LIMITED LIABILITY PARTNERSHIP (LLP)

LIMITED LIABILITY PARTNERSHIP (LLP): Limited Liability Partnership (LLP) in India is another option available to a business entity to carry on its activity as registered body having the features of a Partnership Firm and a Limited Company. The management of LLP is defined by LLP agreement and partners have the freedom to regulate affairs of the LLP. It is a corporate business medium that provides the benefits of limited liability, where professionalism and inventiveness combine to operate flexibly, organizing their internal structure on a partnership basis.

Any two or more persons, associated in carrying on a profit-oriented lawful business may enter their names in the incorporation document and file the same with the Registrar, to register a Limited Liability Partnership. On LLP registration it becomes a legal body separate from its partners and any change in its partners is not going to affect its legal existence. The liability of the partners is limited to their agreed contribution in the LLP registration bangalore which may be of tangible or intangible nature or both.

LLP registration in India requires minimum two persons as Designated Partners. The mutual rights and duties of partners in an LLP are governed by an agreement between the partners or between the LLP and the partners and are subject to the provisions of the LLP Act 2008. LLP will have to file its annual return with the Registrar of Companies.
Designated Partner:

LLP registration in India requires at least two individual Designated Partners. One of the Designated Partners shall be resident of India. In case of an LLP, where all the partners are corporate bodies or in which one or more partners are individuals and corporate bodies, then at least two individuals who are partners of such LLP or nominees of such corporate bodies shall act as designated partners. The main advantages of LLP registration in India are:

1 No requirement of audit of LLP Annual Accounts until turnover reaches Rs.40 lakhs or Contribution of Rs.25 lakhs.
2 Less tax as compared to the company.
3 No requirement of minimum capital contribution.
4 No restriction as to maximum number of partners.
5 The LLP registration process is simple.
6 The Ministry does not allow another person to start another LLP or Company in your LLP's Name.
7 The LLP formation procedure costs less.
8 Less statutory compliances as compared to Limited Companies.
9 No exposure to personal assets of the partners except in a fraud case
10 Body corporate can be a partner of an LLP.
11 Less Government intervention.
12 Easy to dissolve or wind-up a LLP.
13 FDI allowed in LLPs.

Limited Liability Partnership Formation Procedure :

1 Applying for Digital Signatures, for all the Designated Partners.
2 Applying for DIN / Director Identification Number for every proposed Designated Partner (Minimum -2).
3 Finalising the LLP name and registered office address.
4 Filing the form for approval of name and get the same approved.
5 Filing the incorporation / registration documents and getting the Certificate of Incorporation from the Registrar
6 Executing the LLP Agreement within 30 days of LLP Registration and filing it with the Registrar
7 Applying for PAN and TAN of the LLP
8 Opening a Bank Account in the name of LLP
9 Get other required registrations and licenses needed for your kind of business.
Other Registrations & Licenses: Service Tax Registration, Shops & Establishment Registration, Professional Tax Registration, IEC Registration, VAT Registration etc

The general documents required for registering LLP in Bangalore and other state of India:

1 ID proof of the proposed Designated Partners: PAN Card, Passport. (Income-tax PAN is a mandatory requirement as proof of identity for Indian Partners and passport is a mandatory requirement as proof of identity for foreign nationals.)
2 Address proof of the proposed Designated Partners: Passport, Election (voter identity) card, Driving licence, Aadhar Card,
3 Passport size photographs of the each Partners.
4 Address Proof of Registered office of the company:

a. Utility Bills : Electricity Bill/ Telephone Bill/ Mobile Bill/ Gas Bill - should not be older than 2 months from the date of filing of the form
b. Conveyance/Lease deed/Rent Agreement along with the rent receipts
c. No objection Certificate from the owner of the Building.

FDI in LLP:
India's foreign trade policy has been formulated with a view to invite and encourage Foreign Direct Investment in India (FDI). There is considerable relaxation in approvals and regulations. The administrative and compliance aspects of FDI are prescribed by the Reserve Bank of India. The Government of India’s recent decision to permit FDI in LLP is subject to the following conditions:


FDI in LLPs will be allowed, through the Government approval route, only for LLPs operating in sectors/activities where 100 percent FDI is allowed, through the automatic route. There are no FDI-linked performance related conditions (such as ‘Non Banking Finance Companies’ or ‘Development of Townships, Housing, Built-up infrastructure and Construction-development projects’ etc.)

LLPs with FDI will not be allowed to operate in agricultural/plantation activity, print media or real estate business.

An Indian company, having FDI, will be permitted to make downstream investment in an LLP only if both-the company, as well as the LLP- are operating in sectors where 100 per cent FDI is allowed, through the automatic route and there are no FDI-linked performance related conditions.

LLPs with FDI will not be eligible to make any downstream investments.

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 authorized dealer/authorized bank.

Investment in LLPs by Foreign Institutional Investors (FIIs) and Foreign Venture Capital Investors (FVCIs) will not be permitted. LLPs will also not be permitted to avail External Commercial Borrowings (ECBs).

In case the LLP with FDI has a body corporate that is a designated partner or nominates an individual to act as a designated partner in accordance with the provisions of section 7 of the LLP Act, 2008, such a body corporate should only be a company registered in India under the Companies Act, and not any other body, such as an LLP or a trust.

For such LLPs, the designated partner "resident in India", as defined under the ‘Explanation’ to section 7(1) of the LLP Act, 2008, would also have to satisfy the definition of "person resident in India", as prescribed under section 2(v)(i) of the Foreign Exchange Management Act, 1999.

The designated partners will be responsible for compliance with all the above conditions and also liable for all penalties imposed on the LLP for their contravention, if any.

Conversion of a company with FDI, into an LLP, will be allowed only if the above stipulations are met and with the prior approval of FIPB/Government.

A person resident outside India or an entity incorporated outside India shall be eligible investor for the purpose of FDI in LLPs. Contribution to the capital of a LLP is allowed.