LLP incorporation is essential in India. The biggest challenge in business partnerships is that the inability of the spouse affects the progress of others. However, a limited liability partnership or LLP eliminates any such risk. It encourages entrepreneurs to start joint ventures with the least responsibility. Moreover, it is a safe form of doing business for startups or small companies. The Limited Liability Partnership Act, 2008.
The corporate partnership regulates the activities of the organization and guarantees its smooth operation. If you also choose LLP, you should be well versed in the LLP registration process.
No limit on maximum number of partners: A minimum of 2 partners is require for LLP registration in Coimbatore – Ramanathapuram, and there is no limit to the maximum number of partners. On the other hand, a private limited company has limited the issue to not having more than 200 members.
Low cost of formation: The cost of LLP registration in Coimbatore – Ramanathapuram process is comparatively low for inclusion of a public limited company.
Low Capital Requirement: The most notable key to have LLP registration in Coimbatore – Ramanathapuram over a private limited company is that one needs a minimum capital to set up a business. Further, partner contributions may include tangible or intangible, movable or immovable property.
There is no compulsion for auditing: Any company, whether private or public, must have their accounts audited. Yet, in the case of LLP, there is no such compulsion. As per the provisions of the Limited Liability Partnership Act, 2008, LLPs have to audit their accounts on an annual basis with a turnover of Rs. 40 lakh or Rs. Contribution of Rs. 25 lakhs in any financial year.
Less compliance burden: LLP incorporation in Coimbatore – Ramanathapuram face less compliance burden than a private company. LLPs are only require to file two statements, namely annual returns and statements accounts and solvency, unlike private companies that have to complete at least 8 to 10 regulatory formalities and compliance.
Requirements of LLP incorporation
Minimum two people: Two people are require for LLP registration in Coimbatore – Ramanathapuram. However, no limit to the maximum number of partners has been fixed.
No Minimum Capital: In the case of LLP, the capital depends on the need of the business and the contribution to the partnership by the partners. The stamp duty on the deed is then fix base upon amount of capital.
Residence Requirement: LLP must have a designated partner from India.
Unique Name: The name of the LLP must be unique, and it must not be the same as the name of any existing company, LLP or trademark that is register.
Contract Requirements – The LLP Act, 2008 provides great operational flexibility. Technically, an LLP agreement is not mandatory. If there is no LLP agreement, the provisions contained in the first list of LLPs apply automatically. Practically, the terms in the first list are not acceptable in most situations. Therefore, it is necessary to enter into an LLP agreement for each LLP. It is not possible to have a standard draft for LLP. The requirements and composition of the proposed LLP should be consider and then the LLP agreement should be draft.
Implementation of the Agreement– The Agreement may be executed before or after the incorporation of the LLP. Since it is an agreement between the partners, there is some relaxation about when the agreement is made. The contract can also be amend several times.
E-Payment of Stamp Duty- Provision for e-payment of stamp duty has been made under the Companies Act. Physical submission of physical stamps and documents will continue until a parallel provision is made under the LLP Act.
General Comments on LLP Agreements
Careful Drafting of Agreements- There cannot be a standard LLP agreement that can fit into all types of LLPs. Thus it should be unique. For example, some LLPs may be in the form of family partnerships, while some may be in the form of joint ventures (like). LLP agreement is need for LLP registration in Coimbatore – Ramanathapuram.
The contract should be as simple as possible. The higher the rigidity of the contract, the greater the degree of operational problems. The needs of all parties should be take into account.
Types of Partners – According to the Indian Partnership Act, partners are mutual agents in a penny. However under the LLP Act, the power of partners may be limit by an LLP agreement.
Veto Power – Agreements may make provisions for veto power for one or more partners. This can be useful if you want to take control of decision making as an LLP partner.
Executive / Managing Committee- If there is large number of partners, it would be advisable to form a committee of senior partners to manage the management.
Number of Partners – There are a legal minimum of 2 partners to implement an LLP agreement. However, if a large number of partners exist, the company would be advised to incorporate with 2 partners and add more partners after the investment.
Draft LLP Agreement corresponding to Form 3 – Commons of Form No. 7 to 20 refers to information on LLP Agreement. It is highly advisable to place the LLP agreement in the same order as long as possible, so that it will be easier to fill out the form filling and check it by the ROC.
Partners in LLP
The partners cannot bind the other partners.
Who can be a partner? A company, an LLP, a foreign LLP and a foreign company can be a partner of an LLP [however, unless the provisions of the FMA are amended there are difficulties in repatriating profits or capital].
At least two partners, no upper limit.
There are no restrictions on participation – a person can be a partner in many LLPs.
Designated Partners – At least two partners must be nominate as ‘Designated Partners’ to fulfill their legal obligations under the LLP Act. Partners other than in cases of fraud will generally not be hold liable.