Limited liability partnership
Limited liability partnership (LLP) is actually a combination of a partnership and a company, encompassing the positive aspects of both these systems to strengthen the business. In this system, the liability of a partner includes only his act, and to the extent to which he has contributed with the capital. Here, two designated partners are required at least. However, no limitation has been imposed on the upper cap of the number of partners. This mechanism has a perpetual succession. LLP registration serves as an alternative vehicle for business to execute business. Here, you will find the features of both conventional partnerships and a private company. The partners in this case get the status of a limited liability company. The mechanism offers the flexibility, through which one can come up with an internal arrangement by means of an agreement between the involved partners. Businessmen and entrepreneurs can thus get a business vehicle which is more structured, as compared to a conventional partnership or a sole proprietorship.
On registering a limited liability partnership company, you will enjoy the flexibility of regulating business operations in adherence to the agreement of the partnership. At the same time, you would enjoy the status of a limited liability company, unlike a system where you would have to strictly adhere to the compliance requirements under the Companies Act (2013). In India, the prime advantage of establishing an LLP registration is the existence of a distinct legal entity, blending the benefits of partnership and company. Under this system, a single partner does not remain liable or responsible for the negligence or misconduct of another partner. From this perspective, this company structure is different from an unlimited partnership.
Registering a limited liability partnership
A limited liability partnership can be registered through the following process:
Digital Signature Certificate: Before you try to register this kind of a company, you need to obtain the designated partners’ Digital Signature Certificate. Various certified agencies, recognized by the government provide these certificates.
Applying for the DIN (Director Identification Number): All the designated partners or people willing to be one of the designated partners in the LLP need the DIN.
Name approval: The company name has to be reserved and approved. On the MCA website, you can search for free names. Accordingly, you can propose a name of your preference. Through this system, you will only get the names that closely resemble that of the existing LLP. This makes it easier to pick a name which does not have any similarity to the ones that already exist.
LLP incorporation: You need to fill the details in an application form in order to incorporate the limited liability partnership. Make sure that all the furnished details are accurate. It is necessary to pay a fee for registration, based on how the partners contribute to the company. The individual holding the DIN, as named in the document of incorporation has to digitally sign the form.
Filing the agreement: An agreement on the limited liability partnership is formed, explaining the duties, rights and responsibilities amongst the partners who have registered. This also has to be signed between the LLP partners and the LLP.The LLP agreement has to be signed within a span of 30 days from the incorporation date.