LLP REGISTRATION-50 FAQs
1. What is a Limited Liability Partnership (LLP) ?
A Limited Liability Partnership is a hybrid of Company and Partnership form of business. It combines the advantages of both the Company and Partnership into a single form of organization. It enjoys the benefits of having a separate legal entity, perpetual succession and a limited liability.
2. What are the salient features of a Limited Liability Partnership (LLP)?
- It is a separate legal entity with perpetual succession. Thus it is capable of entering into contracts and holding property in its own name.
- Partners are severally liable for any unauthorized acts done during the course of the business unlike Partnership firms, where partners are jointly and severally liable for all the claims against the firm.
- Every limited liability partnership shall have either the words “limited liability partnership” or “LLP” as the last words of its name.
- A minimum of two partners will be required and there will not be any limit to the maximum number of partners.
- Every Designated Partner would be required to obtain a “Director’s Identification Number” (DIN).
- It contains the elements of a corporate structure as well as a Firm.
3. What are the advantages of forming an LLP?
- Low cost of Formation of LLP.
- It is easy to register an LLP due to lesser technical formalities and legal complexities.
- No requirement of audit of the LLP upto a certain limit, hence it is easier to maintain than a LLP.
- There is no minimum authorized capital requirement for an LLP.
- There is no restriction on the maximum number of partners.
- Individual Partners are not liable for the acts of other partners, unlike a partnership.
- The partners have limited liability and their personal assets are not exposed except in cases of fraud.
- Lesser formalities to maintain statutory records.
- Professionals like CS / CA / CWA / Lawyers can form Multi-disciplinary Professional LLP.
4. What is the difference between LLP and a Partnership Firm?
- An LLP is governed by the provisions of the LLP Act, 2008 whereas a Partnership is governed by the Partnership Act, 1932.
- Registration of an LLP is compulsory but the registration of a partnership firm is optional.
- A partnership firm does not have a perpetual succession.
- An LLP can purchase immovable property in its own name, unlike a partnership firm,which cannot purchase property in its own name.
5. Who can be a “Designated Partner” and what are its requirements?
Appointment of at least two “Designated Partners” is mandatory for all LLPs. And both shall be individuals and at least one of the Designated Partner shall be a resident of India. In case of a LLP in which either one or all the partners are bodies corporate, then at least two individuals who are partners of such LLP or nominees of such bodies corporate shall act as designated partners.
6.When does audit becomes mandatory in case of LLP?
‘LLP’ is required to get their books of accounts audited when the total revenue is more than INR Rs. 40 lacs or total capital of partners exceeds INR Rs. 25 lacs.
7. Whether LLPs would be required to maintain books of accounts?
An LLP shall be under an obligation to maintain annual accounts reflecting true and fair view of its state of affairs. A “Statement of Accounts and Solvency” in prescribed form shall be filed by every LLP with the Registrar every year.
8. Whether annual return would be required to be filed?
Every LLP would be required to file with ROC an Annual Return every year.
9. What are the registration formalities relating to LLPs?
Every LLP shall have a registered office and it shall be registered with the ROC. An incorporation Document subscribed by at least two partners shall have to be delivered to the Registrar in form 2. Every LLP so registered shall be assigned a LLP identification number (LLPIN).
10. Whether other business entities would be able to convert into LLP?
The LLP Act contains such provisions wherein it is stated that entities like firm or company can convert themselves into LLP.
11. Can a Non Profit Organization form LLP?
No. The essential requirement for setting LLP is carrying on a business with a view to make “profit”.
12. Whether e – filling of documents with ROC would be allowed?
Yes, the filling and inspection of documents can be done online through the website mca.gov.in
13.Which documents will be available for public inspection?
Incorporation document, Names of partners and changes, if any, Statement of Account and Solvency, Annual Return are the documents that will be available for inspection.
14. Can a foreign LLP reserve its existing name while registering in India?
A foreign LLP can reserve its existing name by which it is registered in the country of its incorporation by making an application to Ministry of Corporate Affairs. The reservation will be valid initially for three years and is renewable thereafter.