 

For Example: ABX LLP is incorporated on 12th September 2019 with Contribution of Rs. 1,00,000/-. The designated partners were not aware of the compliances and hence they did not file the Form 11 till 30th November 2021. On 30th November 2021 the additional fees for filing Form 11 will be as below:

 

Due date for filing Form 11: 30.05.2020

Date of filing Form 11: 30.11.2021

Normal Fees: Rs. 50/-

Additional Fees: Rs. 18,400 (Rs. 100/- per day for 184 days delay )

 

II.               Filing of Statement of Accounts or Financial Statements in Form 8

 

Ø  All LLPs are Required to maintain their Books of accounts. The accounts may be on cash basis or accrual basis.

 

Ø  They also need to prepare a Statement of Solvency (accounts) every year ending 31st march for this purpose.

 

Due Date for filing Statement of Accounts

 

Ø   LLP Form 8 should be filed with the Registrar Companies on or Before 30th October every year.

 

Auditing requirements for LLPs:

 

Ø  It shall be noted that LLPs whose annual turnover exceeds Rs 40 lakh or whose contribution exceeds Rs 25Lkh are required to get their accounts audited by qualified Chartered Accountant mandatorily.

 

Certification

 

The Form needs to Digitally signed by:

 

Ø  Two Designated Partners;

Ø  in case the annual turnover of the LLP crosses Rs 40 Lakhs or the Capital contribution from partners exceeds more than Rs 25 lakhs the Form should be Digitally signed by the Statutory Auditor of the LLP and should be certified by another Practicing Professional.

 

Government Fees details

 

Ø  The filing fees for Form 8 depend upon the Capital Contribution of the LLP. Minimum Filing Fees is Rs. 50/-

 

Ø  There is an additional Filing fees of Rs. 100/- per day per form, if there is any delay in filing the form beyond the due date.

 

For Example: ABX LLP is incorporated on 12th September 2019 with Contribution of Rs. 1,00,000/-. The designated partners were not aware of the compliances and hence they did not file the Form 8 till 30th November 2021. On 30th November 2021 the additional fees for filing Form 8 will be as below:

 

Due date for filing Form 8: 30.10.2021

Date of filing Form 8: 30.11.2021

Normal Fees: Rs. 50/-

Additional Fees: Rs. 3,100 (Rs. 100/- per day for 31 days delay)

 

 

STEPS FOR CONVERSION OF PARTNERSHIP FIRM TO LIMITED LIABILITY PARTNERSHIP (LLP)

STEPS FOR CONVERSION OF PARTNERSHIP FIRMS INTO LIMITED LIABILITY PARTNERSHIP (LLP)

 

       I.          Obtain Digital Signature: 

 

Every Partners in a partnership firms must obtain the Digital Signature Certificate as it will be required for filing of various e-forms with Ministry for conversion.

 

     II.          Name Approval:

 

The applicant needs to file for reservation of name for the proposed LLP through Ministry of Corporate Affairs. The name must be obtained before filing the forms for conversion of partnership firms into LLP.

 

   III.          Filing of forms for Incorporation:

 

Once the name got approved through RUN, the forms for Incorporation of LLP needs to be filed. If the proposed Designated Partner is not having Designated Partner Identification Number (DIN) we can apply the same along with incorporation forms (Maximum 2).

 

                                        Following documents and information is required for filing of e-forms:

 

·        Capital of Proposed LLP and Contribution of Proposed Partners

·        Phone No. and E-Mail Id of Proposed Partners

·        Identity Proof of the Partners (Voter Id Card/Driving Licence/Passport)

·        Latest Utility Bill (Not Older Than 2 Months) (for Registered Office)

·        Registered Office Proof (Allotment Letter/ Possession Letter/ Sale Deed/ Rent Agreement)

·        PAN of all Partners

·        Bank Statement of partners as address proof

 

Following documents needs to be attached along with e-forms:

 

·        Subscriber Sheet Including Consent.

·        Proof of Address of Registered Office of the LLP which includes NOC of the Owner.

·        Main Object.

·        Details of LLP or Company if the proposed Designated Partner /Partner is Director or Partner of any other Company or LLP respectively.

 

   IV.          Filing of Form 17

 

Application and statement of Conversion of Partnership into LLP (form 17) needs to be filed.  This form needs to be filed along with the application for incorporation. It includes the declaration by a partner of the LLP. And shall be digitally signed by the partner and Certified by the practicing professionals.

 

Following documents needs to be attached to form 17:

 

·        Statement of consent of partners of the firm.

·        Statement of Assets and Liabilities of the firm duly certified as true and correct by the Chartered Accountant in practice.

·        Copy of acknowledgement of latest income tax return.

·        List of all the secured creditors along with their consent to the conversion

 

     V.          Filling of Form-3: Information with regard to limited liability partnership agreement and changes, if any, made therein. Copy of the Agreement should be attached to the e-form.

 

Ø  The precondition for conversion for your partnership firm is:

 

·        Partnership should be a registered under Indian partnership Act 1932.

·        All the partners of existing firm should compulsorily become the partners of LLP.

·        Minimum 2 partners as Designated Partners and one of them should be Resident in India.

·        Registered Office for the existing partnership firm.

 

Ø  Effects of conversion:

 

Once the firm gets registered as LLP:

 

• All tangible and intangible property, all assets and liabilities, etc. relating to the firm and shall be transferred to the LLP without further act or deed.
• The firm will be dissolved and removed from records maintained under the Indian Partnership Act, 1932.
• All the pending proceedings by and against the firm shall continue in the same manner in the name of LLP.
• All rulings, orders and judgements against the firm shall be now against the LLP.
• All existing agreements and contracts, including contract of employment shall continue with LLP.

 

However, every partner of the firm will continue to be personally liable to obligations and liabilities of the firm that incurred before the conversion of firm into LLP.

 

 

Disclaimer:

The Views expressed are solely of the Author and the contents of this article is to share the Knowledge on subject matter. Expert advice should be sought for your specific circumstances.