Updated : May 31, 2024What Are the Minimum Requirements for LLP Registration in India?
This blog discusses the minimum requirements for LLP Registration in India, including its minimum eligibility conditions and documentation. Fulfilling all these requirements is essential for successfully incorporating an LLP under the LLP Act.
LLPs or Limited Liability Partnerships were introduced under the LLP Act in 2008, as a hybrid structure between traditional partnership firms and Limited Companies. It combined the best features of both these entities to form a Partnership model that provided limited liability protection to partners with flexibility of management akin to a traditional part. Since then it has become one of the most popular choices among entrepreneurs for the incorporation of their startup businesses.
However, to incorporate a Startup as LLP, entrepreneurs need to meet the minimum requirements for LLP Registration. These include the minimum eligibility conditions for setting up an LLP and the documents required for registering it. We have explained all the requirements in detail further. Meeting these requirements is not just mandatory under the LLP Act, but also ensures a smooth and hassle-free incorporation process.
What is a Limited Liability Partnership or LLP?
Before understanding the minimum requirements for LLP Registration, understanding the concept and key features of LLP itself is crucial. According to the LLP Act, an LLP is a “body corporate formed and incorporated under the provisions of the act, as a legal entity separate from its partners”. In other words, an LLP is an incorporated partnership structure with a legal identity of its own. Its identity is separate from the identity of its partners. When compared to a traditional Partnership Firm, the most significant benefit that an LLP offers to its partners is limited liability protection. Some of the other key features of LLP Registration are given in the table below.
| S.No. | Key Features of a Limited Liability Partnership (LLP) |
|---|---|
| 1. | Statutorily Incorporated Entity |
| 2. | Has a Distinct Legal Identity from Partners |
| 3. | Partners are Not Involved in Management |
| 4. | Limited Liability for Partners |
| 5. | Change in partners does not affect LLP’s existence |
Is LLP Registration Mandatory in India?
The LLP Act defines an LLP as an entity incorporated under the Act. Therefore, incorporation or registration is mandatory for LLP businesses in India. The ROC or Registrar of Companies is the authority that incorporates LLPs through an online application-based process. However, before the incorporation process is initiated, all the minimum requirements for LLP Registration must be met, including the minimum eligibility conditions and documentation.
The mandatory requirement of registration is what gives a distinct legal identity to an LLP and makes it different from a traditional partnership firm. A traditional partnership firm, in comparison to an LLP, may or may not be registered. The Indian Partnership Act that governs the firm’s establishment, makes its registration optional by the State’s Registrar of Firms. However, its legal identity is established by the partnership deed, a document that forms the basis of its foundation and existence.
What are the Minimum Requirements for LLP Registration?
The minimum requirements for LLP Registration includes the minimum eligibility conditions for its establishment and the documents which makes its registration successful. These requirements are prescribed under the LLP Act of 2008 and the LLP (Incorporation) Rules of 2009. Meeting these requirements is absolutely essential for a successful incorporation process. We have explained these requirements in detail below, so that you’re well acquainted with them before the incorporation process begins.
| Minimum Eligibility Conditions | List of Documents |
|---|---|
|
|
Minimum Eligibility Conditions for LLP Registration
The first set of minimum requirements for LLP Registration lays down the minimum eligibility conditions to set it up. These include the minimum number of partners or co-owners, minimum number of designated partners to control the management, a unique and valid name of the LLP and its registered office address. Also, an adequate amount of capital must be contributed by the partners to operate the business smoothly in its initial stages. Let’s delve a little deeper into these conditions for better understanding.
Minimum Number of Partners
The ownership of an LLP is shared between its partners, who are collectively responsible to invest capital into it and share the profits as per a fixed, mutually decided ratio. To set up an LLP, a minimum of 2 partners are required who may be individuals or body corporates. However, he’s an individual, he cannot become a partner if
- He is declared of unsound mind by a court of law
- He is an undischarged insolvent
- He has been adjudicated as an undischarged insolvent previously
- If he is an Indian, must have a PAN
Minimum Number of Designated Partners
Designated partners are appointed by the partners from among themselves to control the management of the LLP. An LLP, unlike a traditional partnership firm, has a separate management structure and the partners do not directly get involved in the management. To set up an LLP, partners must appoint at least 2 designated partners. Their maximum number can go up to 15. Designated Partners of an LLP must be non-minor individuals, either Indian or foreign in nationality.
A Resident Designated Partner
An LLP can have a maximum of fifteen designated partners, who can either be Indian or foreign nationals, resident or non-resident in India. However, the LLP Act, 2008, mandates that out of all the designated partners in an LLP, at least one must be a Resident Indian. A resident Indian Designated Partner is one who has lived in India for more than 182 days in the previous financial year.
Unique Name of LLP
No business, including an LLP, can be formed or incorporated without a name. To name an LLP you must follow certain legal principles mentioned in several laws like the Companies Act, Company Incorporation Rules, the Trademark Act, and the Names & Emblems Act. Reward our detailed blog on naming guidelines of an LLP for complete information. Briefly, an ideal name for an LLP must be unique, original, and communicative of its business activity. Choosing names similar or identical to already registered companies, LLPs, and trademarks might be detrimental. Moreover, an LLP’s name must not contain words that show Government patronage, as it is a privately owned entity and the same can be misleading for the public.
