LLP is a partnership where the partners enjoy limited liability. In case of bankruptcy, the personal assets of partners are not affected as the company becomes a separate legal entity in front of law. This form of business has become very popular in recent years as it enables partners to enjoy security of their assets. It has become popular because it has the advantages of a company form and partnership form of business. Very suitable for ecommerce business models. The name of the company shall end with Limited Liability Partnership or LLP.
Features of a LLP
- Separate legal entity
- Minimum 2 partners required whereas, no limit for maximum partners
- Limited liability
- No minimum capital contribution
Advantages of a LLP
- Separate legal entity in the eyes of law
- Liability of each partner is limited to the amount of shares
- Low cost of formation
- Easy to form
- Partners are liable only for their own act and not for others
- Less restrictions and compliance
Registration of LLP
- A Designated Partner Identification Number (DPIN) has to be obtained by filing the eForm DIR-3.
- Obtain DSC
- Apply for name by filing up Form 1 (application for reservation or change of name)
- Filing of Form 2 (Incorporation document and Subscriber’s statement), if required
- After incorporation, agreement needs to be filed within 30 days. It is to be filed in Form 3 (Information with regard to Limited Liability Partnership Agreement and changes, if any, made therein).
Time to register LLP
Time taken for incorporation is 14-20 working days.
Cost to register LLP
Cost varies from 7000-8000 INR (approx) for basic registration.