Process for Incorporation of LLP under Companies Act, 2013

Recently most entrepreneurs have started opting for Limited Liability
Partnership, considering it has most positive features of Partnership and Companies. It is hybrid form which incorporates benefits
of both partnership and companies.

Limited Liability
Partnerships (LLPs) are commercial vehicles which combine the features of
partnership and company form of business .The concept of Limited Liability
Partnership (LLP) has been introduced in India by way of Limited Liability
Partnership Act, 2008 (notified on 31st March 2008).

A Limited Liability Partnership combines the advantages of both the Company and
Partnership into a single form of organization.
In an LLP one partner is not responsible or liable for another partner’s misconduct
or negligence.

In an LLP, all partners have limited liability for each individual’s protection within
the partnership, similar to that of the shareholders of a limited company.
However, unlike the company shareholders, the partners have the right to manage
the business directly. An LLP also limits the personal liability of a partner for the
errors, omissions, incompetence, or negligence of the LLP’s employees or other
agents.

REQUIREMENTS FOR INCORPORATION OF LLP:
PARTNER:
1. A minimum of two partners will be required for formation of an LLP. There will
not be any limit to the maximum number of partners.
2. A body corporate can also be Partner of LLP.
DESIGNATED PARTNER:
1. Every LLP shall be required to have at least TWO DESIGNATED PARTNERS.
2. Designated Partners shall be Individuals
3. At least one of the Designated Partner shall be a resident of India.
4. In case of a LLP in which all the partners are bodies corporate or in which one or
more partners are individuals and bodies corporate, {At least two individuals who
are partners of such LLP or nominees of such bodies corporate shall act as designated partners}.

REGISTERED OFFICE:
1. Every LLP shall have a registered office to which all Communications and Notices
may be addressed and where they shall be received. (Section- 13)
PROCESS FOR INCORPORATION OF COMPANY: Below Given are Seven Simple
Process for Incorporation of LLP.
STEP WISE PROCESS FOR INCORPORATION OF LIMITED LIABILITY
PARTNERSHIP “LLP”
Step-I- Obtain din:

Every individual intending to be appointed as designated partner of a limited
liability partnership has to make an application for allotment of Director
Identification Number. MCA has vide its notification amended the limited liability
partnership rules, 2009. Now instead of DPIN, every partner who will be appointed
as designated Partner , will need to apply for DIN and not DPIN.
Step-II- obtain DSC

Designated partner of LLP/proposed LLP, whose signatures are to be affixed on
the e-forms has to obtain class 2 Digital Signature Certificate (DSC) from any
authorized certifying agency. Register Digital Signature of Designated Partner on
the website of Ministry of Corporate Affairs. Fill in the registration form. Fields
marked * in the form are to be mandatorily filled. Upload digital signature
certificate. On successful registration, system will give a message that you have
been registered successfully.

Step-III- search for name availability
Selection of business name is crucial for the image of your venture. You select a
name which reflects the business you plan. Ensure selected name satisfy LLP
Name Guidelines of Ministry of Corporate Affairs.
Free name search facility (of existing companies / LLPs) is available on MCA
portal. The system will provide the list of similar/closely resembling names of
existing companies/LLPs based on the search criteria filled up . Link given below:
http://www.mca.gov.in/DCAPortalWeb/dca/MyMCALogin.do?
method=setDefaultProperty&mode=16
Step-IV- filling of form llp-1 (name approval)- Section-16
After Search of Name approval, If name is available according to your search.
Then Download Form LLP-1 from the below given Link: http://www.mca.gov.in/
MinistryV2/Download_eForm_LLP.html
Following Information are required to be filed in form LLP-1
DIN of Designated Partner.
Email Id
Occupation
State of Register office of Company
Objects of LLP
Partners Contribution into LLP
Name of LLP
Significant of Name
If Proposed Name is Based on Trade Mark (NOC from the Owner of TM)
DSC of Designated Partner

