What is a limited liability partnership (LLP)
LLP means Limited liability partnership. According to limited liability partnership (LLP) act 2008 to incorporate any firm under this act, it should compile the necessary requirements.
An LLP firm is same as partnership firm but has limited liability and perpetual succession.
Limited liability partnership (LLP) is an alternative form of business and the reason behind choosing Limited liability partnership (LLP) is, it provides benefits to the partners by making their liability limited.The main advantage of this Limited liability partnership (LLP) is it is similar to the old partnership but here one partner will not be held liable for other partners misconduct/negligence. Hence, all the partners enjoy a limited liability protection for other partners acts and it also protects the owners from Limited liability partnership (LLP) debts responsible or liable for another partners misconduct or negligence. There must be minimum two persons to start a Limited liability partnership (LLP).
What is a private limited company
A private limited company has more than 2 persons as its members not exceeding 200, has a minimum paid up share capital of Rs.1,00,000 and the liability of the members of the company is limited by their shares.
Reasons to register as a private limited company
There are many reasons to register as a private limited company they are
- Corporate personality:
By incorporating a company it has corporate personality means a company will have a name, common seal and it has capable of entering into contracts and can buy properties in its own name and can sue and be sued by other
2 . Limited liability:
By incorporating a company it has limited liability means the liability of their members is limited by their shares. This can be best illustrated by an example
Illustration: if A holds shares of the total nominal value of `2,000 and paid 1000/- as part payment at the time of allotment, he cannot be called upon to pay more than ` 1000/-, the amount remaining unpaid on his shares.
3. Legal entity:
This makes that the company itself is a person existed in the eyes of law and it is a separate person from its members. This means the company itself responsible for assets and liabilities, debtors and creditors. This shows that shareholders are not responsible for company acts.
4. Share capital:
The persons who invest money in the company are called shareholders and the contributed amount is called share. For the development of any business, investment is necessary so by this feature any person can buy/invest /contribute money to the company and it automatically raises the capital of the company.
5. Trustworthiness / belief/ Regulations :
All the companies incorporated must follow the provisions of the companies act 2013
And all the companies in India must register with the Registrar Of companies, all the companies are regulated from time to time by the companies act.
6. Perpetual succession:
A company is different from its members it has a perpetual succession and it never dies. The persons may die but the company never dies.
Why do I need company registration:
A company registration is compulsory in India according to the companies act and also to avail the benefits and features like corporate personality, perpetual succession, limited liability etc a company must register and these are the main features of the company.
Private limited company Registration in India
The process of private limited company registration through online
Firstly we need to log on to the website of the ministry of corporate affairs
There we need to fill a form called INC 32 SPICE (Simplified Proforma for Incorporating Company Electronically )
To fill the particular form the person need to have
- Digital signature certificate (DSC):
A digital signature is must and should for the application of formation of company. The DSC is mandatory for all the subscribers of Memorandum Of Association. The person must obtain a digital signature certificate from the recognized government certified agencies. The time period for DSC is minimum 2 days.
2. Application for DIN.
DIN means director identification number. To be a director of the company a person must have DIN. one person gets only one DIN number and they can use the same DIN number for any number of companies.
3. Name of the company:
Thereafter the person gets a chance to propose a name of the company and then if their is availability for the name proposed then the next stage comes.
Note: there will be a search done by the ministry of corporate affairs(MCA) as a check whether there is any company existed with same name, trademark and the proposed name should not hurt any religion , it should not related to geographical locations if it is related to any of the above the MCA will reject the name and the person need to again choose a name.
4. Filling INC-32:
Thereafter the person fills the form called INC-32 which incorporates the company
The person needs to fill the particulars like
- Digital signature certificate
- Director identification number
- Proposed name
- State the type of company: public/private/one person company
- State the category of the company: limited by shares, guarantee, an unlimited company
- Companies share capital
- License numbers
- Details of the members of the company
- Address of the company
- Details of the address of the members of the company
- Names of subscribers
- Promoters name and details
- Name the Registrar of the company where the company need to be registered
How to convert Limited liability partnership LLP to Private limited company
Many entities started as Limited liability partnership want to expand their business in India so they prefer converting their Limited liability partnership (LLP) to the private limited company as it contains lot more advantages compare to that of Limited liability partnership (LLP).
According to section 366 of the companies act 2013, it states any partnership firm, LLP, cooperative society or any other business entity formed under any law can be converted into a company if it fulfills all the necessary conditions as a company.
Prerequisites to be complied before applying for conversion
- The basic condition is there must be 7 partners in the Limited liability partnership (LLP)
- All the partners must give their concern in the general meeting of partners regarding the conversion of Limited liability partnership( LLP) into the private limited company
- There must be a notice in the newspaper regarding such conversion one in English and the other is vernacular language.
Procedure for conversion LLP to private limited company
- An e form application need to be made INC form -1 for name approval
- After this an e form called URC -1 need to filed under section 366 for the conversion
Documents required for filing URC -1
- Director identification number for all the partners
- A list of first directors, names, sur names, residential addresses
- The details of Limited liability partnership (LLP) like name , address
- A copy of Limited liability partnership (LLP) agreement and the registration certificate
- No objection certificate from the registrar
- Advertisement for conversion in the news paper
- Articles of Association
- Memorandum of association
- The share capital of the company
The conversion of Limited liability partnership (LLP) into private limited company requires many documents to be drafted so for quality and experts you can reach www.companyvakil.com for the process of converting your entity
The conversion of Limited liability partnership (LLP) into a company itself increases the turnover and capital of the company. From now this converted LLP will have all the advantages of a company like corporate personality, legal entity, limited liability, share capital, perpetual succession. compare to LLP the company has lot more regulations like conducting meeting board, general, annual general meeting etc.
Once a Limited liability partnership ( LLP) is converted into company this will be governed by the companies act 2013. With Company Vakil both registration and conversion of Private Limited Company and Limited Liability Partnership is a breeze