LLP Makes Company Registration and Incorporation Simpler
A new type of corporate body that focuses on the small and medium sized businesses is introduced in India called the LLP. The LLP stands for the Limited Liability Partnership and it provides the benefits of the PLC (Private limited Companies) and also the compliance maintenance is easier. Many small businesses choose this type because of its easy maintenance and lower fee registration. This form is more popular because it is a hybrid form which has the benefits of both the companies and partnership and it has many features like, lower restriction and compliance, separate legal entity, tax benefits and the liability of each partner is limited to the contribution of each member mentioned in the agreement. This type of business is applicable for the law firms and the web development shops.
An entity or a company that wishes to incorporate into the Limited Liability Partnership must follow the basic registration steps.
Designated Identification Number (DIN)
Any individual who wishes to acquire a partnership in the Limited Liability Partnership must apply for the DIN, because according to the LLP rules of 2009 the Ministry of Corporate Affairs notified that any person who is appointed as the designated partner in the company must apply for the DIN instead of the DPIN (Designated Partnership Identification Number). The fee has to be paid only through the online mode either by the internet banking or the credit card and the fee amount is one hundred rupees. Even the required forms that have to be submitted along with the DIN form must be scanned and submitted online and the physical submission is not permitted.
The applicant must make sure of following instructions while filing the DIN application form.
- In the first name and last name field, single alphabet is not allowed and the prefixes like the Kumari, Shri, Mr. or Ms are allowed.
- The name entered in the form must be similar to that of the name in the identification card including the spelling of the applicant.
- Affixing the photo of the applicant is a must and they must ensure that it is a recent photo that gives the full front view of the applicant’s face.
- If the applicant is of Indian national, they have to produce the PAN and the information that they provide like the name of the applicant, their date of birth and the applicant’s father’s name should be similar to that of the PAN details.
- If the applicant is of foreign national, they have to submit their passport as the identification proof.
- The address proof of the applicant can either be the driver’s license, ration card, voter’s id, telephone bill, electricity bill or bank account statement. The proof must be under the name of the applicant.
- The documents and the proofs that are submitted by the applicant must not be older than one year in the case of the foreign applicant and two months in the case of the Indian applicant from the date of filing the application form.
- The affidavit must follow the regulations that are mentioned in the Annexure-1 under the Designated Identification Number Rules on the stamp paper which will be notarized.
- The signature on the application form must be signed by the professional and must be submitted online.
Digital Signature Certificate
After the submission of the DIN process, the applicant must focus on the registration of the Digital Signature Certificate. The partner of the LLP or the designated partner of the proposed LLP must sign the eForms which must obtain class 2 DSC or class 3 DSC from any of the authorized certifying consultancy or agency. The applicant must fill the ‘Register Digital Signature of Designated Partner’ application form the official website of the MCA. All the fields that are mandatory must be filled in the registration form and submit it online. If the registration is successful, the applicant will receive the message from MCA.
- The name of the LLP or the company must not be similar to any other entity, so the business owner must first analyze whether the name resembles any other company’s name.
- In the MCA portal, the applicant can search for the names that are similar to the proposed company name. If the name is not found in the database, the applicant must reserve the name by downloading and filling the Form-1.
- The applicants can choose up to 6 names for the proposed LLP and they have to state the coined word or key word in the proposed name.
- The details of the applicant must be filled in the application form and they have to select whether the applicant is the ‘Nominee of the body corporate’ or ‘Individual as partner’.
- The registered DIN of the applicant must be entered in the application form. If the applicant clicks on the pre-fill button, the name, contact number, mobile number, current residential address, email address and the fax number of the applicant will be automatically generated from the database.
- If the designated partner is a ‘nominee of the corporate body’, they must choose the type of corporate body. They should also provide the identification number. The identification number can either be CIN (Corporate identity number), FCRN (Foreign company registration number), LLPIN (Limited Liability Partnership Identification Number) or FLLPIN (Foreign Limited Liability Partnership Identification Number).
- In the LLP form, a minimum of two designated partners must be mentioned; in which one of the partners must be a resident of India.
- The designated partners of the LLP or a company must either be a nominee or an individual who is represented on behalf of the corporate bodies.
- All the details filled by the applicant must furnish the correct details on the application form because it is pre-filled automatically filled in the Form 2. Then, they have to append the DSC and submit the form by paying Rs.200 online.
- The name will then be registered by the Registrar, while the applicant can start filling the Form-2.
Incorporation and Subscription
In Form-2, the applicant must fill the details about the number of partners and designated partners and the amount of funds contributed by each partner. Any individual who wishes to become the designated partner must give their consent prior and file the form according to the prescribed format. And if the name includes Cost accountant, Chartered accountant, asset management, CWA, CA, CS, chit fund, securitization, architect, merchant bankers, mutual ventures, stock exchange, insurance, non-banking financial, banking, etc must attach an approval form for the concerned governing and regulatory authority. The fee depends on the contribution made by the partners in the proposed LLP. If the furnished details are relevant and abide by the rules of the LLP Act, the Registrar will provide the incorporation certificate.
Drafting the Agreement
Within 30 days of registration, the applicant must file the LLP agreement and it must be drafted according to the regulations mentioned under the LLP Act. The designated partners are responsible for all the things and matters for following the provisions of the Act. And they are liable to the fines or penalties imposed on LLP, so the applicant must follow the guidelines of the professional while drafting the form.
After filling the form, they have to upload the LLP agreement form in the portal. If the submitted form follows all the regulations, it gets approved by the respective authority. With this approval the registration process for the LLP is completed. Thus, the company can start the business.
Author Bio :
Anand Rajendran, CEO of Uptra.in, a leading provider of legal services, including company registration. He is the Head of Communications at Uptra Consultancy Services , India’s largest online legal services facilitator.