Limited Liability partnership

In India, the law of LLP is new. The Limited Liability Partnership Bill, 2008 and The LLP Act 2008 became operational on 31st March 2009.
The Limited Liability Partnership Rules 2009 ('the LLP Rules') notified on 01st April 2009 and brought into force from that date, except the Rules pertaining to conversion of existing partnership firms, private limited and unlisted public limited companies into LLP, which are brought into force from 31st May 2009.
As per the LLP Act any two persons can incorporate a LLP.
Every LLP shall have two designated partners (i.e. partners responsible for compliance of law of LLP) and one of the two designated partners, shall be resident in India.
LLP shall have a registered office and optionally one other address for serving of documents by the Government and others.
Audit of books of accounts of LLP by an Indian Chartered Accountant is mandatory, except for small LLPs. As per Rule 24(8) of the LLP Rules 2009 -where turnover of LLP does not exceed Rs. 4 million (Rs. forty lakhs) in any financial year or contribution of partners in LLP does not exceed Rs. 2.5 million (Rs. Twenty Five lakhs) need not get their accounts audited.
Annual filing of statement of accounts (by 30 September) and annual return (by 30 May).

Salient features of LLP are:

• For income tax purpose, LLP is treated at par with partnership firms. Thus, LLP liable for payment of income tax and share of its partners in LLP is not liable to tax. Meaning no dividend distribution tax payable. Provision of 'deemed dividend' under income tax law, is not applicable to LLP.
• LLP is a body corporate. It means it can hold property (movable, shares, securities, immovable's etc) in its own name. LLP can file suit in its own name. LLP can be sued by others in its name. LLP can enter into contract in its own name.
• LLP can have other Body Corporate (including companies) as its partners.
• LLP requires minimum 2 partners. There is no limit on maximum partners. However two individuals shall be 'Designated Partners'. One of the Designated Partner shall be such individual who has stayed in India for at least 182 days in the immediate preceding one year.
• Where LLP has only body corporate as partners, then such body corporate shall nominate individuals to comply with requirements of two individuals being 'Designated Partners'.
• Prior written consent of individual required to make him Designated Partner (DP). Designated Partners require DP Identification Number (DPIN)
• Liabilities of partners of LLP are restricted to the extent of amount of capital contributed by them. Designated partners liable for any lapse in compliance of the provisions of the LLP Act. In the event of non-payment of Income Tax by LLP, its partners may be held liable for the same.
• In LLP, partners are agent of LLP, but are not agent of other partners. Thus, a partner is not liable for act of other partners.
• If LLP agreement so provides, partners can do business with LLP as if outsiders. LLP can enter into pre-incorporation contracts.
• Partners of LLP may assign / transfer his share of profit in LLP.
• Legal heirs may become partner of LLP, if so provided in LLP agreement.
• Existing partnership firm, private company and unlisted public company can be converted into LLP.
• LLP is required to maintain books of accounts.
• LLP shall get its books of accounts audited either voluntarily or mandatorily from a chartered accountant, where its turnover is Rs.40 lakhs (Rs.4,000,000/-) or above OR where its capital is Rs.25 lakhs (Rs.2,500,000/-) or above.
• LLP is required to file with ROC, every year, annual return and state of accounts and declaration of solvency. For delay in filing, additional fees @ Rs.100 per day is payable.
• Where LLP is having capital exceeding Rs. 50 lakhs (Rs.5,000,000/-) OR turnover exceeding Rs.5 crore (Rs.50,000,000/-), annual return shall be certified by a practicing company secretary.
• Except offences punishable with imprisonment, other offences are compoundable. Statute provides for arrangement or reconstruction between LLP and its partners and/or creditors
• For non-payment of debt, creditors may file suit for winding up of LLP.
• LLP can be closed by striking off its name or by winding up.
• Partners may apply for investigation into affairs of LLP by the Central Govt. appointment and cessation of partners, as per LLP agreement. If LLP agreement is silent, then provisions of LLP Act shall apply.
• Electronic filing of documents and requirement of digital signature.

LLP Registration

Procedure in brief:

• Obtaining DIN & DSC for the proposed designated partners. (Mandatory)
• Applying for company name approval.
• Drafting & stamping of LLP Agreement.
• Submission of documents & obtaining of Certificate of Incorporation.
• Filing of LLP Agreement within I month of Incorporation and requisite ratification of LLP agreement.

Requirements for obtaining DIN & DSC:

• Copy of PAN card.(self-attested )
• Copy of address proof (self- attested voter's id card/self- attestedrecent (not older than 2 months) telephone bill;self- attested (not older than 2 months) recent electricity bill; bank statement attested by banker ; valid passport).
• 5 Photographs (passport size).
• DIR 4 (verification document)
• Personal details--Details of own name & father's name as appearing in PAN (no abbreviations allowed), occupation, educational qualification, place of birth, mobile number, email id;

Information required for DIN

Documents /Information required for Registration:

• Six Proposed names of the LLP in order of preference
• Activities of the proposed LLP in detail.
• DIN; DSC; Address Proof; Identity Proof; Father's Name; Place of Birth; Date of Birth; of all proposed designated partners and promoters.
• Clear Copy of Identity and Address Proof (latest bank statement/passport/telephone bill/electricity bill)
• Details of Authorized and Subscribed Capital (minimum Rs. 1,00,000/-)
• Details of break - up of Share Capital.i.e. Funding by promoters.
• Drafting of LLP Agreement .Subscription sheet to be handwritten by the designated partners themselves in their own hand.
• Clear copy of partners ID & Address Proof has to be self- attested.
• Lease agreement/rental agreement for registered office else .NOC from Landlord in case of rented premises.
• If own premises tax paid receipts.