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Limited Liability Partnership (LLP) offer limited liability protection for an association of persons doing business. LLP is ideal for small businesses.
Limited Liability Partnership (LLP) was introduced in India by way of the Limited Liability Partnership Act, 2008. The basic premise behind the introduction of Limited Liability Partnership (LLP) is to provide a form of business entity that is simple to maintain while providing limited liability to the owners. Since, its introduction in 2010, LLPs have been well received with over 1 lakhs registrations so far until September, 2014.
The main advantage of a Limited Liability Partnership over a traditional partnership firm is that in a LLP, one partner is not responsible or liable for another partner’s misconduct or negligence. A LLP also provides limited liability protection for the owners from the debts of the LLP. Therefore, all partners in a LLP enjoy a form of limited liability protection for each individual’s protection within the partnership, similar to that of the shareholders of a private limited company. However, unlike private limited company shareholder, the partners of a LLP have the right to manage the business directly.
LLP is one of the easiest form of business to incorporate and manage in India. With an easy incorporation process and simple compliance formalities, LLP is preferred by Professionals, Micro and Small businesses that are family owned or closely-held. Since, LLPs are not capable of issuing equity shares, LLP should be used for any business that has plans for raising equity funds during its lifecycle.
My legal book is the market leader in LLP registration services in India. In addition to LLP registration, My legal book also offers a variety of business registration services like private limited company registration, one person company registration, Nidhi Company Registration, Section 8 Company Registration, Producer Company Registration and Indian Subsidiary registration. The average time taken to complete a LLP registration is about 15 – 20 working days, subject to government processing time and client document submission. Get a free consultation on LLP registration and business setup in India by scheduling an appointment with an My legal book Advisor.
A LLP is a legal entity and a juristic person established under the Act. Therefore, a LLP has wide legal capacity and can own property and also incur debts. However, the Partners of a LLP have no liability to the creditors of a LLP for the debts of the LLP.
A LLP has ‘perpetual succession’, that is continued or uninterrupted existence until it is legally dissolved. A LLP being a separate legal person, is unaffected by the death or other departure of any Partner. Hence, a LLP continues to be in existence irrespective of the changes in ownership.
A LLP does not require audit if it has less than Rs. 40 lakhs of turnover and less than Rs.25 lakhs of capital contribution. Therefore, LLPs are ideal for startups and small businesses that are just starting their operations and want to have minimal regulatory compliance related formalities.
The ownership of a LLP can be easily transferred to another person by inducting them as a Partner of the LLP. LLP is a separate legal entity separate from its Partners, so by changing the Partners, the ownership of the LLP can be changed.
A LLP being an artificial judicial person, can acquire, own, enjoy and sell, property in its name. No Partner can make any claim upon the property of the LLP – so long as the LLP is a going concern.
Identity and address proof will be required for all partners of the LLP to be incorporated. In case of Indian nationals, PAN is mandatory. For foreign nationals, apostilled or notarised copy of passport must be submitted mandatorily. All documents submitted must be valid. Residence proof documents like bank statement or electricity bill must be less than 2 months old.
All LLPs must have a registered office in India. To prove access to the registered office, a recent copy of the electricity bill or property tax receipt or water bill must be submitted. Along with the utility bill, rental agreement or sale deed and a letter from the landlord with his/her consent to use the office as a registered office of a company must be submitted.