LIMITED LIABILITY PARTNERSHIP COMPANY [LLP] FORMATION IN INDIA

The LLP stands for limited liability partnership which can be defined as a corporate entity registered under the limited liability partnership act ,2008.

It can also be defined as a hybrid form of partnership that enjoys limited liabilities and also includes features of a company.One should note that the compliances for a company are applicable to limited liability partnership.

• BUSINESS WHERE LLP NEED APPROVAL FOR REGULATORY AUTHORITIES –

There are certain business activities where the limited liability partnership companies need prior authority of regulatory authorities before the beginning and usch business activities are venture capital ,banking , stock exchange ,merchant banking ,architecture , chit fund ,reconstruction , NBFC ,mutual fund etc.

All the activities marked above need the prior approval for concerned authorities and bodies before starting the business as per terms and conditions of the companies act ,2013.

• FOREIGNER CAN BECOME A PARTNER IN LLP –

According to new companies act ,2013 , the foreigner can also become a partner in the limited liability company keeping in mind that there should be at least one member or partner in the company who is an indian citizen and resident of India in the previous calendar year.

• CONVERSION OF PARTNERSHIP FIRM INTO LLP –

A partnership firm can be easily converted into the limited liability partnership firm according to rules defined below –

A form 17 is needed to be filed along with the form 2 for the conversion of the partnership firm into the limited liability partnership company.

One should note that an existing partnership firm by complying with the provisions of clause 58 and schedule 2 of Limited liability partnership act can be easily converted into a limited liability partnership company.

• MINIMUM PARTNERS REQUIRED TO FORM LLP –

As per the Limited Liability Partnership act,2008, The minimum partners required to incorporate a limited liability partnership firm is two and there is no limit for the maximum number of partners.

• A FOREIGN LLP CAN ESTABLISH BUSINESS IN INDIA –

According to the new companies act,2013 a foreign limited liability partnership company can easily establish a business in India.The process involves filing of form 27 with the ROC.

The form includes various details such as foreign LLP incorporation , two authorized representatives ,designated partners for compliances under the act.

• ADVANTAGES OF FORMING LIMITED LIABILITY PARTNERSHIP COMPANY –

The advantages of forming limited liability partnership companies are defined below –

1] FEATURES OF PARTNERSHIP AND COMPANIES –

The basic and foremost advantage is that LLP includes features of both partnership firm as well as the company.Therefore both the types of feature are available here.

2] INCORPORATION COST INVOLVED –

  The cost involved in the incorporation of the limited liability partnership company is very low.

3] MINIMUM TWO AND MAXIMUM PARTNERS EXEMPT –

 In LLP there is no limit for the maximum number of the partners and minimum required partners for the incorporation is two.

4] AUDIT NOT MANDATORY –

 There is no mandatory audit to be done in LLP unless the turnover exceeds Rs. 40 lac. And the capital contribution exceeds rs.25 lac.

5]MAINTAIN ONLY ACCOUNT BOOKS-

 There are very few records to be maintained i,e only the books of account are needed to be maintained.

6] LIMITED LIABILITY OF PARTNERS –

 In the case of LLP , the partners’ liability is limited to his shares and therefore the personal assets of  every partner is safe and secured.