1. PROCEDURE FOR INCORPORATION OF LLP
The Registrar of Companies (ROC) is the authority having jurisdiction over the incorporation. The steps required are:
- Decide on the Partners and the Designated Partners
- Obtain Designated Partner Identification Number (DPIN) and a digital signature certificate
- Decide on the name of the LLP and check whether it is available
- Draft the LLP agreement
- File the LLP Agreement, incorporation documents and obtain the Certificate of Incorporation
Limited Liability Partnership (LLP) in India
Limited liability partnership firm is a new business structure in India formed under the Limited Liability Partnership Act, 2008. A hybrid of existing partnership firms and full-fledged companies, it is a separate legal entity, liable to the full extent of its assets with the liability of the partners being limited to their agreed contribution in the firm.
Features of a LLP
- LLP is a separate legal entity separate from its partners, can own assets in its name, can sue and be sued.
- Unlike corporate shareholders, the partners have the right to manage the business directly
- One partner is not responsible or liable for another partner’s misconduct or negligence.
- Minimum of 2 partners and no maximum
- Should be ‘for profit’ business
- Has Perpetual succession
- The rights and duties of partners in LLP, will be governed by the agreement between partners and the partners have the flexibility to devise the agreement as per their choice. The duties and obligations of Designated Partners shall be as provided in the law.
- Liability of the partners is limited to the extent of his contribution in the LLP. No exposure of personal assets of the partner, except in cases of fraud.
- Foreign nationals can be partners in LLP.
FOREIGN DIRECT INVESTMENT IN LLP
Foreign direct investment in LLP is allowed, with the specific approval of the government, in those sector /activities where 100% FDI is otherwise allowed under the automatic route and there are no FDI-linked performance related conditions.
FDI in LLPs is permitted, subject to the following conditions
FDI in LLPs is allowed through the Government approval route for LLPs. The approval will be granted only in sectors/activities where 100% FDI is allowed under automatic route and wher there are no FDI-linked performance related conditions.
LLPs with FDI will not be allowed to operate in agricultural/plantation activity, print media or real estate business.
An Indian company, having FDI, will be permitted to make downstream investment in an LLP only if both-the company, as well as the LLP are operating in sectors where 100% FDI is allowed, through the automatic route and there are no FDI-linked performance related conditions.
LLPs with FDI will not be eligible to make any downstream investments.
Foreign Capital participation in the capital structure of LLPs will be allowed only by way of cash consideration, received by inward remittance, through normal banking channels or by debit to NRE/FCNR account of the person concerned, maintained with an authorised dealer/authorised bank.
Investment in LLPs by Foreign Institutional Investors (FIIs) and Foreign Venture Capital Investors (FVCIs) will not be permitted. LLPs will also not be permitted to avail External Commercial Borrowings (ECBs).
In case the LLP with FDI has a body corporate that is a designated partner or nominates an individual to act as a designated partner in accordance with the provisions of Section 7 of the LLP Act, 2008 such a body corporate should only be a company registered in India under the Companies Act, 1956 and not any other body, such as an LLP or trust.
For such LLPs, the designated partner “resident in India”, as defined under the ‘Explanation’ to Section 7(1) of the LLP Act, 2008, would also have to satisfy the definition of “person resident in India”, as prescribed under Section 2 (v) (i) of the Foreign Exchange Management Act, 1999.
The designated partners will be responsible for compliance with all the above conditions and also liable for all penalties imposed on the LLP for their contravention, if any.
Conversion of a company with FDI, into an LLP, will be allowed only if the above stipulations are met and with the prior approval of FIPB/Government.
2. OUR SERVICE
We’ve prepared the ideal package of services for the company type listed above to help you start your business in India. In order to make the process go as smoothly as possible, we’ve prepared a limited list of necessary documents we’ll need so that we can prepare all the rest for you. If you have any questions about these please don’t hesitate to ask.
3. REQUIRED DOCUMENTS
- Documents related to the company
(Business plan, information/pamphlets about the company, office lease agreement, etc)
- other documents as needed on a case-by-case basis
Items We Prepare
Draft the LLP agreement
b. File the LLP Agreement, incorporation documents and obtain the Certificate of Incorporation
- Who can be admitted as a partner to LLP?
Answer-only individuals and body corporate can be admitted as partners in an LLP.
- How a person can be admitted as a partner to LLP?
Answer-Admission of partner to LLP happens in accordance with LLP agreement. Usually, LLP greement provides procedures for admission. As per LLP law, every new partner shall give his consent for appointment before admission.
- Is admission of a partner a complicated process?
Answer-No, it is simple process. The process varies depending on the provisions in the LLP agreement.
- What are the rights of a partner in LLP?
Answer-Generally the partner of an LLP has economic as well as management rights enable him to participate in profits and losses of LLP and management rights assure participation in management of LLP.
- What does a partner get after admission to LLP?
Answer-A partner admitted to the LLP get economic as well as management rights in LLP.
- Is it possible to admit a foreign national as a partner in LLP?
Answer-Yes, subject to approval from central government a foreign national can be admitted as a partner in LLP.