Frequently Asked Questions (FAQs) on Limited Liability Partnership

Frequently Asked Questions (FAQs) on Limited Liability Partnership. FAQ LLP can make it easier for people to understand the legalities involved in forming and running an LLP (Limited Liability Partnership) by providing concise and easy-to-understand answers to commonly asked questions. Here are some ways in which an FAQ on LLP can make it easy to understand the legalities:
1. Clear explanations: An FAQ can provide clear and concise explanations of the legal requirements, procedures, and obligations involved in setting up and running an LLP. This can help people understand the legalities involved without getting overwhelmed with technical jargon.
2. Commonly asked questions: An FAQ can address the most commonly asked questions related to LLP, such as "What is an LLP?" "What are the advantages of forming an LLP?" "What are the steps involved in incorporating an LLP?" "What are the compliance requirements for an LLP?" and so on. By addressing the most common questions, an FAQ can provide a comprehensive overview of the legalities involved in an LLP.
3. Easy navigation: An FAQ section can be designed to be easily navigable, with questions grouped under relevant categories or topics. This can make it easier for people to find the information they are looking for and avoid confusion.
4. Regular updates: An FAQ section can be regularly updated to reflect changes in the legal requirements or procedures related to LLP. This can ensure that the information provided is up-to-date and accurate.
FAQ section on LLP can make it easier for people to understand the legalities involved in forming and running an LLP by providing clear explanations, addressing commonly asked questions, being easily navigable, and regularly updated. Thereby citing some FAQ on LLP Registration and Others.
Q. What are the mandatory ROC Filing applicable in case of LLP post Incorporation?
LLP is required to file various forms and documents with the Registrar of Companies (ROC) on an annual and event-driven basis as per the provisions of the Limited Liability Partnership Act, 2008 and the LLP Rules, 2009. These filings are mandatory and failure to comply with these filing requirements can result in penalties and fines.
The following are some of the important annual and event-driven filings that an LLP is required to make with the ROC:
1. Annual Return: Every LLP is required to file an Annual Return in Form 11 with the ROC within 60 days from the close of the financial year. The Annual Return contains information about the partners of the LLP, its registered office, capital contribution, and other details.
2. Statement of Account and Solvency: Every LLP is required to file a Statement of Account and Solvency in Form 8 with the ROC within 30 days from the end of six months of the financial year. The Statement of Account and Solvency contains information about the assets and liabilities of the LLP, its solvency status, and other details.
3. Change in Partners or Designated Partners: An LLP is required to file Form 4 with the ROC within 30 days of any change in partners or designated partners of the LLP along with Form -3 in case of filing of supplementary deed for change.
4. Change in Registered Office: An LLP is required to file Form 15 with the ROC within 30 days of any change in its registered office address along with Form-3 in case of filing of supplementary deed for change.
5. Event-Driven Filings: An LLP is required to file various event-driven forms with the ROC within the prescribed time limits, such as Form-3 for filing LLP agreement, Form 12 for appointment of auditor, and Form 22 for intimation of notice of closure of business. It is important for an LLP to ensure timely and accurate filing of these forms with the ROC to avoid any penalties or fines.
Q. What is the due date for filing form-8 & Form 11
Every LLP in India must file Form 8 (Statement of Account & Solvency) and Form 11 (Annual Return) every year with the Registrar of Companies (ROC). 
The due date for filing these forms is within 60 days from the end of the financial year, i.e., on or before May 30th every year. 
For example, if the financial year of the LLP ends on March 31st, the due date for filing Forms 8 and 11 will be May 30th of the same year. 
It is important to note that these forms must be filed even if the LLP has not done any business during the financial year. Late filing of these forms attracts additional fees and penalties.
Q. LLP can apply for start-up registration?
Yes, LLPs can apply for start-up registration with the Department for Promotion of Industry and Internal Trade (DPIIT) as per the Start-up India initiative launched by the Government of India.
To be eligible for start-up registration, the LLP must meet the following criteria:
1. The LLP must be incorporated as per the Limited Liability Partnership Act, 2008.
2. The LLP must not have completed 10 years from the date of its incorporation.
3. The LLP's turnover for any of the financial years since its incorporation must not exceed Rs. 100 crore.
4. The LLP must be working towards innovation, development, deployment, or commercialization of new products, processes, or services driven by technology or intellectual property.
5. The LLP must obtain a certificate of eligibility from the DPIIT.
Once registered, the LLP can avail various benefits such as tax exemptions, easier access to funding, and government schemes, among others, as provided under the Start-up India initiative.
