Step into a flexible corporate structure and enjoy the benefits of Limited Liability.
Limited Liability Partnerships (LLPs) provide distinct advantages over traditional partnerships. As a separate legal entity, an LLP must be registered with the central government, combining the credibility of a corporate structure with the flexibility of a partnership. Converting a partnership firm into an LLP allows partners to manage operations efficiently while protecting their personal assets and limiting liability.
In an LLP, partners’ liability is restricted to the capital they contribute, as defined in the LLP Agreement. Even during liquidation, the LLP’s losses or debts do not affect the partners personally. Moreover, no partner is accountable for the negligence or misconduct of another partner.
Partners’ liability in an LLP is confined to the capital they contribute, as agreed in the LLP Agreement. Even upon dissolution, the LLP’s losses or debts cannot be transferred to the partners. Additionally, no partner is responsible for the negligence or misconduct of another partner.
An LLP provides tax benefits by exempting it from Dividend Distribution Tax (DDT) and Minimum Alternative Tax (MAT). Moreover, payments made to partners as interest or remuneration are considered business expenses, reducing the overall taxable income.
Raising capital is easier in an LLP, as it allows limited partners to invest without assuming personal liability—unlike a general partnership where every partner bears unlimited liability.
PAN Card of all partners and the firm. Foreign nationals can submit a copy of their passport instead.
Aadhar Card, Voter ID, Passport, or Driving License of all partners.
Latest passport-sized photographs of all partners.
Latest electricity bill or telephone bill of the registered office address.
No Objection Certificate (NOC) from the owner of the registered office premises.
Rent Agreement of the registered office premises, if applicable.
If the partnership firm is registered, providing the Certificate of Registration from the Registrar of Firms (RoF) is mandatory.
In the case of an NRI or Foreign National partner, all submitted documents must be duly notarized or apostilled to ensure legal validity.
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A unique prefix helps establish the LLP’s brand identity and is ideally a coined or invented word that distinguishes it from others.
The latter part of the LLP’s name should clearly reflect the nature of its business activity.
The LLP’s name should include “LLP” or “Limited Liability Partnership” as a mandatory suffix.
*Subject to Government processing time
The partnership must include the same partners as the original firm, maintaining the same capital proportions recorded at the time of conversion. Therefore, the LLP cannot have more or fewer partners than the existing partnership; any changes to the number of partners can only be made after the conversion is complete.
The LLP name is reserved by submitting an online application. Partners can propose up to six names in order of preference. If the proposed names do not meet the criteria for uniqueness, relevance, or other requirements, the Registrar may request a resubmission with different names.
No, there is no minimum capital requirement to form an LLP. The business can start with any amount of capital as needed. However, each partner must contribute to the LLP, with the contribution amounts specified in the LLP Agreement. The stamp duty payable is determined based on the total capital contribution.
A Director Identification Number (DIN) is a unique number issued by the Ministry of Corporate Affairs to individuals upon application, enabling them to serve as a Director in any company or as a Designated Partner in an LLP. The earlier concept of a separate Designated Partner Identification Number (DPIN) is no longer applicable for LLP incorporation.
There are no citizenship or residency restrictions to become a partner in an LLP. The LLP Act, 2008 permits foreign nationals, including foreign companies and LLPs, to incorporate an LLP in India, provided at least one designated partner is a resident of India. Additionally, all partners must be at least 18 years old (not minors) and legally capable of entering into contracts. The designated partner must also have a valid Director Identification Number (DIN).
The LLP Agreement is a contract signed by all designated partners and partners after the LLP is incorporated. It outlines the business terms, including the rights, roles, duties, and responsibilities of the partners. This agreement must be filed within 30 days of receiving the certificate of incorporation; otherwise, a late fee of ₹100 per day will be charged until it is submitted.
To make any changes in the Limited Liability Partnership, the partners must pass a resolution during a partners’ meeting as specified in the LLP Agreement. This resolution should authorize an existing designated partner to act on behalf of the LLP and its partners. The authorized partner must hold a valid Digital Signature Certificate (DSC) to file the application with the Registrar. Once the partners execute the Supplement Agreement reflecting the change in partners or their designations, an application must be submitted to the MCA for approval of these changes.
Under the Act, LLPs and general partnerships are treated similarly (except for recovery purposes), so converting a general partnership firm to an LLP generally has no tax implications. This holds true only if the partners’ rights and obligations remain unchanged and no assets or liabilities are transferred during the conversion. If these conditions are not met, capital gains tax provisions will apply.
The primary reason for conversion is often to retain the original name and preserve brand identity in the market. To convert an LLP under the same name, it is necessary to provide valid proof demonstrating the firm’s prior use of the brand name. The MCA grants approval for name reservation based on the supporting documents submitted with the application.
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