Top 5 Legal Requirements for LLP Registration in India
In India, limited liability partnerships, or LLPs, are becoming increasingly common corporate structures. Partners benefit from limited accountability and the flexibility of a partnership, while companies enjoy the benefits of corporate structure. Understanding the legal requirements is essential for entrepreneurs looking to start an LLP. It is vital to ensure these regulations are followed while establishing an LLP, regardless of the city in India.
If you are looking to register your business as an LLP, here is a list of the top 5 legal requirements you need to abide by and steps to ensure full compliance with the LLP ACT 2008.
1. Digital Signature Certificate (DSC)
To register an LLP in India, one must first obtain a Digital Signature Certificate (DSC). Since all registration documents are filed online, a digital signature is mandatory for signing the e-forms. Every designated partner of the LLP must obtain a DSC from a government-recognized certifying authority.
To apply for a DSC, the partners must provide identity proof (PAN card, Aadhaar card) and address proof. It’s important to note that only Class 2 or Class 3 certificates are valid for LLP company registration. You can complete the registration process with a DSC, as all forms and filings with the Ministry of Corporate Affairs (MCA) are done digitally.
2. Director Identification Number (DIN)
The second requirement is that every designated partner in the LLP obtain a Director Identification Number (DIN). The DIN is a unique identification number required under Indian law for individuals wishing to become company directors or designated partners in LLPs. The MCA issues this number, and it is mandatory for LLP registration.
Partners can apply for a DIN while applying for the LLP registration through Form DIR-3. This form must be filed with the MCA and the supporting documents, such as proof of identity and address. The person cannot be named as a designated partner in the LLP if they do not have a valid DIN.
3. Name Reservation for the LLP
Before proceeding with LLP registration, reserving the LLP’s name with the MCA is another crucial step. It would help if you chose a unique and appropriate name for your LLP, ensuring it complies with the MCA’s naming guidelines. The name must not be identical or too like the name of an existing company, LLP, or trademark.
You must file Form LLP-RUN (Limited Liability Partnership – Reserve Unique Name) with the MCA to reserve a name. It’s advisable to suggest at least two names to avoid rejection. Once approved, the reserved name will be valid for 90 days, during which time you must complete the rest of the registration process.
4. LLP Agreement
A well-drafted LLP agreement is one of the most important legal requirements for LLP company registration. The agreement outlines the mutual rights and duties of the partners and the LLP’s operational framework. It must include essential details like the LLP’s name, the details of the partners, each partner’s capital contribution, profit-sharing ratios, and the LLP’s management structure.
This agreement must be filed with the MCA in Form 3 within 30 days of incorporation. If the partners agree to any modifications in the future, the new agreement must be submitted to the MCA and may be changed.
5. Registered Office Address
Every LLP must have a registered office in India. This address is where all legal notices and official communication will be sent. If you’re registering your LLP in a significant business hub, such as Mumbai, you need to provide a valid local address for LLP registration in Mumbai.
You must submit documentary proof of the registered office, such as utility bills (not older than two months) and an NOC (No Objection Certificate) from the property owner, along with the lease or rent agreement (if applicable). The office address must be within India and capable of receiving official government communication.
Additional Legal Formalities
Once you have completed these five legal requirements, there are a few additional formalities you need to comply with:
- PAN and TAN Applications: A Tax Deduction and Collection Account Number (TAN) and Permanent Account Number (PAN) must be applied for by the Limited Liability Partnership after it is incorporated.
- GST Registration: If your LLP’s annual turnover exceeds the threshold limit (currently ₹40 lakhs for most states, ₹20 lakhs for some states, and ₹10 lakhs for category states), you need to obtain GST registration.
- Compliance Filings: LLPs must regularly file their Annual Returns (Form 11) and Statement of Accounts and Solvency (Form 8) with the MCA.
Registering an LLP in India is a streamlined process but requires strict compliance with several legal formalities. From obtaining the necessary Digital Signature Certificates and Director Identification Numbers to drafting the LLP agreement and securing the registered office, each step is crucial to ensure your LLP registration is successful.
It is essential to follow these guidelines carefully for entrepreneurs and business owners looking to set up an LLP, mainly those planning for LLP registration in Mumbai. This ensures that your business is legally compliant and ready to operate within the regulatory framework of the Indian government.
By consulting with an expert or legal specialist, you can handle the challenges of LLP company registration and avoid delays or legal concerns. If you are looking to register your company as per the LLP act, let Shah and Doshi guide you through the complexities of LLP registration. Our team of experienced chartered accountants provides comprehensive support, ensuring your LLP is established legally and efficiently. From initial formation to ongoing compliance, we’re here to help you navigate the process seamlessly.
