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Incorporation of Limited Liability Partnership

What is LLP?

It is a new and hybrid form of organization combining the benefits of partnership firm and corporate identity of a company.  Like a company, LLP is also a body corporate with separate legal existence and is governed by Limited Liability Partnership Act. The liability of the members of LLP is limited to the capital contributed or as mutually decided in the agreement.

Requirements for incorporating LLP:

  • Minimum 2 individual persons to act as designated partners.

[Note: Body Corporate partner of LLP cannot act as designated partner but can nominate an individual to act as designated partner.]

  • 2 Preferable Names of LLP.
  • Object of LLP and Business to be transacted.
  • Details of any trademark/patent/design registration etc.
  • Details designated partners and partners in LLP.
  • Details of total Capital to be contributed.
  • Details regarding place of business.

 

Duration for incorporation:

After submission of various forms to Registrar of Companies under Ministry of Corporate affairs it takes approximately a month to receive the certificate of Incorporation.

 

A Certificate of Incorporation of LLP is a conclusive evidence of its existence.

 

Benefits of LLP:

  • Corporate Identity – can sue and be sued in its name.
  • Limited liability of Partners.
  • Flexibility in management
  • Operate LLP with different levels of membership like designated partner and partner.

Lesser compliances and disclosures as compared to Companies.

 

Proceed to incorporate an LLP

Annual Filing of Limited Liability Partnership

WHAT IF NO FILING IS DONE?

​Filing is mandatory for every LLP and if there is any delay in filing either form-8 or 11, penalty of Rs. 100 per day is livable until it is filed. You cannot close or wind up your LLP without filing Annual Accounts.

WHY ANNUAL FILLING?

Every Limited liability Partnership has to maintain its books of accounts whether there are any business transactions or not. Unlike any other type of business entity, LLP also has to file its financial statements with a Government authority known as Registrar of Companies in order to intimate them about your business.

WHAT IS ANNUAL FILLING?

LLPs in India must file its Annual Return (LLP Form 11) within 60 days from the end of close of financial year and Statement of Account & Solvency (LLP Form 8) within 30 days from end of six months of close of financial year. Unlike Companies, LLPs mandatorily have to maintain their financial year, as April 1st to March 31st. Therefore, LLP annual return is due on May 30th and the Statement of Account & Solvency is due on October 30th of each financial year.

In case LLP has been incorporated on or after 1st October of financial year, then LLP can close its first financial year either on the coming or next 31st March i.e. LLP files its first financial year details for 18 months.

WHAT IF NO FILING IS DONE?

​Filing is mandatory for every LLP and if there is any delay in filing either form-8 or 11, penalty of Rs. 100 per day is livable until it is filed. You cannot close or wind up your LLP without filing Annual Accounts.

 

Proceed to file annual returns for LLP.

Other Post Incorporation activities

Company Incorporation was the first step that you have completed successfully to establish your business venture. Incorporation of the Company gives it a legal status.

To realise the benefits of working in a company form of business organisation, you need to actively initiate all business transactions through your company.

The work post incorporation is divided into different categories:

  1. Regulatory work :
  • For Companies :
    • Issue of Share certificates
    • Preparation of Notice, Minutes of meetings held.
    • Opening of bank account.
    • PAN and TAN application
    • Appointment of 1st
    • GST Registrations.
    • Shop Act License
  1. Business Activity Based :
  • Professional Tax Registrations
  • Factory License
  • Udyog Aadhar
  • MSME Registration
  • Grant of License under Section 8
  • Start Up Registration
  • FSSAI Registration
  • Import Export License
  • Contract Labour Registrations
  • Foreign Exchange Compliance
  • Drug License etc.
  1. Maintaining requisite documents and records as required under the act:
  • Notice, agenda and Minutes of Board meetings
  • Statutory registers.
  • Disclosures by directors.
  1. Annual Reporting :
  • Filing of various forms annually for Companies within the time frame.
  1. Work as per company requirements:
  • Issue of Shares
  • Change in Composition of Board for companies.
  • Transfer/Transmission of Shares/Capital Contribution.
  • Change of Name, Business activity, registered office address, Capital of Company.
  • Appointment of Cost Auditor.
  • Alteration of MOA/AOA.
  • Registration/Modification of Charge
  • Search report and charge reports.
  • Due Diligence report.
  • Conversion of shares into loan.

