To,

Adv. Rajiv Patel Sir,

Pune

Subject: Regarding Information for registration of LLP

Reference: CS Atul Bohra

Dear Sir,

As per your discussion with Atul Bohra Sir, I am forwarding you the details for registration of LLP and
requirement of the same. Following are the Steps for registration of LLP.

Steps for Incorporating a New Limited Liability Partnership

A Limited Liability Partnership may be incorporated as per the procedure explained below:

A. Obtain Director Identification Number (DIN).

All designated partners of the proposed LLP shall obtain “Director Identification Number (DIN)” by filing
an application.

For this purpose we require following documents to generate and submit application online.

1. Copy of PAN card (Mandatory)

2. Address proof (either of the following):-
a. Copy of Passport
b. Copy of Driving License
c. Copy of Voter ID Card
d. Copy of Latest Electricity Bill
e. Copy of Latest BSNL Telephone Bill
f. Copy of Bank Passbook with Latest Entries
3. Affidavit in prescribed Format (we will prepare the same once we receive the documents as
mention in 1 & 2 Above)
4. Two Color passport size Photos of Applicant

B. Digital Signature Certificate

Designated partner of LLP/proposed LLP, whose signatures are to be affixed on the e-forms has to
obtain class 2 Digital Signature Certificate (DSC).

For this purpose we require following documents to generate and submit application online.

5. Copy of PAN card (Mandatory)

6. Address proof (either of the following):-
g. Copy of Passport
h. Copy of Driving License
i. Copy of Voter ID Card
j. Copy of Latest Electricity Bill
k. Copy of Latest BSNL Telephone Bill
l. Copy of Bank Passbook with Latest Entries

C. Reservation of name

The LLP which is proposed to register require to apply for the reservation of name with Registrar of
Companies.
This name should contain the name of the Firm and shall denote the main activity of the company. e. g.
ABC Legal Consultants LLP here ABC is the name and Legal Consultants is the business activity of the
company

The LLP should designate at least two partners who will look after the business and compliances of the
LLP. These partners are called as Designated Partners.

Details of minimum two designated partners of the proposed LLP, one of them must be a resident of
India, is required to be filled in the application for reservation of name. Only individuals or nominees on
behalf of the bodies corporate as partners can act as designated partners.

While submission of Form for Name reservation we require detailed main object of the company.

D. Incorporation of LLP

Once the name is reserved by the Registrar LLP can be registered by submitting the Partnership Deed
as per the prescribed format containing the following details mainly,

 LLP Agreement
 LLP Name
 Address of the registered office ( Require Address proof and NOC from the owner or Rent/Leave
and License Agreement)
 Partners
 Contribution
 Designated Partners
 Designated Partners Identification Number
 Digital Signature Certificate
 Registered Office
 Mutual Rights and Duties of Partners
 Management and Administration of LLP
 Details regarding, admission, retirement, cessation, expulsion and resignation of partners
 Information relating to voluntary winding up

Statement in the e-form is to be digitally signed by a person named in the incorporation document as a
designated partner having permanent DIN and also to be digitally signed by an company
secretary/chartered accountant/cost accountant in practice and engaged in the formation of LLP.

On submission of complete documents the Registrar after satisfying himself about compliance with
relevant provisions of the LLP Act will register the LLP and will issue a certificate of incorporation.

TAXATION VIEW FOR LLP

The Union Budget 2009 announced on July 6, 2009 has laid down the roadmap for the taxation of
the LLPs in India.
Limited Liability Partnership (‘LLP’) is a form of business structure which combines best elements of the
partnership and corporate structures of carrying out business and provides considerable flexibility in
management and for conducting businesses, especially to small and medium firms. The LLP were
recently introduced in India vide the Limited Liability Partnership Act, 2008 (‘LLP Act’). However, the
need for a clear cut tax regime in respect of the income of the LLP was essential to give certainty in all
respects of conducting business via this mode of business.
LLP to be treated at par with general partnership

The Union Budget 2009 announced on July 6, 2009 has laid down the roadmap for the taxation of the
LLPs in India. The new provisions introduced in relation to the taxation of LLP do not treat the LLP as a
transparent entity but treat the same at par with the general partnerships under the Indian Partnership
Act, 1932. Accordingly, the profits and losses of the LLP would not pass through in the hands of the
partners but would be assessable in the hands of the LLP. The definition of “firm”, “partner” and
“partnership” under section 2(23) of the Income Tax Act, 1961 (‘IT Act’) have also been extended to
include LLP, a partner in a LLP and LLP respectively within their scope. Accordingly, all the provisions
relating to the firm incorporated apply mutatis mutandis to LLP.

Conversion of general partnerships / companies into LLP

The LLP Act provides for the conversion of general partnerships and private limited companies or
unlisted public companies into LLP. However, no amendments have been proposed to the IT Act per se
clarifying the tax implications arising on the conversion of a general partnership into a LLP. The
memorandum to the budget states that no tax liability would arise in case of a conversion of a general
partnership into LLP, so long as there is no change in the rights and obligations of the partners and no
transfer of assets or liabilities post the conversion. However, the conversion of a general partnership into
LLP would inevitably involve the limitation of personal liability of the partners, thereby resulting in a
change in the obligations of the partners. Therefore, the issue would arise whether such a conversion
would lead to a transfer liable to tax under section 45 of the IT Act. Further, there is no indication on the
tax implications of the conversion of a private limited company or public unlisted company into an LLP,
neither in the Act nor in the memorandum.