NOTE :
**In case the displayed residential status needs to be updated or the residential
Status is not displayed; you are required to file Form DIN-4 on MCA21 portal for
updating the residential status of the DP before filing this Form.
Ensure that correct details have been provided as the same shall be automatically
pre-filled in Form 2 for incorporation of LLP. Append digital signatures and submit
the e-form. Pay the necessary fee of Rs 200/- by credit card (master/visa).
Upon receipt of an application under Section 16(1) and on payment of the
prescribed Fees of Rs. 200/-, the Registrar may, if he is satisfied, subject t to the
rules prescribed by the Central Government in the matter, that the name to be
reserved is not one which may b e rejected on any ground referred to in sub-
section (2) of Section 15, reserve the name for a period of three month from the
date of intimation by the Registrar.
Step-V- Drafting of LLP agreement Section- 23(3)
Section 23(3) of the LLP Act provides that an agreement in writing made before
the incorporation of a LLP Between the persons who have subscribed their names
to the incorporation document.
This is common, and also advisable, to have an agreement between the persons
who have subscribed their names to the incorporation documents of a LLP. Such
agreements usually relate to preliminary and pre-incorporation expenses of a LLp
and their subsequent ratification by the LLP, after incorporation. The provison of
Secton- 23(3) suggests that such an agreement(s) may impose obligations on the
LLP only when such an agreement(s) is ratified by all the partners after the
incorporation of the LLP.
The LLP agreement is very lengthy document and should be on Stamp paper.
The LLP Agreement must be Stamped in accordance with the stamp Act
applicable in the relevant state where LLP is being incorporated.
Its include information as given below:
Effective Date of LLP Agreement, Registered Office of LLP, Business of LLP,
Contribution of Partners, Profit Sharing Ratio, Provisions for Admission,
Resignation, Retirement and cessation of partners, Removal of Partners, Rights of
Partners, Duties of Partners, Duties & Responsibilities of Designated Partner,
Meetings, Liability of LLP, Winding up & Dissolution, Accounting Year, Audit,
Jurisdiction, Validity of this Agreement etc.
Step-VI Filing of (Form 2) for Incorporation and Subscription Document
After receiving of Name approval Letter from ROC within 90 days there is need to
prepare and get sign all the documents required to be attached in Form-2 and file
Form-2 with ROC.
INFORMATION REQUIRED TO BE MENTION IN FORM LLP-2
Enter the proposed address of the registered office and valid email ID of the LLP.
Enter the main division of industrial activity- “given below in Annexure A”
Enter the No. of Designated Partner.
Enter the total monetary value of contribution by all the partners/ designated
partners of the LLP. Value of contribution cannot be less than the contribution
entered at the time of name availability.
DOCUMENTS REQUIRED TO BE ATTACH IN FORM LLP-2
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 (if applicable).

NOTE :
After the Registrar is satisfied that all the formalities with respect to the
incorporation has been complied , he will issue a Certificate of Incorporation as to
formation of the LLP within maximum of 14 days from date of filing of documents
.
The Certificate of Incorporation issued shall be the conclusive evidence of
formation of the LLP.

On incorporation Every LLP so registered shall be assigned a LLP identification
number (LLPIN) in one consecutive series.
Step-VII- Filling of LLP agreement (form- 3)
It is not mandatory to file LLP agreement at the time of registration and same
can be file in form LLP-3 within 30 days of Incorporation of LLP. 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 to all
penalties imposed on the LLP. So it is very important to draft LLP agreement with
professional help.
The LLP agreement has to be uploaded. Once it gets approved all the formalities
for registration gets completed. The LLP can start It’s business now onwards.
NOTES:

VALUE OF STAMP DUTY ON LLP AGREEMENT
1. IN MAHARASHTRA
A.
Contribution in cash
a) where share of contribution does not exceed
Rs. 50,000 Rs. 500
b)
where it exceeds Rs. 50,000 for every Rs.
50,000 or part subject to a maximum of Rs.
5,000
Rs. 500
B. Contribution by way of property
Same duty as on conveyance
under A.25 on the market
value of property
–
1. IN DELHI
A 1 % of Contribution Subject To Max 5000/-

(Author – CS Divesh Goyal, ACS is a Company Secretary in Practice from Delhi
and can be contacted at csdiveshgoyal@gmail.com)
Source : tax guru.in