The concept of a limited liability partnership first originated in the United States and came to India through the Limited Liability Partnership Act, 2008. Its history is very interesting. Hundreds of savings and loan companies were declare bankrupt during the financial crisis in the United States in the late 1980s and early 1990s. This led to the collapse of many accounting and law firms which then faced major legal claims provoked by the US government. These claims placed a burden on the partners of such payments who were not even responsible for the failure and were responsible for paying millions of dollars in compensation. Then in 1991 a new concept of limited liability partnership (LLP) was introduce in the city of Texas which gained popularity in the majority of the United States and eventually resulted in the passage of the LLP law.
The company form of business is consider to be the most popular form of business in the industry but in the case of professionals providing secretarial, legal, accounting and doctoral services, who not only comply with the legal entity formation, but also regulate by their respective governing bodies of which they are members. , It is not possible for them to start a company business, as they are not allow to act as a corporate body.
On the other hand the idea of a partnership firm which does not provide limited liability and besides, where the personal assets of all the partners are always at risk is not consider appropriate for many. Thus in order to overcome the shortcomings of the company and the form of business partnership, an antenna hybrid form was need which could have the characteristics of both the partnership and the company. Because it is a ubiquitous truth that necessity is the mother of all inventions, India adopt the concept of limited liability partnership, which had already try and test by countries like UK, US, China etc.
Limited Liability Partnership (LLP) is a newly introduced type of corporate entity in India that is suitable for small and medium size enterprises. Although easy to maintain compliance, LLP offers many benefits to a private limited company. Low registration fees and easy maintenance make LLP the first choice for many small businesses in India.
A limited liability partnership is a form of business partnership that has a legal entity separate from its partners who have a permanent successor. In India it is govern by the Limited Liability Partnership Act, 2008 which was notify on 1.03.2009 and came into force on 01.04.2009 which is amended from time to time. Being a separate law, the provisions of the Indian Partnership Act, 1932 do not apply to LLPs. This is a great relief for partners, especially professionals such as company secretaries, chartered accountants, cost accountants, advocates and other professionals.
LLP registration in India is govern by the Limited Liability Partnership (LLP) Act, 200 by, and is administer by the Ministry of Corporate Affairs. Today, LLP registration and other regulatory filings are paperless; the documents are file electronically through the MCA website and process at the Central Registration Center (CRC).
In 2006, he changed the process of LLP inclusion and regulatory compliance filing with the introduction of the e-governance initiative ‘MCA21’ by the Ministry of Corporate Affairs.
Today, LLP registration and other regulatory filings are paperless; Documents are process on the MCA website (and at the Central Registration Center (CRC)), at the back office dedicate to the LLP and LLP registration process. The name of the LLP is approve and the registration is handle. Is on the Registrar of Companies concerned in the State.
The LLP registration process in India is completely online. After completing all the registration formalities, the Central Registrar of Companies issues a digitally signed Certificate of Inc. (COI). Electronic certificates issue by the Ministry can be verified by all the appointees on the MCA website.
A limited liability partnership must have at least 2 partners. Partners can be individuals, companies or LLPs. Partners are individuals who own and operate an LLP. The LLP partner will have two types of rights such as management rights and profit rights.
Each LLP has at least 2 designated partners who are individuals and at least one of them is a resident of India. An LLP registration in Coimbatore in which all the partners are body corporates or in which one or more partners are individuals and entities corporates, at least two persons, such as limited liability partnership partners or such body will act as nominated designated partners of the corporate.
Also, The designated partner (excluding the corporate partner nominee), should be a partner of the LLP. The designated partners are responsible for compliance under the LLP Act and Rules.
Digital Signature Certificate (DSC) is a legally recognize method of electronic signing of documents. All the documents to be file with the Registrar Companies / Companies / Ministry of Corporate Affairs are validated with the DSC. All LLP partners and designated partners must have a valid DSC to sign documents electronically.
The amount invest in LLP by the partners is call the capital contribution of the LLP. There are no minimum capital requirements for LLP registration. Partners must agree to contribute at least a nominal amount (say Rs.1 or Rs.1000) as a capital contribution to the LLP. No one can become an LLP partner without a contribution. The amount agreed to be contribute by the partner becomes the liability of the partner of the LLP.
The choice of LLP name is important for quick registration of LLP. The process of approval and allotment of LLP names in India is conduct by the Ministry of Corporate Affairs (MCA) as per the LLP Name Availability Guidelines under Companies Act 201.
The LLP name must be the same as the existing company or LLP. Also, the proposed name should not be like a registered trademark or a trademark for which a third party is applying.
Similarly, The registered fee refers to the official correspondence address of the LLP or its main place of business. The address of the register office fee will be use for all official communications of the LLP registration in India. The address of the LLP registration office will be fill in at the time of registration of the new LLP.
The Limited Liability Partnership Act, 2008 recognizes the changing requirements of the business environment in the current era. The inclusion of an LLP will provide a helpful new option for startups such as business partnerships that are concern about being expose to responsibility.
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