Other amendments

Although the LLP have been treated at par with the general partnership, they have been specifically
excluded from the provisions of section of 44AD of the Act, which provide for an option of the income of
the general partnerships to be taxed at a presumptive rate of 8%. There seems to be no clarity on such
an approach of excluding LLP from the provisions of presumptive taxation.
A new section 167C has been introduced in the IT Act, which makes every partner of a LLP jointly and
severally liable for the taxes to be paid by the LLP for the period during which he was a partner, unless
the non-recovery of taxes cannot be attributed to gross neglect, misfeasance or breach of duty on his
part. The aforesaid is irrespective of any contrary provision in the LLP Act. Although this section appears
to be in conflict with the scheme of the LLP Act, which does not make the partners personally liable for
the liabilities of the firm, it seems to be in line with existing provisions of section 179 of the IT Act, which
cast a similar liability on the Directors of a private company in liquidation.

Other matters

Since the LLPs have been treated at par with the general partnership, they would not be liable to
Dividend Distribution Tax and Minimum Alternate Tax. Further, the Budget has also scrapped the
surcharge on tax for firms. Also, if the LLP is a non-resident under the IT Act (its control management is
wholly situated outside India), it would continue to be taxed at 30% plus applicable cess. All the
aforesaid factors make LLP an attractive mode of business so far as the tax cost is concerned.
However, LLP, which is a hybrid structure between a company and a firm, could have been more
attractive mode of investment if a pass through status was accorded to it for tax purposes.

The practice of taxing the income of the LLP in the hands of the firm is a divergence from the practice of
treating the LLP as a tax transparent entity in certain other countries like UK and USA, which tax the
income of the LLP in the hands of the partners. Thus, in case of the income of the LLP is also taxed in
other jurisdiction where the income is taxed in the hands of the partners, the availability of tax credit to
LLP in India might lead to certain difficulties.
Following are the broad differences between Company and LLP

Sr. BASIS OF DIFFERENCE COMPANY LLP

No.
1. Limit on number of There is limit on maximum There is no Limit on Maxim
Membership number of members in Case of number of Partners in LLP.
Private Limited Company
2. Self regulations Company either Private of LLP is regulated mostly on the
Public is regulated by the basis of LLP agreement which
Companies Act, 1956 and the is mutually decided and
Articles of Association of the agreed by the partners of LLP.
company is which required to Like Profit sharing ratio, capital
be framed in consistence with contribution ration, conditions
the Provisions of the regarding specific rights and
Companies Act, 1956. obligations can be explained in
the agreement. In case LLP is
silent on any provision then
provisions of LLP Act will be
applicable
3. Acceptance on unsecured The Private Limited Company There is no restrictive
loan can accept unsecured loan only provision in The LLP Act or
from members, Directors and Rules specified there under.
relative of Directors of the
company whereas Public
company can accept unsecured
loan from Directors only
4. Dividend Company required to pay There is no provisions for
Dividend Distribution Tax on taxation on distribution of part
declaration and payment of of profit of LLP to its partners
Dividend
5. Documentation Memorandum is to be filed with Incorporation Document is
ROC required to be filed.
6. Flexibility regarding Memorandum should contain Incorporation Document is not
Registration Office of the State in which incorporated. required to contain State in
Company which incorporated. Thus,
registered office can be
changed to any place in India
just by informing ROC subject
to prescribed conditions.

7. Submission of main Articles are to be filed at the LLP Agreement is required to

documents regarding LLP time of incorporation. Private be filed later. In absence of
company must have Articles. In LLP Agreement, mutual rights
case of public company, and duties will be as specified
provisions of Table A apply if in first schedule to LLP Act.
there are no Articles. Thus, practically, each LLP
must have LLP Agreement,
though not mandatory.
8. Management Team Managing Director and Whole Designated Partner to look
time Director to look after day after statutory compliances.
to day administration.. Otherwise, all partners can
look into affairs of the LLP.
 However, LLP can delegate
powers to some partners who
may be designated as
'Managing Partner', or
'Executive Partner' or any
other name.
9. Management of the Firm Individual director or member Every partner has authority to
does not have authority in conduct business of LLP,
conduct of business of unless the LLP Agreement
company. provides to contrary.
10. Remuneration Restrictions on remuneration to No restriction on remuneration
director as per Companies Act to partner. Remuneration
should be provided in LLP
agreement.
11. Shares Certificate Etc Share, share certificate, No requirement of share and
register of members, transfer share certificate. Hence, no
and transmission of shares etc. question of its issue, allotment,
required. transfer, rectification of register
etc.
12. Conduct of Business Board meetings, general No provision for regular
meetings are required. meeting of Board and
members. Partners can decide
when and how to meet,
delegation of powers etc.
Provision is made that LLP
should maintain minute book
13. Treatment of Secured Charges are required to be No provision for registration of
Loan registered charges.
14. Maintenance of Records Elaborate records and registers No records and registers have
are required to be maintained been prescribed.
15. Restriction on Board or Restrictions on Board regarding Partners are free to enter into
Partner some specified contracts, any contract.
contracts in which directors
interested, investments, loans
and guarantees to other
companies
16. Disclosure Disclosures required of No requirement of disclosures
contracts where directors are required of contracts where
interested partners are interested, unless
specified in LLP Agreement.
17. Provision relating to Elaborate provision relating to No provision relating to
Redressal redressal in case of oppression redressal in case of
and mismanagement oppression and
mismanagement

You are requested to go through the same and inform us if any further clarification or information is
required from our side.

Thanking you

Pushkar Shukre