Table of Contents
What is a Limited Liability Partnership?
Why an LLP instead of a Partnership Firm?
- Flexibility and Freedom of Management – The partners of an LLP are granted a considerable amount of freedom in how they manage the day-to-day operations of the LLP as the Limited Liability Partnership Act of 2008 does not specify the manner in which the LLP Agreement is drafted.
- Permanent Succession – Unlike in a partnership firm, the demise or departure of a partner in an LLP has no impact on the LLP’s . The LLP’s ability to operate as a separate legal entity defines its feature of succession.
- Attractive Investments – Foreign investors and venture capitalists are drawn to LLPs as an investment opportunity because they are more organized and have a structure extremely similar to body corporates.
- Multidisciplinary LLP- An LLP allows professionals from different disciplines and fields to collaborate for the fulfillment of several goals.
Process of Converting a Business Firm from a partnership to an LLP
The approval of the name
- It is ideal that all designated partners of an LLP possess Digital Signature Certificates in their names. This is because almost every e-form filed in the name of the company requires the DSC of the designated partners accompanied with it. However, if this is not the case, at least the director authorized to file the application for registration must possess a DSC before beginning the process of registration.
Submitting the Form and Documentation to the RoC
- RUN – LLP form Service Request Number (SRN).
- The proposed LLP’s name.
- Details of the firm’s name, address, registration, and partnership agreement.
- Information on the number of partners and the required capital contribution.
- Details on secured creditors.
- Information on the RUN – LLP will be automatically filed.
- The LLP’s registered office address and email address.
- The Registrar’s Office.
- Nature of commercial operations
- Details of the partners and designated partners like their PAN, DPIN, and DIN.
- Contributions of each partner to the LLP.
Issue of Registration Certificate
- Name of the LLP
- Names of all the partners and designated partners
- Capital and profit-sharing ratios
- Rights and obligations of partners
- Rules regarding the day to day operations of the LLP
Intimation to the Registrar of Firms
There are many important things to contemplate about when converting your partnership into an LLP. Your formation documents must be revised in the first place to reflect the modification. You must also alter your management and governance structure with the alteration of your business structure. Finally, you must create and carry out a successful business plan to operate your LLP. All these requirements must be fulfilled carefully with the aid and advice of a legal professional like Setindiabiz.