Q. What is LLP Agreement?
A Limited Liability Partnership (LLP) Agreement is a written agreement between the LLP or its partners or the partners of the LLP. It outlines the mutual rights and duties of the partners and is mandatory to be drafted within 30 days from the date of incorporation of the LLP and in case of delay 100 Rs. Need to pay per day delay.
The LLP Agreement is like the charter of the LLP and serves as its governing document. It defines the scope and extent of the LLP's operations as well as the rights, duties, and obligations of the partners. It is similar to the Memorandum of Association and Articles of Association for a private limited company.
The LLP Agreement typically includes details such as the name and address of the LLP, the names and addresses of the partners, their contributions to the LLP, the profit-sharing ratio, the rights and duties of the partners, the management structure of the LLP, the decision-making process, the procedures for admitting or expelling partners, and the process for dissolving the LLP.
In an LLP, a Deed is a legal document that sets out the rights, duties, and obligations of the partners of the LLP. It is also commonly known as the LLP Agreement.
The Deed is essential for the functioning of an LLP for the following reasons:
»It outlines the mutual rights and duties of the partners: The Deed specifies the mutual rights and duties of the partners in the LLP. It details their roles, responsibilities, and obligations towards the LLP, each other, and third parties.
»It defines the LLP's management structure: The Deed defines the LLP's management structure, including the decision-making process, the roles of designated partners, and the powers of the partners.
»It sets the profit-sharing ratio: The Deed specifies the profit-sharing ratio among the partners. It outlines how profits will be distributed among the partners and what their entitlements are.
»It determines how partners will be admitted and expelled: The Deed outlines the procedure for admitting new partners and expelling existing partners. It specifies the grounds for expulsion and the process for dispute resolution.
»It governs the dissolution of the LLP: The Deed specifies the procedure for dissolving the LLP, including the distribution of assets and liabilities among the partners.
Therefore, Deed is important for the functioning of an LLP because it sets out the legal framework for the LLP's operations, management, decision-making, and dispute resolution. It helps to ensure that the LLP functions efficiently and effectively while protecting the interests of all partners.
In case of LLPs how we can raise funds?
LLPs can raise funds through various means, such as:
1. Contributions from partners: LLPs can raise funds by accepting contributions from its partners. These contributions can be made in the form of capital or loans.
2. Borrowing from financial institutions: LLPs can also borrow funds from banks, financial institutions, or other lending sources. The LLP can take a loan against its assets, such as property or equipment.
3. Angel investors and venture capitalists: LLPs can also raise funds by seeking investment from angel investors or venture capitalists. These investors provide funds in exchange for a share in the profits or ownership in the LLP.
4. Crowdfunding: LLPs can also raise funds through crowdfunding platforms. Crowdfunding is a method of raising funds from a large number of people via the internet. LLPs can use crowdfunding to raise funds for a specific project or product.
It is important to note that LLPs must comply with all the regulations and guidelines set by the Ministry of Corporate Affairs and other regulatory authorities while raising funds. It is advisable to seek professional advice and guidance before raising funds for an LLP.
Q. In case of LLP, Can entrepreneur get investment from Foreign Investors ?
Yes, an LLP in India can receive investment from foreign investors subject to the Foreign Direct Investment (FDI) policy and guidelines issued by the Reserve Bank of India (RBI) and other relevant authorities. The FDI policy and guidelines are regularly updated, and it is advisable to consult with a legal expert to ensure compliance with the latest regulations. Additionally, the LLP agreement may also have provisions related to investment by foreign partners.
Q. In LLP, FDI is allowed?
Yes, Foreign Direct Investment (FDI) is allowed in LLPs in India, subject to certain conditions and guidelines issued by the Reserve Bank of India (RBI) and the Foreign Exchange Management Act (FEMA).
As per the current guidelines, an LLP can receive FDI under the automatic route or approval route, depending on the sector, percentage of foreign investment, and other criteria.
Under the automatic route, no prior approval from the RBI is required, but the LLP must comply with certain reporting requirements and other conditions.
Under the approval route, prior approval from the RBI is required, and the LLP must comply with additional conditions and procedures as prescribed by the RBI.
It is advisable to consult with a professional advisor or legal expert for specific guidance on FDI in LLPs.
Q. Any activity or business prohibited from the LLP Registration ?
Yes, there are certain activities or businesses that are prohibited from LLP registration in India. According to the Limited Liability Partnership Act, 2008, an LLP cannot be formed for carrying on any illegal business, or any business or activity which is fraudulent or involves money laundering.

