Essential elements to incorporate LLP
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Detailed Solution & Explanation
Under the LLP Act, 2008, the following elements are very essential to form a LLP in India:
1. Persons intending to incorporate a LLP shall decide a name for the LLP.
2. A LLP shall execute a limited liability partnership agreement between the partners
inter se or between the LLP and its partners. In the absence of any agreement the
provisions as set out in First Schedule of LLP Act, 2008 will be applied.
3. Then they shall complete and submit the incorporation document in the form
prescribed with the Registrar electronically, along with the prescribed fees.
4. There must be at least two partners for incorporation of LLP [Individual or body
corporate].
5. A LLP shall have a registered office in India so as to send and receive communications;
6. It should appoint atleast two individuals as designated partners who will be
responsible for number of duties including doing of all acts, matters and things as are
required to be done by the LLP. At least one of them should be resident in India. Each
designated partner shall hold a Designated Partner Identification Number (DPIN)
which is allotted by MCA.
7. As soon as the process is completed, a certificate of registration shall be issued which
shall contain a Limited Liability Partnership Identification Number (LLPIN)
Steps or process for incorporating an LLP
Step 1: Reservation of name
The first step while incorporating a LLP is the reservation of name of LLP.
The name of a LLP shall not be similar to that of an existing LLP, Company or a
Partnership Firm.
The applicant has to file e-form 1, for ascertaining the availability and reservation of
name. 6 names in order of preference can be indicated.
The name should contain the suffix "Limited Liability Partnership" or "LLP".
Step 2: Incorporation
In the second step, the applicant has to file e-form 2 for incorporating a new LLP.
This form contains the details of the proposed LLP and the Partners and Designated
Partners along with their consent to act as such.
Step 3: Execute a LLP Agreement
It is mandatory to execute LLP Agreement. [Sec. 23]
LLP agreement shall be filed with the registrar in e-form 3 within 30 days of
incorporation of LLP.
The contents of the LLP Agreement are enumerated below:
1. Name of LLP
2. Name and address of partners and designated partners
3. Form of contribution & interest on contribution
4. Profit sharing ratio
5. Remuneration of Partners
6. Rights & Duties of Partners
7. Proposed Business
8. Rules for governing LLP.
DIRFFERENCES
About This Chapter: Partnership & Companies
Paper
Paper 1: Accounting
Weightage
15-20%
Key Topics
Admission, Retirement, Death, Shares, Debentures
This chapter covers Admission, Retirement, Death, Shares, Debentures and is part of Paper 1: Accounting in the CA Foundation exam.
View Official ICAI SyllabusExam Strategy Tip
This topic carries 15-20% weightage. Focus on understanding core concepts rather than memorizing.
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