Reason for Limited Liability Partnership (LLP)
                     Reason for Limited 
Liability Partnership 
(LLP) registration
HERE IN THIS BLOG, WE HAVE DISCUSSED ABOUT THE REASON FOR 
LIMITED LIABILITY PARTNERSHIP AND THE STEPS INVOLVED IN LLP 
REGISTRATION.
By the way, LLP stands for Limited 
Liability Partnership. An LLP is described 
as a hybrid form of business because it 
offers more flexibility that is normally 
there in case of a partnership, as well as 
the benefits of limited liability associated 
with the limited liability firm. An LLP is 
basically an independent legal entity.
A LLP combines the advantages of both the Company and Partnership in a 
single form of organization. The major difference between for that of other 
traditional partners is that a partner in LLP is not responsible for 
misconduct of another partner. All partners will enjoy the limited 
liability for the protection of each individual, which is similar to that of the 
shareholders of a corporation. Reason for LLP Registration is discussed 
below:
Reason for LLP Registration:
In India, LLP was governed under the Limited Liability Partnership Act, 
2008. In LLP the partners have the right to manage the business directly 
or indirectly, unlike corporate shareholders.
Moreover, an LLP can continue doing business in spite of changes of 
partners. It can hold property and also enter contracts on its own. As such 
it is held liable to the fullest extent of its assets. However, the liability of 
the partners is restricted to the contribution that they have made in the 
same.
LLP Agreement:
Since, an LLP is bestowed with the status of a body corporate as well as a 
separate legal entity it has perpetual succession. All the individual partners 
happen to be safeguarded from any joint liability that may be created by the 
wrong business decisions taken by the other partner. The same reason can 
also be applied to any misconduct on part of partners. It is the main 
partnership agreement that governs the mutual duties and rights of the 
partners .
At times, such agreements may also be reached between an LLP and the 
partners. In that case that particular agreement would be accorded the 
status of main governing entity. However, since it is an independent legal 
entity, an LLP cannot be considered to have been absolved of the liability 
towards its various obligations
Requirement for LLP 
incorporation:
In a limited liability partnership, there is no share capital 
like corporate but there has to be some contribution 
from each partner which is known as partner’s 
capital for the LLP formation. However there is no 
minimum requirement of capital for LLP registration. 
In essence, a person can start a limited liability 
partnership with any amount of capital. There is no 
reason to show the proof of capital investment during 
the incorporation process. Partner’s contribution can be 
tangible, movable or immovable or intangible property 
and any other LLP benefits. The reason behind LLP 
formation is limited liability.
NATURE OF LIMITED LIABILITY 
PARTNERSHIP:
 LLP is generally formed to carry on a lawful business, which includes 
any trade, business or profession.
 Moreover, LLP is a body corporate having a legal separate entity from 
its partners, also having a perpetual succession. Changes in the 
partners shall not affect the rights, liabilities, and existence of the LLP.
 LLP can acquire, hold, develop or dispose of a property.
 LLP can sue, can be sued and can possess a common seal and do such 
acts as body corporate are lawfully allowed to do.
 Any liabilities associated to LLP is met out of the property of the LLP.
ADVANTAGES OF A LIMITED 
LIABILITY PARTNERSHIP:
 The cost of LLP formation is low
 Easy management
 There is no need for the capital contribution
 No restrictions for the number of partners
 Less agreement requirement
 Less Government intervention
 In LLP, auditory requirement will be there in the case of contributions 
exceeding Rs. 25 lakh or turnover exceeding Rs. 40 lakh
 Easy to dissolve or wind-up the firm.
Steps involved in LLP Application 
process:
STEP 1: OBTAIN DIGITAL SIGNATURE CERTIFICATE (DSC) FOR 
PROPOSED DESIGNATED PARTNER
The first step is to acquire the DSC (Digital Signature Certificate) for 
Designated Partner of LLP or the proposed LLP, their signature and photo 
is to be affixed on the e-form along with attested Identity and address 
proof documents to obtain Class 2 or Class 3 DSC from any authorised 
certifying authority.
STEP 2: OBTAIN DESIGNATED PARTNERS IDENTIFICATION NUMBER (DPIN)
In second step, you have to apply for DPIN/ DIN (Designated Partner Identification 
Number/ Director Identification Number) for all designated partners. And for this, 
you have to apply for DIN through e-Form DIR-3 in MCA portal.
STEP 3: OBTAIN NAME APPROVAL FROM MCA
In third step, before incorporation or registration of a limited liability 
partnership (LLP) company, the applicant/ entrepreneur has to reserve the 
proposed name of LLP in MCA database and he needs to file the E-Form 1 for 
ascertaining the availability and reservation of unique name of the LLP business.
STEP 4: INCORPORATE THE LLP COMPANY BY FILING CERTAIN FORM
In fourth step, once the name is reserved by the ROC, then you can 
incorporate the LLP Company by filing E-Form 2 along with necessary 
documents, which is typically used for incorporating a new limited liability 
partnership.
E-Form 2 contains all details of LLP proposed to be incorporated, partners or 
designated partners details and also the consent of the partners or 
designated partners to act as partner or designated partner.
Step 5: Filing of LLP Agreement and Partners Details
In fifth step, the applicant has to file LLP Agreement with the 
Registrar in E-form 3 within 30 days of incorporation of LLP. And 
the execution of LLP Agreement is mandatory as per Section 23 of 
LLP Act, 2008.
There are certain documents that have to be provided by both 
the LLP as well as the partners in order for the company to be 
registered. An LLP needs to furnish proof of its registered office 
address and its DSC. The partners have to provide their PAN cards 
or any other reason for ID proof, their address proof, their 
residence proof, and photographs.
After submission of complete documents at ROC; then the registrar will 
inspect and verify it, if they satisfied with your relevant compliance 
provisions of LLP Act, then will register the LLP. And you will be issue an 
incorporation certificate in Form 16 within 14 days of filing e-Form 2.
In case the partners are foreign nationals or non-resident Indians they 
have to provide their passports. It is very important that these passports 
are either apostilled or notarized by relevant authorities in the relevant 
home country of that partner.
CONVERSION OF EXISTING 
FIRMS INTO LLP:
Consequently, a firm can apply to the Registrar of Companies in the form 
prescribed along with the prescribed documents for converting itself into 
an LLP. It is important to note that all the partners of the firm become 
partners of the LLP.
Assets and liabilities of the firm can be transferred on LLP registration, to 
and vest in the LLP and the firm will stand dissolved.
However, it is important to note that every official correspondence of the 
LLP should bear a statement ,not later than fourteen days after the 
registration that it was converted from a firm into an LLP, along with the 
date of registration. This activity shall be carried on for a period of twelve 
months commencing not later than fourteen days after the date of LLP 
registration