Limited Liability Partnership (LLP)
An LLP, regulated under the Limited Liability Partnership Act, 2008, combines the flexibility of a partnership with the limited liability of a company. It’s a popular choice for new businesses due to its lower incorporation costs and reduced compliance burden. Crucially, one partner is not held responsible for another partner’s misconduct or negligence.
Benefits of LLP Registration:
- Limited Liability: Partners' personal assets are protected from business debts.
- Separate Legal Entity: An LLP can own assets, borrow funds, and enter contracts in its own name.
- Operational Flexibility: The LLP Agreement, drafted by the partners, governs its operations.
- Fewer Compliance Requirements: Compared to a private limited company, an LLP has fewer mandatory compliances, such as no requirement for board meetings or AGMs.
- No Minimum Capital Requirement: An LLP can be incorporated with any amount of capital.
LLP Registration Process:
- Obtain DSC and Designated Partner Identification Number (DPIN).
- Reserve the LLP name through the RUN-LLP form on the MCA portal.
- File the incorporation form, FiLLiP, with the Registrar of Companies.
- Draft and file the LLP Agreement in Form 3 within 30 days of incorporation.
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Do You Have Any Questions?
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What is the minimum requirement for an LLP?
You need at least two “Designated Partners,” one of whom must be a resident of India. There is no limit on the maximum number of partners.
What is the difference between an LLP and a Partnership Firm?
The main difference is liability. In a Partnership Firm, partners have unlimited liability. In an LLP, partners’ liability is limited to their contribution.
What is an LLP Agreement?
This is the most crucial document for an LLP. It defines the roles, responsibilities, profit-sharing, and other rules among the partners. It must be filed within 30 days of incorporation.
Can a company be a partner in an LLP?
Yes, a body corporate (like a Private Limited Company or even another LLP) can be a partner in an LLP.