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The Limited Liability Partnership (LLP), established under the LLP Act, 2008, provides a flexible and secure business framework. Converting a sole proprietorship into an LLP allows business owners to enjoy limited liability while retaining the operational flexibility of a partnership.
LLP merges the advantages of a company and a partnership firm into a single structure. Unlike a proprietorship, it protects partners from personal liability for each other’s negligence or misconduct, making it an ideal choice for professionals, small and micro enterprises, and closely-held or family-run businesses aiming for growth with minimized risk.
A Limited Liability Partnership (LLP) is a distinct legal entity, separate from its partners. Unlike a general partnership, an LLP can hold assets, sign contracts, and initiate legal proceedings in its own name, providing enhanced legal and operational autonomy.
In an LLP, partners’ liability is restricted to the capital they contribute as stated in the LLP Agreement. They are not personally responsible for the LLP’s debts or losses, even upon dissolution, and are shielded from the negligence or misconduct of other partners.
An LLP operates according to the provisions of its LLP Agreement, giving partners the flexibility to define roles, responsibilities, and decision-making powers. This structure allows them to manage the business in a way that suits their needs, offering greater adaptability than most other business formats.
An LLP entails fewer compliance requirements than a Private Limited Company. Statutory audits are needed only if the LLP exceeds certain turnover or capital thresholds, and formalities such as partner meetings or resolutions are more flexible, making overall compliance simpler and less burdensome.
The submission of a PAN is mandatory for partners; however, a passport is an acceptable alternative for foreign nationals
Please submit a copy of one valid ID, such as an Aadhaar card, Voter ID, Passport, or Driver's License, for all partners.
All partners must submit a recent passport-sized photo
The partnership must furnish proof of the registered office address via a recent utility bill, such as an electricity or telephone statement.
The partnership is required to procure a No Objection Certificate from the landlord or owner of the premises registered as the business address
A copy of the Rent Agreement must be submitted, if the registered office premises are leased or rented
All partners are required to furnish their Permanent Account Number (PAN). Foreign nationals have the option to submit their passport in lieu of a PAN
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The proposed name shall function as a primary brand-builder for the LLP and is ideally required to be a unique, coined term
The second component of the LLP’s name is required to explicitly state the nature of its business activities
The name of the LLP must end with the suffix ‘LLP’ or ‘Limited Liability Partnership
*Subject to Government processing time
When applying for name reservation, the trade name of the proprietorship can be used as the LLP’s name. The Ministry may approve the same name, given that the proprietorship is being converted into an LLP, unless the name is already taken by another company or LLP. However, final approval of the name is entirely at the discretion of the MCA.
Yes, Foreign Direct Investment (FDI) in LLPs is permitted under the automatic route for sectors approved by the Foreign Investment Promotion Board (FIPB). However, Foreign Institutional Investors (FIIs) and Foreign Venture Capital Investors (FVCIs) are not allowed to invest in LLPs. Additionally, LLPs cannot avail External Commercial Borrowings (ECBs).
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Convert proprietorship to LLP to leverage on added benefits with limited liability