Registered Office Address of LLP
An LLP must have a Registered Office with which it will get incorporated by the Registrar of Companies. This office will act as its place of official correspondence and communications. Also, the LLP will be required to maintain all its official accounts and documents at this office for inspection by regulatory authorities. The registered office must be a fully constructed space with locking facilities available for privacy and security. It may be situated on commercial or residential land.
Certain amount of Capital
No business can conduct its operations without capital. This is obviously true for LLPs as well. Although the LLP Act does not prescribe any minimum limit of capital for incorporating an LLP, the partners must decide the adequate amount of capital as per the needs of the business. In the due course of operations, it is this decided capital that the partners must strive to invest into the business.
Primary Business Activity
The LLP’s proposed commercial operations are referred to as its objectives. An LLP can be opened for all lawful purposes or objectives. It is obvious that you must determine the primary objective of the LLP before beginning the process of its formation and incorporation. Note that, an LLP can conduct multiple business activities but can be incorporated with only a single objective or primary business activity. The name of the LLP should mention its primary objective to strengthen its brand value.
Minimum Documents Required for LLP Registration
After all the minimum requirements for LLP registration are met, entrepreneurs can proceed with meeting the documentation requirements. Documentation is an extremely crucial aspect of the LLP incorporation process. The application for LLP registration cannot be filed without supporting documents that verify the identity of the partners, the business and its principal place of operations. We have explained all the documentation requirements below for your convenience.
KYC Documents of Partners
The first set of documents required for LLP Registration are the KYC documents of all the partners. These establish and verify the partner’s identity for the ROC. Specifically, these documents include the PAN, Adhar, and personal address proofs of all partners. For the address proof, partners can submit any utility bills in their name or a bank statement. Note that the address proof cannot be older than 2 months. Also, all partners have to submit their coloured photographs as well.
Proof of Registered Office Address
Another important document required for LLP Registration is the Proof of Address of the LLP’s Registered Office. For this, any utility bill in the name of the LLP, with the registered address mentioned on it, may be submitted. The proof of address must be recent and not older than 2 months.
No Objection Certificate
As far as the registered office is concerned, its property owner must issue a No Objection Certificate to the owner of the LLP. The No Objection Certificate must declare that the property owner does not object to the establishment of the LLP’s registered office at their property. It must be drafted in a specific format and submitted with other documents for LLP Registration.
DSC & DPIN
All partners must have their Digital Signatures and Designated partners must have their DPIN allotted to them. Digital Signature of the authorised designated partner is used to authenticate the LLP Registration Application. All the other documents of the LLP are also attested using digital signatures of partners. A class 3 digital signature would be appropriate for this purpose. DPIN is allotted to the designated partners of LLP by the MCA. DPIN of all designated partners are required to be submitted in the LLP Registration application. To apply for DPIN, the concerned designated partners must file an application on the MCA portal.
LLP Agreement
Although LLP has introduced few new features, it still is a Partnership structure at its core. Therefore, like all other Partnership businesses, the foundation of an LLP is based on mutually agreed terms and conditions between partners, documented in an LLP Agreement. The agreement is drafted and signed by all partners. Since it is a legal document, it must be stamped by a public notary as well. LLP Agreement is not required for LLP registration per se, but needs to be filed to the ROC within 30 days after the registration is complete.
What is the Process of LLP Registration in India?
To register an LLP, the first and foremost step is to fulfil the minimum requirements for LLP registration. Before diving into the intricacies of the registration procedure, it is essential to ensure that your LLP complies with the prerequisites discussed above, both in terms of eligibility and documentation. Once these foundational prerequisites are met, you can proceed with the subsequent steps of the LLP Registration process. Here’s a brief overview of these steps:
Step 1: Fulfil the Minimum Requirements for LLP Registration
Ensure that all the minimum requirements for LLP Registration have been met. In other words, make sure the LLP is eligible for LLP registration and has all the documents for the same.
Step 2: Draft the LLP Agreement
Draft an LLP Agreement outlining the roles, responsibilities, and contributions of partners. This agreement must be notarized and submitted within 30 days of LLP registration.
Step 3: File LLP Registration Application
Complete the online LLP Registration application on the Ministry of Corporate Affairs (MCA) website. Provide partner’s details, LLP name, and other required information. Upload the necessary documents to complete the application.
Step 4: Payment and SRN Generation
Make the necessary payment for LLP Registration. You’ll receive a Service Request Number (SRN) for future reference and tracking of application status.
Step 5: Approval and Certificate Issuance
The Registrar of Companies (ROC) reviews your application. If it meets all minimum requirements for LLP Registration, the ROC will approve it and issue a Certificate of Incorporation, officially registering your LLP.
Conclusion
Adhering to the Minimum Requirements for LLP Registration is the foundational step toward establishing a Limited Liability Partnership in India. These prerequisites, including minimum partners and designated partners, a unique LLP name, and documentary essentials like DPINs and DSCs of all partners. By ensuring compliance with these fundamental requisites, businesses can incorporate their LLP through a quick and easy registration process. The registration will secure its legal identity, provide limited liability protection to partners, and allow the LLP to exist perpetually.
