Limited Liability Partnership

It is a new phenomenon in Indian context. The Parliament of India has enacted (Limited Liability Partnership Act, 2008) with effect from April 1, 2009. Therefore, now the Indian laws permits to incorporate LLP.

Following are silent features of LLP

  1. It shall be a body corporate and a legal entity separate from its partners.
  2. Perpetual succession
  3. The liability of the partners would be limited to their agreed contribution in the LLP. Further, no partner wouldbe liable on account of the independent or unauthorized actions of other partners
  4. The partners have the right to manage the business directly
  5. Minimum of 2 partners and no maximum number.
  6. The rights and duties of partners in LLP, will be governed by the agreement between partners.
  7. Liability of the partners is limited to the extent of his contribution in the LLP.
  8. Audit of the accounts is required only if the contribution exceeds Rs. 25 lakhs by the partners or annual turnover exceeds Rs.40 lakhs.
  9. It is mandatory for the partners to have DPIN

Procedure for Establishment of LLP


Decide on the Partners and the Designated Partners

A LLP can be incorporated with a minimum of at least two partners who can be Individuals or Body Corporate through their nominees. Further for incorporating an LLP, of the total number no. of partners, at least two shall be Designated Partners, of which at least one must be an Indian Resident.

Parameters for deciding the Partners and Designated Partners:
Atleast Two Partners; Individuals or Body Corporate through individual nominees.
Minimum of Two Individuals as Designated Partners, of total no. of Partners.
Atleast One Designated Partner to be Resident Indian.

A person ‘Resident in India’ means a person who has stayed in India for a period of not less than one hundred and eighty two days during the immediately preceding one year.

‘Designated Partner’ means a partner who is designated as such in the incorporation documents or who become a designated partner by and in accordance with the Limited Liability Partnership Agreement


Obtain Designated Partner Identification Number (DPIN) and a digital signature certificate

DPIN is an eight digit numeric number allotted by the Central Government in order to identify a particular partner and can be obtained by making an online application in eForm 7 to Central Government and submitting the physical application along with necessary identity and Address proof of the person applying with prescribed fees.


Decide on the name of the LLP and check whether it is available.

The next step is to decide the name for the proposed LLP to be incorporated, anyone intending to incorporate an LLP has to evaluate his proposed name under the prescribed parameters and make an application in Form 1of Rule 18(5) of the Limited Liability Partnership Act 2008, for reservation of the desired name. The name of the limited liability partnership shall not be similar or identical with Company or LLP already registered in India and it should not contain words prohibited under the law.



Draft the LLP agreement

The next step is drafting of Limited Liability Partnership Agreement governing the mutual rights and obligation of the partners and among the LLP and its partners.

The basic contents of Agreement are:

The basic contents of Agreement are:
Name of LLP
Name of Partners & Designated Partners
Form of contribution
Profit Sharing ratio
Rights & Duties of Partners
Proposed Business
Rules for governing the LLP

The Agreement can be drafted before or after Incorporation of the LLP


File the LLP Agreement, incorporation documents

Next is the filing of Incorporation documents, consent of Partners and declaration electronically through the medium of e-forms prescribed with the Registrar of LLP for incorporation of the LLP on payment of prescribed fees based on the total monetary value of contribution of partners in the proposed LLP.

eForm 2: Incorporation Document

This is an informative document setting down the details of LLP, its Partners including designated partners along with their amount of contribution and consent for forming a Limited Liability Partnership to carry on a lawful business with profit motive along with declaration stating that all the requirements of Limited Liability Partnership Act, 2008 regarding incorporation of LLP in India have been complied with.

eForm 3: Details of LLP Agreement

This form provides for the necessary information in respect to the LLP Agreement entered into between the partners.

eForm 4: Consent of Partners

Consent of each partner to become a partner of Limited Liability Partnership along with their address and identity proof to be filed with the Registrar of Companies.

Subscription Sheet: Just like in case of Company formation, the partners are required to subscribe their names along with signatures to the subscription sheet, which shall be witnessed by any chartered Accountant/Company Secretary/Advocate in practice.

eForm 3 & 4 are required to filed within 30 days of the incorporation


Obtain the Certificate of Incorporation

After the Registrar is satisfied that all the formalities with respect to the incorporation has been complied, he will issue a Certificate of Incorporation as to formation of the LLP within maximum of 14 days from date of filing of documents . The Certificate of Incorporation issued shall be the conclusive evidence of formation of the LLP.

On September 27th, 2010, posted in: Knowledge Bank by