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Of the various types of business structure permitted in India, limited liability partnership has gained a lot of popularity in the recent years. This structure came into existence in the year 2008 with the implementation of the Limited Liability Partnership Act 2008. The Act lays down the guidelines for setting up LLP in India. It combines the features of partnership and company structures of business. It offers a lot of benefits and flexibility to the owners, and is therefore being increasingly preferred by new entrepreneurs.
An LLP is a corporate body with its own legal identity which is separate from its owners. There are at least two partners. The partners of an LLP have limited liabilities in the business. The existence and functioning of the business is not affected by the death or insolvency of any partner. Few essential steps in the process of incorporation of an LLP in India are discussed in this article.
Steps Involved in the Registration process
Digital Signature Certificate
The first step in the process is to obtain the Digital Signature Certificate. As the registration process is online, a digital signature is must and has to be affixed on all electronically submitted documents. It’s an electronic identity proof that authenticates the electronically submitted documents. The DSC can be obtained from different certifying authorities, which in turn are appointed by the controller of certifying authorities. Valid for 2 years from the date of issuance, the DSC is linked with PAN, and all the partners have to acquire one. There are three types of DSC (class 1, 2 &3) all with varying level of security. Digitally signed documents cannot be tampered with.
Director Identification Number (DIN) or Designated Partner Identification Number (DPIN)
The next step in the process is to obtain the DIN/DPIN for the designated partners of the LLP. This is a unique number that is necessary for filing e-forms. Maximum two partners can apply for DIN at a time. If there are more than two partners, the DIN for the rest can be obtained later. A proof of identity, address proof, and a subscriber’s sheet has to be submitted along with the application. All the documents should be attested by a CA/CS/CWA. The application is to be made on the e-form d-3 along with the applicable fees. The application is processed by the central registration centre that can ask for additional documents if necessary. A maximum of 20 days is given in total for form re submission.
Reserving the LLP Name
When you have decided on setting up LLP in India, you must ensure that the name you choose for your company is unique and distinct from names used by other organization. Once you decide on the name of the LLP, you have to file an application for reserving the same via the RUNLLP (Run Unique Name-Limited Liability Partnership) web service. You can submit two names in order of preference. If the registrar is satisfied that a name is not used by any other registered company, or it is in anyway similar to an existing name, it gives its approval. The name is then reserved for the next 90 days within which you have to complete the remaining formalities for the incorporation of the LLP.
After reserving the LLP name you then have to file for incorporation of the LLP. If for some reason you have not reserved the LLP name you can do so along with incorporation application which is to be made via the FILLIP or the Form for Incorporation of Limited Liability Partnership. All necessary details documents including the details of the designated partners have to be submitted along with application. Upon processing, if the application is found to be complete in all respect, DIN/DPIN of the partners is generated and LLPIN issued. It is the identification number for the LLP. The designated partners are intimated via email and the certificate of incorporation is issued.
After the issuance of incorporation certificate, application for PAN and TAN has to be made with the income tax department on the officially prescribed forms.
The Limited Liability Partnership Agreement
The final step in the process of setting up LLP in India is the drafting and filing of the Limited Liability partnership Agreement. It is an agreement made between the partners of the LLP that describes the functions and rights of the partners, business objectives, and the profit sharing ratio. The agreement is mandatory for completing the incorporation process and has to be executed within 30 days of incorporation by paying the applicable stamp duty which is calculated on the basis capital contribution by the partners.
The process to incorporate a new LLP in India is now complete with the execution of the LLP agreement. You have to follow all the steps mentioned above for setting up LLP in India.
This article is created by AhlawatAssociates – One of the best place for hire best Corporate Lawyers in India.