Limited liability partnership is a new form of business entity. It is a hybrid structure that combines the elements of both corporate as well as a partnership (i.e limited liability with flexibility).
LLP is prevalent across the globe. As the name suggests, partners in LLP have limited liability i.e each partner is liable for its own acts and not liable for other partner’s wrongful decisions or any misconduct.
The formation and regulation of limited liability partnership are governed by the Limited Liability Partnership Act, 2008 and the rules made thereunder i.e Limited Liability Rules, 2009.
Background of Limited Liability Partnership Act 2008
Back in 1957, a suggestion was made by iron, steel and hardware merchants that limited liability partnership should be recognized in India as small businesses are facing problems to comply with the cumbersome framework of companies Act unless a full-time secretary is engaged. This suggestion was rejected outright by the 7th law commission. 
But this scenario changed rapidly as LLP has been a matter of discussion for many years and various committees made recommendations for legislation on LLP’s in India:
- Bhatt committee in 1972;
- Naik committee in 1992;
- Abid Hussein Committee in 1997;
- soon after it, In 2003, the Naresh Chandra Committee report highlighted the grave need to introduce LLP’s in the service industry, which finally succeeded in launching the concept of LLP in India.
- JJ. Irani Expert Committee on Company law in 2005 recommended to enact separate legislation in India and also to extend the scope of LLP to the small enterprises.
The need for LLP was realized by the Ministry of Corporate Affairs in the following words:
“ In the view of the potential growth of the service sector, the requirement of providing flexibility to small enterprises to participate in joint ventures and agreements that enable them to access technology and bring together business synergies and to face the increasing global competition enabled through WTO, etc., the formation of limited liability partnerships (LLP) should be encouraged” 
According to the Limited Liability Partnership Act, 2008, LLP is a partnership formed and registered under this Act. This specifies two requirements:
- An existence of partnership and
- The need for its registration
Thus, Registration of LLP is mandatory under the proposed act and certificate of incorporation is conclusive evidence of its formation and registration.
Step by step procedure to register LLP in India:
To register a Limited liability partnership in India, you need to first apply for a Designated Partner or Director Identification Number (DPIN or DIN) which can be done by filing E-forms, you would then need to acquire your Digital Signature Certificate and register the same on the portal. Thereafter you need to get the LLP name approved, you can register the LLP by filing the incorporation form. 
STEP 1: Application for Director Identification Number (DIN)
Every LLP shall have at least 2 individuals as designated partners out of which one of them shall be a resident of India.
All the designated partners of the proposed LLP shall obtain “Director Identification Number” by making an application in E-form along with application fees. It is a unique identification number allotted to designated partners. Since 2011, no separate DPIN is required if you already have a DIN number.
SPIC E-form: Any person (not having DIN ) proposed to become a first director in a new company shall have to make an application through E-form SPIC. The applicant is required to attach identity proof and address proof along with the application.
DIR 3 Form: Any person intending to become a director in the existing company has to make an application through DIR 3 e-form. The applicant needs to attach a photograph and scanned copy of identity proof and residence proof.
STEP 2: Acquire and Register Digital Signature Certificate (DSC)
DSC is required to digitally sign all documents as Information technology Act, 2000 provides for the use of digital signature on documents submitted in electronic form in order to ensure the security and authenticity of documents filed electronically.
Acquire Digital Signature Certificate: DSC is issued by licensed Certifying Authorities, registered with the controller of certifying Authorities.
The time taken to issue DSC varies according to individual certifying authorities but is generally between 3-7 working days or in case of Aadhar holders, it could be done on the same day, by completing e-KYC.
Register Digital Signature Certificate: DSC can be registered with MCA for the purpose of Role check. Role check is the internal verification process of MCA, under which the authenticity of credentials submitted through any particular form is validated with the information available with MCA in its repository.
STEP 3: Incorporation of an LLP
(i) Application for reservation of Name:
The application for the reservation of the name of LLP is to be filed in form 1, it is mandatory the “LLP” is suffixed to the name. such name shall be available for the period of 3 months. During this period of 3 months, you need to apply for an incorporation certificate.
(ii) Filing of incorporation Document and Subscription statement:
The incorporation document is required to be filed in form 2 with the registrar of the state in which the registered office of limited liability partnership is to be situated.
The Incorporation document shall state-
(a) Name of the Limited liability partnership;
(b) The proposed business of Limited liability partnership;
(c) Address of the registered office of the Limited liability partnership;
(d) Name and address of each of the persons who are to be partners of Limited liability partnership on incorporation;
(e) Name and address of each of the persons who are to be Designated partners of Limited liability partnership on incorporation;
(f) contain such other information concerning the proposed LLP as may be prescribed.
Along with the Incorporation document, there shall be filed a statement in part B of form 2 by an eligible professional, either an advocate or a CS or a CA, who is engaged in the formation of LLP or by anyone who subscribed his name to the incorporation document.
These documents will have to be signed by each designated partner and shall file consent in form 2 along with the fee.
STEP 4: Filing of LLP agreement:
Limited liability partnership shall file its LLP agreement with the Registrar of companies in form 3 within 30 days from the date of its incorporation. In case this not done fine will be levied, the LLP agreement must be printed on stamp paper and signed by each designated partner together with the signature of two witnesses.
STEP 5: Wait for approval:
Once the govt is satisfied that all the requirements have been complied with, it will grant its approval for a limited liability partnership to commence business.
- https://www.latestlaws.com/library/law-commission-of-india-reports/law-commission-report-no-7- patnership-act
- Ministry of Corporate Affairs, Government of India, LLP Act, <http://www .mca.gov.in/ Ministry/pdf/LLP.pdf>.
This article is authored by Liza Arora, Student of 3rd year B.B.A LL.B at JIM’s Engineering Management Technical Campus School of Law Greater Noida Affiliated to GGSIPU.
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