The LLP Act prohibits LLPs from engaging in the following activities:»Financial services: An LLP cannot provide any financial services to the public, including banking and insurance.»Investment in securities: An LLP cannot invest in securities, except for its own or for its clients' funds.»Real estate business: An LLP cannot engage in the business of buying and selling of real estate, except for its own use.»Manufacturing and mining activities: An LLP can engage in manufacturing or mining activities but not advisable.

LLP Act was amended in 2021 to allow LLPs to undertake manufacturing and mining activities. Previously, LLPs were not allowed to undertake manufacturing and mining activities as they were considered as 'industrial activities' which were prohibited under the LLP Act. However, with the amendment, LLPs can now undertake these activities provided that they comply with the applicable laws and regulations related to these activities. This has widened the scope of businesses that can be carried out through an LLP structure.Under the amended rules, an LLP can undertake manufacturing and allied activities if:

It has filed all its previous financial statements and annual returns with the Registrar of Companies;

It has at least one designated partner who is resident in India;

It has made an investment of at least Rs. 1 lakh in its business; and

It complies with all the other applicable laws and regulations.Similarly, LLPs are also allowed to undertake mining and quarrying activities, subject to certain conditions and compliance with applicable laws and regulations.An LLP can provide only those professional services that are allowed under the LLP Act or any other applicable law.It is important to note that the list of prohibited activities may vary based on the rules and regulations issued by the Ministry of Corporate Affairs from time to time.

Q. LLP is better to choose for Registration, who are in Service sector?

LLP (Limited Liability Partnership) is a business structure that offers the benefits of both a partnership and a limited liability company. It is a popular choice for businesses in the service sector, as it offers several advantages that suit the needs of these businesses.

One advantage of LLP is that it offers limited liability protection to its partners. This means that the personal assets of the partners are protected in case of any business debts or legal issues. In the service sector, where businesses often provide advice and consultancy services, there is a higher risk of legal liability. Therefore, LLP can be a better option for professionals such as lawyers, accountants, and consultants, who want to protect their personal assets.

Another advantage of LLP is that it provides flexibility in terms of management and ownership. Unlike a traditional partnership, LLP allows partners to have different levels of involvement in the management of the business. This can be helpful in the service sector, where different partners may have different areas of expertise.LLP also offers tax benefits, as it is treated as a separate legal entity for tax purposes. This means that the business is taxed separately from the partners, and partners only pay tax on their share of the profits.
Defiantly, LLP can be a good option for businesses in the service sector, as it offers limited liability protection, management flexibility, and tax benefits.

