This document provides information about forming a Limited Liability Partnership (LLP) under Indian law. It outlines the key steps in the LLP formation process, including deciding on partners and designated partners, obtaining digital signatures and Director Identification Numbers, checking name availability, drafting an LLP agreement, and filing incorporation documents with the Registrar of LLPs. It also compares LLPs with partnerships and private companies, describing advantages such as limited partner liability and greater flexibility in management structures for LLPs.

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Value Added Professional Services LLP
404, 4th Floor, Devika Tower, Chander
Nagar, Ghaziabad (U.P.) 201011
Email: contactus@vapsllp.com

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Limited Liability Partnership
(LLP)

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What is LLP
• LLP is an alternative corporate business form that gives the
benefits of limited liability of a company and the flexibility
of a partnership.
• The LLP can continue its existence irrespective of changes
in partners. It is capable of entering into contracts and
holding property in its own name.
• The LLP is a separate legal entity, is liable to the full extent
of its assets but liability of the partners is limited to their
agreed contribution in the LLP.
• Further, no partner is liable on account of the independent
or un-authorized actions of other partners, thus individual
partners are shielded from joint liability created by another
partner’s wrongful business decisions or misconduct.

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Advantages of LLP
• Partner in LLP is not liable for the wrongful
acts of other partners.
• LLP will have a perpetual succession.
Admission or Cessation of a Partner shall
not affect its status.
• A Firm, Private Company or a Public
Company can be converted in LLP.
• Partner may transact with LLP.

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LLP vs Partnership
S.
No.
LLP Partnership
1
Liability of Partners limited to
contribution
Liability of Partners is unlimited
2
Partners not jointly liable for
acts of other Partners
Partners jointly and severally
liable
3
LLP is a body corporate
having perpetual succession
Partnership firms are neither
body corporates nor do they
have perpetual succession
4 LLP is a separate legal entity
A partnership is not an entity
legally separate from its
members
5
Incorporation of LLP is
mandatory
Registration of partnership is not
mandatory

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LLP vs Partnership
S.
No.
LLP Partnership
6
LLP required to make
financial disclosures
Partnership is not required to
make financial disclosures
7
LLP can have more than 20
Partners
partnership cannot have more
than 20 partners
8
Filing of accounts, statement
of solvency and annual return
are mandatory
Filing of accounts, statement of
solvency and annual return are
not required
9
The Act silent on the issue of
admission of minor as
partner of LLP.
Minor can be admitted to the
benefits of partnership.

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LLP vs Company
S.
No.
LLP Company
1
Incorporation procedure
relatively simple and Expeditious
Incorporation procedure more
complex than LLP
2
Flexible management structure –
Partners are entitled to
participate in management
Management structure usually
complex – Shareholders do not
ordinarily participate in day to
day Management
3 Flexible Capital Structure
Capital structure less flexible than
LLP
4
No provision relating to redressal
in case of oppression &
mismanagement
Elaborate provision relating to
redressal in case of oppression
and mismanagement
5
Limited statutory compliance as
compared to Companies
Complex statutory compliance
Requirements

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LLP Registration

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Steps for Formation
Step-1:-Deciding the Partners and Designated Partners
Step-2:-Obtaining DPIN No. & Digital Signature
Step-3:-Checking the Name Availability
Step-4:-Drafting of LLP Agreement
Step-5: Filing of Incorporation Documents
Step-6: Certificate of Incorporation

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Step 1: Designated Partners
• A LLP can be incorporated with a minimum of at least two partners who
can be Individuals or Body Corporate through their nominees.
• Out of the total number of partners, at least two shall be Designated
Partners, of which at least one must be an Indian Resident.
Parameters for deciding the Partners and Designated Partners:
• At least Two Partners; Individuals or Body Corporate through individual
nominees.
• Minimum of Two Individuals as Designated Partners, of total number of
Partners.
• At least One Designated Partner to be Resident Indian.
• A person ‘Resident in India ‘means a person who has stayed in India
for a period of not less than one hundred and eighty two days during the
immediately preceding one year. (Explanation to Section-7)
• ‘Designated Partner’ means a partner who is designated as such in the
incorporation documents or who become a designated partner by and in
accordance with the Limited Liability Partnership Agreement

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Step 2: Obtaining DSC & DIN
Digital Signature Certificate:
All the forms like e-Form 1, e-Form 2, e-Form 3 etc.
which are required for the purpose of incorporating the
LLP are filed electronically through the medium of
Internet; it is not possible to sign them manually.
Therefore, for the purpose of signing these forms, the
Designated Partner of the proposed LLP needs to
obtain a Digital Signature Certificate (DSC) from
government recognized DSA’s. The signatures shall
also be required for signing and filing of all relevant
forms and documents to be filed, annually or event
based after incorporation of the LLP, asking for
approvals or as intimation.

