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Limited Liability Partnership Registration in India: A Detailed Guide - Overview
LLPs are similar to Private Limited Companies with regard to compliance and operational requirements. A Limited Liability Partnership (LLP) is a form of business enterprise in which the partners are not personally liable for the debts of the partnership. An LLP can be considered as a hybrid between an incorporated company and a partnership firm. It was introduced to provide a form of business that is easy to maintain. Like companies, LLPs have limited legal liability for their partners, but like partnerships, they are generally governed by contractual obligations instead of company laws. LLP in India took shape after January 2009, making it an instant success with startups and professional services. Features of LLP are stated below.
- Unlike a partnership, the partners are not liable for the independent or unauthorised actions of one partner
- Partners are personally liable only to the extent of their investment in the LLP i.e. limited liability for its partners
- It is generally governed by contractual obligations instead of company laws
- LLP is a separate legal entity and it has perpetual succession
- Compliance requirements are lower compared to private limited companies
Benefits to register Limited Liability Company
The most vital reason for registering as Private Limited Company is the limited liability. The members of the firm are only liable for a small amount of debt incurred by it. This is entirely different from proprietorship and partnership where the personal assets of directors and partners are not protected if the business becomes bankrupt.
Low costs: Company registration can often be a costly affair; however, this is not the case when it comes to LLPs
Separate Legal Existence: The owner and the company are considered as two separate legal entities.
Limited Liability: In the case of a proprietorship firm, the owner’s personal assets are in danger if the company is at financial losses,however, this is not the case when you pursue a company registration in India as an LLP.
No Audit Requirement & Minimal Compliances: LLP is easy to manage and statutory audit is not required for Limited Liability Partnership. LLP is most ideal for small enterprises.
Better image and credibility in Market: Limited Liability Partnership (LLP) is a popular and well known business structure in the world. Corporate Customers, Vendors and Govt. Agencies prefer to deal with LLP instead of proprietorship or normal partnerships.
Flexible Agreement: Transferring the ownership of LLP is also easy. A person can quickly be inducted in as a designated partner and the ownership switches to them.
Checklist for Registering a Company in India
A minimum of two members who are aged 18 or more.
One of the Directors must be Indian Resident
A minimum share capital of Rs 100,000.
|Form of Business||PRIVATE LIMITED COMPANY||ONE PERSON COMPANY||LLP||PARTNERSHIP FIRM||PROPRIETORSHIP FIRM|
|Recommended For||Startups & Growing Companies||Sole Promoters||Professional Services Companies||Small Businesses Firms||Small Traders, Agents & Manufactures|
|Prevailing laws||Companies Act||Companies Act||LLP Act||Partnership Act||NA|
|Charter Documents||MOA & AOA||MOA & AOA||LLP Agreement||Partnership Deed||NA|
|Limit of Members||2-200||1||2-Unlimited||2-20||NA|
|Separate legal identity||Yes||Yes||Yes||NO||NO|
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Simplified Performa for Incorporating Company Electronically, also known as SPICe, was introduced in the year 2016 for the purpose of incorporation of the companies. Under the Ease of Doing Business (EODB) initiative, the MCA released the new form SPICe+ to further ease the company incorporation process. The new SPICe+ form encompasses more features than the earlier SPICe form. Name approval is integrated as part of the SPICe+ form. Apart from that, even after affixing DSC in the form, information can be modified in the SPICe+ form.
After the introduction of the SPICe+ form, the name approval has been integrated with SPICe+. Part-A of SPICe+ is for name approval. Therefore, from 15th February 2020, the RUN form can only be used for a change of name.
Company Limited by Shares: The liability of the shareholders is limited only to the amount that is unpaid on the shares held by them. Company Limited by Guarantee: A company having no share capital where the liability of the shareholders is limited up to the amount undertaken to be contributed by them in the event of liquidation of the company.
Yes. private limited companies are eligible for attracting foreign direct investments in compliance with the relevant laws and regulations.
DIN, also known as Director Identification Number, is an identification number of a person intending or has become a director in a company. DPIN, also known as Designated Partner Identification Number, is an identification number for a designated partner in LLP. It is similar to DIN in the case of companies. DIN and DPIN are issued by the Ministry of Corporate Affairs.
Yes. Even a foreign national can become a director in a private limited company.
As per the Companies Act, 2013, only an individual natural person can become a director in a company. Therefore, neither a company, firm, or association can become a director in any company. This is to ensure the fixation of duties and responsibilities that would be difficult in the case of companies and firms becoming directors.
The private limited company registration cost depends upon various factors like authorized capital, number of directors, etc. Initiate your Pvt. Ltd. Company Registration with Trade Approvals as your partner in corporate compliance! Reach out to us for any professional assistance.