BRIEF LEARNING ABOUT LLP

[KANIKA LOHIYA]

Brief Learning  About LLP

A Limited Liability Partnership (LLP) is a statutory body. A statutory body means a body created by law, regulated by law and wind up by law.  The incorporation and formation of such body is regulated by the Limited Liability Partnership Act, 2008. LLP inculcates the features of the business opportunities, namely partnership firm and company. LLP facilitates joint advantage of both the nature of businesses. LLP is a kind of partnership which has registered limited liability partnership agreement along with a statutory recognition. The partnership agreement is consists of the business activities, obligations, mutual rights and duties, restrictions of the designated partners, management and administration of LLP, clauses related to admission, retirement, cessation, expulsion and resignation of the designated partners, resolution of disputes arises, if any, etc. Such agreement also clarifies the duration of the LLP and its process and method for winding up. Such preparation of agreement signifies the feature of partnership firm and the registration of the agreement, incorporation process and regulation process along with the winding up process of LLP signifies the feature of a company. The brief overview of LLP is discussed in the following write up.

Incorporation Process:

Incorporation of a LLP means to form a statutory body which is created by law. The necessary forms required and the process to be followed is properly elaborated and regularized by the act. The steps for the incorporation are as follows:

1. The first step is to decide a name for LLP. Two names are decided and applied through the Reserve Unique Name service, available on My Mca portal. Along with the name, a brief description of object with which the LLP is to be incorporated is also submitted.
2. Minimum 2 designated partners are required.
3. As soon as the name is approved, the next step is preparation of documents.
4. The following documents are collected and prepared:
   1. Basic KYC of the designated partners (PAN, Aadhar card, Bank statement etc)
   2. Utility bill (among Electricity bill, Water bill etc) of the registered office
   3. Consent to act as designated partners of LLP
   4. Subscribers sheet
   5. A detailed list of Companies and LLP in which designated partner is a director or designated partner respectively
5. Such documents are attached and filled with the Form LLP FILLIP.
6. Once we get the Certificate of Incorporation, the next step is to file LLP agreement, as an attachment to the form 3.
7. The stamp duty is paid at the time of incorporation only.
8. As soon as the above forms get approved, Certificate of Incorporation is generated, the LLP is ready to start its business.

Regulation process:

The regulation process of the LLP determines the timely filing of the forms for complying the provisions. Some of its characteristics are discussed as:

1. A auditor is appointed to manage the accounts of LLP.
2. LLP is required to file its annual financial statements via form 8 and 11.
3. The changes in the partners and their relation are required to update within a prescribed time with the respective authority.
4. Besides change in relationship of partners, the changes in the liability of the partners are also to be submitted.
5. As and when the changes incorporated in the LLP agreement, such all changes will every time be registered with the respective authority.
6. The law has provided us provisions for conversion of a company, a firm into a LLP. Such flexibility is a fruitful step for business expansion and development. According to the changed scenario and requirements, one can opt for any of the nature of business and convert it vice versa.
7. The act has provided us separate rules for winding up and dissolution of LLP. Various modes are available for the same and applicable as per the situation and circumstances. The winding up of LLP may be:

1. Voluntary, or
2. By the Tribunal, or
3. The Registrar has the power to strike off the defunct LLP.

8. The penal provisions, late filing fees, punishments, restrictions and the like are prescribed for non compliances.

The above write up is a short description about LLP. At last, it can be concluded that LLP is a good business option which has weightage and recognition above other business opportunities. It is easy and simple to start and proceed with. It has transparency in its work which is regulated by law

This is just for your reference. It does not constitute our professional advise or recommendation.

CS KANIKA LOHIYA