Limited Liability Partnership has been introduced in India by way of Limited Liability Partnership Act, 2008. The basic premise behind the introduction of Limited Liability Partnership (LLP) is to provide a form of business organization that is simple to maintain while at the same time providing limited liability to the owners. A Limited Liability Partnership combines the advantages of both the Company and Partnership into a single form of organization and one partner is not responsible or liable for another partner’s misconduct or negligence. Therefore, all partners have a form of limited liability for each individual’s protection within the partnership, similar to that of the shareholders of a corporation. However, unlike corporate shareholders, the partners have the right to manage the business directly. An LLP also limits the personal liability of a partner for the errors, omissions, incompetence, or negligence of the LLP’s employees or other agents. LLP is one of the easiest form of business to incorporate and manage.
1. LLP Incorporation
Adroit Corporation Pvt. Ltd can incorporate a Limited Liability Partnership in 14 to 20 days, subject to ROC processing time.
2. Obtaining DSC & DPIN
Digital Signature Certificate (DSC) and Designated Partner Identification Number (DPIN) is required for the proposed Partners of the LLP. DPIN and DSC can be obtained for the proposed Partners within 5 to 7 days.
3. Name Approval
A minimum of one and a maximum of six proposed names must be submitted to the MCA. Subject to availability, naming guidelines and MCA processing time, Name Approval can be obtained in 5 to 7 working days.
4. LLP Incorporation
Incorporation documents can be submitted to the MCA along with an application for incorporation. MCA will usually approve the application for incorporation in 5 to 7 days, subject to their processing time.
Separate Legal Entity
A LLP is a legal entity and a juristic person established under the Act. Therefore a LLP form of organization has wide legal capacity and can own property and also incur debts. The Partners of a LLP have no liability to the creditors of a LLP for such debts.
Audit NOT Required
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 Designated Partner of the LLP. LLP is a separate legal entity separate from its Managing Partners, so by changing the Managing Partners, the ownership of the LLP can be changed.
A LLP being a juristic person, can acquire, own, enjoy and alienate, property in its own name. No Partner can make any claim upon the property of the LLP so long as the LLP is a going concern.
Limited Liability means the status of being legally responsible only to a limited amount for debts of a LLP. Unlike proprietorships and partnerships, in a LLP the liability of the members in respect 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 but continues to be in existence irrespective of the changes in Partnership.
Capacity to sue and be sued
To sue means to institute legal proceedings against or to bring a suit in a court of law. Just as one person can bring a legal action in his/her own name against another in that person
In the LLP form of organization it is possible for a LLP to make a valid and effective contract with any of its members. Thus, a person can at the same time be a Partner, creditor, supplier and also an employee of the LLP.