Q. Through LLP Registration, It is easy to operate Business easily without investing much expenses ?
 While registering an LLP, there may be certain expenses involved such as government fees, professional fees for filing forms and drafting documents, and costs associated with obtaining the necessary licenses and permits for the business. However, once the LLP is registered, it can offer several benefits such as limited liability protection for its partners, separate legal identity from its partners, flexibility in management and ownership, and tax benefits.
Overall, an LLP can provide a cost-effective and efficient way to operate a business, especially for small and medium-sized enterprises. However, the actual expenses and ease of operation will depend on various factors such as the nature of the business, the number of partners, the scope of operations, and the regulatory requirements. It is always advisable to seek the advice of professionals and conduct thorough research before registering an LLP.
Q. LLP can be easily converted into Private Limited Company ?
Yes, LLP (Limited Liability Partnership) can be easily converted into a Private Limited Company. The process of conversion involves certain legal formalities and compliances that need to be completed as per the rules and regulations laid down by the Ministry of Corporate Affairs (MCA). The application for the conversion of an LLP (Limited Liability Partnership) into a Private Limited Company must be filed with the Central Registration Centre (CRC) of the Ministry of Corporate Affairs (MCA). The CRC is the designated authority for processing such applications. The process of conversion requires the submission of various documents, such as the LLP agreement, statement of assets and liabilities, latest income tax returns, and other necessary certificates and declarations. These documents must be filed with the CRC in the prescribed format and manner. Once the application is filed with the CRC, the authority will process the application and issue a certificate of incorporation for the Private Limited Company if all the necessary requirements and formalities are fulfilled.
It is important to note that the conversion process may take some time and involve costs of MCA Legal fees.
Q. In LLP , Can foreign National Person become a Designated Partner?
Yes, a foreign national person can become a designated partner in an LLP (Limited Liability Partnership) registered in India, subject to certain conditions.
As per the LLP Act, 2008, a designated partner of an LLP can be a resident or a non-resident of India. However, if the designated partner is a foreign national, he/she must comply with the provisions of the Foreign Exchange Management Act, 1999 (FEMA) and the rules and regulations framed thereunder. Foreign national must comply with the rules and regulations related to taxation, remittance of profits, and other legal formalities. while it is possible for a foreign national to become a designated partner in an LLP registered in India, process should be followed in same manner to provide documents after apostille and notarised from respective country.
Q. In case of Foreign Nationals, what are the documents required to furnish in LLP Registration?
When a foreign national becomes a designated partner in an LLP registered in India, the process for providing documents is similar to that of Indian designated partners. However, there are some additional requirements that foreign nationals need to fulfil. Foreign nationals must provide the following documents to become designated partners in an LLP:-
1. A valid passport and visa: Foreign nationals must provide a copy of their valid passport and visa to establish their identity and eligibility to work in India.
2. Overseas address proof: Foreign nationals must provide a proof of address from their country of residence, such as a utility bill or bank statement, to establish their overseas address.
3. DPIN is mandatory: Foreign nationals who want to become designated partners (DPs) in an existing LLP (Limited Liability Partnership) in India must obtain a Director Identification Number (DIN) from the Indian authorities and In the case of a new LLP registration, the process is slightly different. The foreign national designated partner should apply for a DPIN (Designated Partner Identification Number) along with the incorporation process. The DPIN is similar to DIN, but it is specifically for designated partners in an LLP.
It is important to note that the process of obtaining DIN or DPIN for foreign nationals may take longer than for Indian nationals, as it may require additional scrutiny and verification of their documents. More, foreign nationals may also need to comply with other regulatory requirements related to foreign investment and exchange control regulations.
4. Apostille and notarization: Foreign nationals must get their documents apostilled and notarized by the relevant authorities in their home country. Apostille is a process of certifying documents for international use, and notarization is the process of verifying the authenticity of a document.
It is important to note that the requirements for documents may vary depending on the specific circumstances of the foreign national. further, the process for obtaining DIN may be different for foreign nationals compared to Indian nationals.
Q. Is DIN & DPIN is same or Different ?
DIN (Director Identification Number) and DPIN (Designated Partner Identification Number) are the same numbers issued by the Ministry of Corporate Affairs (MCA) to individuals who intend to become directors or designated partners, respectively, in companies or LLPs registered in India. DPIN was introduced specifically for designated partners in LLPs, while DIN was introduced for directors of companies. 
In 2011, the MCA merged the two identification numbers, and now a single identification number is used for both directors and designated partners. The MCA now issues a DIN to all individuals who wish to become directors or designated partners in companies or LLPs registered in India.
now, Yes Both are same but yes uses are in different manner-
In case of Company-DIN is a unique identification number issued by the Ministry of Corporate Affairs (MCA) to individuals who intend to become directors of a company. It is a requirement for any individual who wishes to be appointed as a director in a company registered in India. DIN is used to maintain a database of all the directors in India and to ensure transparency in corporate governance.
In case of LLP-DPIN is a unique identification number issued by the MCA to individuals who intend to become designated partners in an LLP (Limited Liability Partnership). It is same DIN, but it is specifically used for designated partners in an LLP. DPIN is also used to maintain a database of all the designated partners in India and to ensure transparency in LLP governance.

Frequently Asked Questions (FAQs) on Limited Liability Partnership

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