Steps for LLP Formation in India
The following steps are required to be undertaken for forming LLP in India:
Step I Deciding the Partners and Designated Partners
A LLP can be incorporated with a minimum of atleast two partners who can be Individuals or Body Corporate through their nominees. Further for incorporating an LLP, of the total number no. of partners, atleast two shall be Designated Partners, of which atleast one must be an Indian Resident.
Parameters for deciding the Partners and Designated Partners:
1 Atleast Two Partners are required for forming a LLP. These can be Individuals or Body Corporate through individual nominees.
2 The LLP should have Minimum of Two Individuals as Designated Partners, out of the total no. of Partners.
3 Atleast One Designated Partner in the LLP should 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
Step II Obtaining DPIN No. & Digital Signature
Designated Partner Identification Number (DPIN): Section 7 (6) of LLP Act 2008, provides that every Designated Partner to obtain a DPIN from the Central Government .
Step III Checking the 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 1of Rule 18(5) of the Limited Liability Partnership Act 2008, 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 which are also not undesirable in the opinion of Central Government or which satisfies the conditions prescribed under rule 18(2). For more information check Name Availability Guidelines.
In case any Body Corporate is partner, copy of Board resolution authorizing the incorporation of LLP shall be attached
To reserve the name file form RUN.
To check name availability please click here
Undesirable Names- Connote
If in the opinion of the department, the name by which a Company is registered gives so misleading an indication of the nature of its activities as to be likely to cause harm to the public, the department may direct it to change its name. A Company registered under the Companies Act, is not entitled to carry on its business in such a way or under such a name, as to represent that its business is the business of any other company or firm or person; and the absence of fraud is immaterial. In such cases, the old company or firm can apply to the court for an injunction, and in such cases the principles that apply to individuals trading under identical or similar names would become applicable.
Step IV file LLP-2 for incorporation
After reserving of name, LLP-2 is to be file for incorporation along with id proof , address proof, subscriber sheet, consent of the partners, registered office proof.
Step V :-Drafting and filing of 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
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 eform 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,
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 the total monetary value of contribution of partners in the proposed LLP.
Step VI 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.