LLP Registration Procedure
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LLP Registration :-
A Limited Liability Partnership, popularly known as LLP combines the advantages of both the Company and Partnership into a single form of organization. An important feature of LLP compared to that of an unlimited partnership is that one partner is not responsible or liable for another partner's misconduct or negligence. In an LLP, all partners have a form of limited liability for each individual's protection within the partnership, similar to that of the shareholders of a corporation. However, unlike corporate shareholders, the partners have the right to manage the business directly. An LLP also limits the personal liability of a partner for the errors, omissions, incompetence, or negligence of the LLP's employees or other agents.
Foreign Direct Investment in LLP :-
The Cabinet Committee on Economic Affairs has approved the proposal to amend the policy on allowing Foreign Direct Investment (FDI) in Limited Liability Partnership (LLP) firms. Highlights of the Cabinet Committee on Economic Affairs Approved Proposal
LLPs with FDI will be allowed, through the Government approval route, in those sectors/ activities where 100% FDI is allowed.
An Indian Company having FDI, be permitted to make downstream investment in LLPs, if the company and LLP is operating in sectors where 100% FDI is allowed
The designated partners will be responsible for compliance conditions and liable for all penalties imposed on the LLP for their contravention
Foreign Capital participation in the capital structure of LLPs will be allowed only by way of cash consideration, received by inward remittance, through normal banking channels or by debit to NRE/FCNR account of the person concerned, maintained with an authorised dealer/authorised bank.
Further, LLPs with FDI not be permitted :-
To operate in agricultural / plantation activity, Print Media and Real Estate Business
To make any kind of downstream investments
To avail External Commercial Borrowings
To accept FDI in the form of consideration in kind
To accept investments from Foreign Institutional Investors and Foreign Venture Capital Investors
Important Features of Limited Liability Partnership :-
LLP shall be a body corporate and a legal entity separate from its partners.
Mutual rights and duties of partners of an LLP inter se and those of the LLP and its partners shall be governed by an agreement between partners or between the LLP and the partners
The LLP will be a separate legal entity, liable to the full extent of its assets, with the liability of the partners being limited to their agreed contribution in the LLP
Every LLP shall have at least two partners and shall also have at least two individuals as Designated Partners, of whom at least one shall be resident in India
The LLP shall be under an obligation to maintain annual accounts reflecting true and fair view of its state of affairs
Basic Setup Requirements for Limited Liability Partnership :-
Minimum 2 Partners (atleast one shall be an individual resident in India)
Contribution by the Partners
LLP Agreement
Registered Office
Advantages :-
Separate legal entity and Easy to establish with less cost of formation
Flexibility without imposing detailed legal and procedural requirements
Perpetual existence irrespective of changes in partners
Internationally renowned form of business in comparison to Company
No requirement of minimum capital contribution
No restrictions as to maximum number of partners
LLP & its partners are distinct from each other
Partners are not liable for Act of other partners
Easy to dissolve or wind-up
Disadvantages :-
LLP cannot raise funds from Public
Any act of the partner without the other may bind the LLP.
Under some cases, liability may extend to personal assets of partners.
No separation of Management from owners
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