The Limited Liability Partnership (LLP) is governed by the Limited Liability Partnership (LLP) Act, 2008 and Limited Liability Partnership Rules, 2009. The LLP Rules, 2009 contains administrative provisions for formation, management, Reconstruction and winding up of LLPs. The Indian Partnership Act, 1932 is not applicable to LLPs.
SILENT FEATURES OF LLP
- LLP shall be a body corporate and a legal entity separate from its partners. It will have perpetual succession, Like a corporation.
- There is no upper limit on
numberof partners in an LLP unlikean ordinary partnership firm where the maximum number of partners can not exceed 20 (10 in case of banking).
- While the LLP will be a separate legal entity, Liable to the full extent of its assets, The liability of the partners would be limited to their agreed contribution to the LLP.
- No partner would be liable on account of independent or unauthorized actions of other partners, thus allowing individual partners to be shielded from joint liability created by
another partnerswrongful business decisions or misconduct.
- The framework of LLP is not restricted to professional services alone. Several business activities can be undertaken using the LLP structure.
- Lesser Compliances in comparison to Company.
Taxrate is samefor LLP & Company.
- Merger &
- Partners have direct Control over LLP unlike in company where shareholders have no control over
- LLP can invest in a Private Limited company/Public company and become a shareholder of that company.
- Easy to dissolve or windup.
- Having the flexibility of perpetual succession- partners coming & going will not affect the LLP.
REQUIREMENT FOR REGISTERING A LLP
- Minimum 2 Partners. The following can be the Partners.
- Companies incorporated in and outside India.
- LLP incorporated in and outside India.
- Individuals Resident in and outside India.
- Minimum 2 Designated Partners who are individuals and at least one of them should be resident in India.
- Digital Signature Certificate.
- DPIN of Partners.
- Proposed Name of LLP to be incorporated.
- Draft LLP Agreement.
- Rent Agreement or any other documents in support of proposed Registered Office of LLP.
- Apply of DPIN of two designated partners.
- Apply for Digital Signature of two designated partners.
- Getting the desired name approved from the registrar of Companies.
- Filing of Incorporation Documents & Subscription statement.
- Obtaining Certificate of Incorporation of LLP.
- Drafting of LLP Agreement & Filing the same with Registrar of Companies
- Getting the LLP Agreement approved.
- Allotting PAN/TAN of LLP.
Foreign Direct Investment in LLP
The Government of India has liberalized FDI norms in LLP in November 2015 and allowed FDI under automatic route in sectors where 100% FDI is allowed through the automatic route. In other words, now Investment in LLP will not require government approval in sectors fully opened to investment. Further under liberalized norms LLP with FDI can also male downstream investment like Companies.
Limitation in External Commercial Borrowing (ECB)
LLP is not allowed to raise External Commercial Borrowing (“ECB”). Thus LLP cannot take commercial loans from its foreign partners, FII’s (Foreign Institutional Investors), banks from outside India, Any financial institution outside India or any other entity outside India.
We can assist in :
- Drafting of LLP agreement.
- Getting Registration of LLP in India.
- Getting approval from RBI for registration/formation of LLP in foreign nationals/entity.
- Opening of Bank account of LLP.
- Maintaining books of accounts of LLP.
- Payroll Processing of LLP.
- Intimating any change in LLP with Registrar of Companies.
- Compiling with Statutory Compliances of LLP on a month to month basis.
- Annual Auditing of LLP.
- Annual compliances of LLP with Registrar of Companies & Income tax.
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