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Step 2: Obtaining DSC & DIN
Information required for applying Digital Signature
Certificate (DSC):
– Name of the Partner who is to obtain the Digital Signature
– Name, Father’s Name, Date of Birth, Place of Birth, Address,
Occupation, IT Permanent Account No. or Passport No or
Voter Identity No., Phone No. and email address
– One Passport Size Photo
– Proof of Identity like PAN card, Voters ID and Passport
– Proof of Address like Bank Statement, Ration Card or Driving
License
– The documents – Proof of Identity and Proof of Address should
be attested by a Gazetted Officer

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Step 2: Obtaining DSC & DIN
Director Identification Number (DIN):
Every Designated Partner is required to obtain a DIN through MCA. If a person
already has a DIN, the same can be used for forming LLP.
If DIN for partners not available then:
For Filing DIN Form
– Partners Name (with expansion of initials), Father’s Name, Grand Father’s
Name, Date of Birth, Place of Birth, Address, Occupation, Educational
qualification, IT Permanent Account No or Passport No or Voter Identity No.,
Phone No. and email address.
– PAN Card Copy.
– Proof of identity – Copies of any one - PAN Card, Passport, Voters Identity
card
– Address Proof – Copies of any one - Latest Bank pass book or Statement,
Ration Card (address should be in English), Voters ID, Driving License.
– Passport size Photos of all Partners.
– Affidavit in Rs.20 stamp paper for each partner and it should be notarized. (It
will be prepared by us – after obtaining the above details

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Step 3: Checking Name availability
 The next step is to decide the name for the proposed LLP to
be incorporated, anyone intending to incorporate an LLP has
to evaluate his proposed name under the prescribed
parameters and make an application in Form 1 for reservation
of the desired name.
 The name of the limited liability partnership shall not be similar
or identical with Company or LLP already registered in India
and it should not contains words prohibited under the
‘Emblems and Names (Prevention of improper use) Act,
1950’or which are also not ‘Undesirable’ in the opinion of
Central Government or which satisfies the conditions
prescribed under rule 18(2).
 In case any Body Corporate is partner, copy of Board
resolution authorizing the incorporation of LLP shall be
attached.

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Step 4: Drafting LLP Agreement
The next pertinent step is drafting of Limited Liability Partnership
Agreement governing the mutual rights and duties among the
partners and among the LLP and its partners.
The basic contents of Agreement are:
– Name of LLP
– Name of Partners & Designated Partners
– Form of contribution
– Profit Sharing ratio
– Rights & Duties of Partners
– Proposed Business
– Rules for governing the LLP
– In case no agreement is entered into, the rights & duties as
prescribed under Schedule I to the LLP Act shall be
applicable

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Step 4: Drafting LLP Agreement
• It is not necessary to have the LLP Agreement signed at
the time of incorporation, as the details of the same
needs to field in e-form 3 within 30 days of
incorporation but in order to avoid any dispute between
the partners as to the terms & conditions of the
agreement after the formation of LLP, it is always
beneficial to have the LLP Agreement drafted and
executed before the incorporation of the LLP.
• In case the Agreement is executed outside India, than
it must be notarized and consularized, for more
information check “Incorporation of LLP” under
FAQ’s

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Step 5: Filing Incorporation documents
Next is the filing of Incorporation documents, consent of Partners and
declaration electronically through the medium of e-forms prescribed with the
Registrar of LLP for incorporation of the LLP on payment of prescribed fees
based on total monetary value of contribution of partners in the proposed LLP.
• e-Form 2: Incorporation Document and subscriber's statement
This is an informative document setting down the details of LLP, its Partners
including designated partners along with their amount of contribution and
consent for forming a Limited Liability Partnership to carry on a lawful
business with profit motive along with declaration stating that all the
requirements of Limited Liability Partnership Act, 2008 regarding
incorporation of LLP in India have been complied with.
• Subscription Sheet:
The partners are required to subscribe their names along with signatures to
the subscription sheet and also along with their consent to become a
partner/ designated partner/ nominee/ nominee & designated partner of
the LLP which shall be witnessed by any Chartered Accountant /
Company Secretary / Advocate in practice.
In case the subscription sheet is executed outside India, than it must be
notarized and consularized

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Step 5: Filing Incorporation documents
• e-Form 3: Details of LLP Agreement
This form provides for the necessary information in respect to the
LLP Agreement entered into between the partners.
Only e-Form 3 is required to file within 30 days of the incorporation.
All the e-Forms will be digitally signed by any designated partner and
shall be certified by an advocate / company secretary / chartered
accountant/cost accountant in practice engaged in the formation of
LLP.
Key points:
• Filling will be done on www.llp.gov.in
• with All the Designated Partners need to be register as Business
User.
• Digital Signature is required only for the Designated Partner who
would be signing all the e Forms.

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Step 6: Certificate of Incorporation
After the Registrar is satisfied that all the formalities
with respect to the incorporation has been
complied, he will issue a Certificate of Incorporation
as to formation of the LLP within maximum of 14
days from date of filing of documents. The
Certificate of Incorporation issued shall be the
conclusive evidence of formation of the LLP.

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This write up is intended to start academic discussion
on few significant interpretations under Companies
Act, 2013 and under The Limited Liability Partnership
Act, 2008. It is not intended to be a professional
advice and should not be relied upon for real time
professional facts. Readers are advised to refer
relevant provision of law before applying or accepting
any of the point mentioned above. Author accepts no
responsibility whatsoever and will not be liable for
any losses, claims or damages which may arise
because of the contents of this write up.
Disclaimer

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Hope you fount it useful