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Limited Liability Partnerships (LLPs) have emerged as a popular structure for Indian entrepreneurs, blending the flexibility of a partnership with the safeguards of a company.
Formed by a minimum of two partners under a formal LLP agreement, an LLP grants each partner limited liability while offering perpetual succession like a corporate entity.
Introduced through the Limited Liability Partnership Act, 2008, this model mandates at least two designated partners, both must be individuals and at least one must reside in India.
The LLP agreement specifies the duties and rights of these designated partners, who are ultimately responsible for ensuring the entity complies with the Act and the terms they’ve agreed upon.
Key Features of Limited Liability Partnership (LLP)
- Incorporated as an independent legal entity, distinct from its partners
- Requires at least two partners to form
- Governed by a formal LLP agreement outlining profit-sharing and internal governance
- Must appoint a minimum of two designated partners, both natural persons
- At least one designated partner must be an Indian resident
- Partner liability capped at the amount of their agreed capital contribution
- Low setup costs compared to companies
- Streamlined compliance with fewer regulatory filings
- No mandatory minimum capital requirement
Checklist / Documents required for registration of Limited liability partnership (LLP)
- At least two individuals must join as partners
- Each designated partner must possess a valid DSC
- Every designated partner needs a DPIN for MCA filings
- An exclusive LLP name that avoids duplication or trademark infringement
- Written record of each partner’s capital contribution
- A signed LLP Agreement detailing governance and profit-sharing terms
- Official proof of the LLP’s registered office address
A Limited Liability Partnership (LLP) is a business model that merges the operational flexibility of a partnership with the limited liability protection typically associated with a corporate entity.
Notable features of an LLP include:
- Limited personal liability for each partner
- Operational and structural flexibility
- Recognition as a separate legal entity from its partners
Any individual or corporate entity capable of entering into a legal agreement can become a partner in an LLP.
Key benefits of registering an LLP include:
- Limited liability for partners
- Flexible management structure
- Certain tax advantages
- Legal capacity to enter contracts and own property in the LLP’s name
The LLP Agreement is a formal document that outlines the roles, responsibilities, profit-sharing, and internal governance rules among the partners.
An LLP must have at least two partners to be legally formed, and there is no upper limit on the number of partners.
Yes, foreign individuals or entities may become partners in an LLP, subject to compliance with applicable foreign investment regulations.