Business Incorporation & Compliance

Limited Liability Partnership (LLP) Registration in India: A Comprehensive Guide

Limited Liability Partnerships (LLPs) gained significant popularity post the enactment of the Limited Liability Partnership Act, 2008. This structure is widely chosen by startups, small businesses, and professionals due to its hybrid advantages, combining the flexibility of a traditional partnership with the limited liability benefits of a company. A key advantage of an LLP is that partners are shielded from the misconduct or negligence of other partners, ensuring personal asset protection. LLPs are favoured for their ease of incorporation and minimal maintenance requirements.

Benefits of Constituting as an LLP: Operating a business as an LLP offers several strategic advantages, including: 

Dual Advantages: It provides a synergistic blend of a partnership's operational flexibility and a company's legal framework. 

Limited Partner Liability: Partners' personal assets are protected, as liability is limited to their agreed contribution to the LLP. One partner is not held responsible for the wrongdoings or negligence of another. 

Cost-Effectiveness: Generally, the incorporation process for an LLP is less expensive compared to establishing a Private Limited Company. 

Fundraising Potential: LLPs possess the capability to raise capital from partners, commercial banks, and Non-Banking Financial Companies (NBFCs). 

Flexible Agreement: The Limited Liability Partnership Agreement offers considerable flexibility in defining the inter-se rights, duties, and liabilities of the partners. 

Sequential Process for LLP Registration The incorporation of an LLP involves a streamlined online process through the Ministry of Corporate Affairs (MCA) portal.

Step 1: Obtain Digital Signature Certificate (DSC) * Requirement: It is mandatory for every proposed Designated Partner to acquire a Digital Signature Certificate (Class 2 or Class 3). All electronic forms for LLP incorporation and subsequent filings require digital signatures.

Step 2: Reserve the LLP Name 

Procedure: An application for name reservation must be made through the "RUN LLP" (Reserve Unique Name – LLP) web service on the MCA portal. 

Criteria: The proposed name must be unique and not identical or too similar to any existing company, LLP, or registered trademark.

Step 3: LLP Incorporation Filing (Webform FiLLiP) 

Integrated Application: The application for incorporating a Limited Liability Partnership is filed via the integrated "FiLLiP" (Form for incorporation of Limited Liability Partnership) webform. This initiative by the Government of India aims to enhance the "Ease of Doing Business" (EODB). 

Comprehensive Service: FiLLiP serves as a comprehensive application for:

Incorporation of the LLP and issuance of the Certificate of Registration.

Allotment of PAN (Permanent Account Number) and TAN (Tax Deduction and Collection Account Number) for the LLP.

Issuance of DIN/DPIN (Director/Designated Partner Identification Number) for up to two individuals (or for all designated partners if they do not already possess a DPIN). 

Partner Capacity: An LLP can now be incorporated with up to 500 partners through this webform. 

Webform 9 Integration:

For Designated Partners who already possess a DPIN, their consent must be filed in the linked Webform-9 under the relevant section of LLP Rules, 2009, upon successful submission of webform FiLLiP.

However, for Designated Partners whose DPIN is applied through webform FiLLiP itself, Form 9 must be filed as an attachment to the FiLLiP webform. 

No Addendum Requirement: There is no longer a requirement to file an Addendum to the FiLLiP form.

Step 4: Filing of LLP Agreement (Webform LLP Form 3) 

Timeliness: Within a period of 30 days from the date of incorporation of the LLP, the partners are required to execute the Limited Liability Partnership Agreement. 

Filing: This executed agreement must then be filed with the Registrar of Companies (RoC) using Webform LLP Form 3. 

Purpose: The LLP Agreement is a foundational document that legally defines the inter-se rights, liabilities, and duties of all partners, ensuring clarity and smooth operation of the LLP.