 

  1. Corporate Restructuring
  • Conversion of Private Limited Company/Unlisted Public Company into Limited Liability Partnership.
  • Conversion of Section 8 Company into another company.
  • Conversion of Public Company into Private Company and vice versa.
  • Amalgamation, Mergers, Takeover, demerger.
  • Consolidation, Sub Division, Reclassification of capital.
  • Application for Dormant Status.
  • Winding Up.
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Private Company Incorporation

Private Company is a type of privately held independent business entity with the liability of owners being limited to the number of shares held by them. There is restriction on trading of shares of private Limited Company publicly.

Private Limited Company v/s LLP

Private Limited Company distinguishes between its directors (Management) and shareholders (Owners) which make it possible to raise funds through venture capital, equity funding, Foreign Direct Investment and attract talent by issuing Employee Stock Option Scheme. Small Businesses not having the above requirement can opt for LLP over Private Company.

Otherwise than stated above, both the entities offer similar features required to run businesses except compliances and legal cost related to Private Limited Company are on a higher side as compared to LLP which makes LLP more suitable for small Businesses.

Requirements for Incorporation of Private Company:

  • Minimum 2 Maximum 200 Shareholders.
  • Minimum 2 maximum 15 Directors.
  • Digital signature and director identification number.
  • Desired Name of Company
  • Place of business.
  • Objects/ Business of the proposed company.
  • IPR details, if any.
  • Details of Place of Office
  • Details of Directors

Proceed to incorporate

Public Company Incorporation

Benefits of Public company over private company:

  • Raising capital through public issue
  • Widening the shareholder base
  • Improved creditworthiness
  • Better growth and expansion opportunities
  • Easy transferability of shares

 

Requirements:

  • Minimum 2 No Maximum Limit.
  • Minimum 2 maximum 15 Directors.
  • Digital signature and director identification number.
  • Desired Name of Company
  • Place of business.
  • Objects/ Business of the proposed company.
  • IPR details, if any.
  • Details of Place of Office
  • Details of Directors

Proceed to incorporate

One Person Company Incorporation

One person company was introduced to support entrepreneurs who on their own are capable of starting a venture allowing them to create a legal entity. A company incorporated with 1 individual member who is an Indian Citizen and resident in India is a One Person Company. OPC allows the person to operate a corporate entity with benefits of a private company.

Benefits:

  • Single promoter
  • Separate legal entity
  • Improve creditability
  • Lesser compliance
  • Limited liability

Requirements:

  • Minimum Authorized Capital of Rs 100000.
  • A nominee of promoter to be appointed while incorporation.
  • Digital signature and Director identification number of director.
  • Proposed name of the company
  • Place of business
  • Object/business of company
  • Details of director

Proceed to incorporate

Nidhi Company Incorporation

What is a “Nidhi” Company?

Nidhi Company  means a company which has been incorporated as a Nidhi with the object of cultivating the habit of thrift and savings amongst its members, receiving deposits from, and lending to, its members only, for their mutual benefit, and which complies with such rules as are prescribed by the Central Government for regulation of such class of companies.

Requirements:

  • Minimum capital Rs 5,00,000.
  • Minimum Number of Members 200
  • Net owned funds minimum Rs 10,00,000.

Proceed to incorporate

Producer Company Incorporation

“Producer Company” means a body corporate having objects or activities specified in section 581B and registered as Producer Company under this Act. It is incorporated as a private Limited Company with liability of its members limited to shares held by them.

The objects of the Producer Company shall relate to all or any of the following matters, namely : –

(a) production, harvesting, procurement, grading, pooling, handling, marketing, selling, export of primary produce of the Members or import of goods or services for their benefit: Provided that the Producer Company may carry on any of the activities specified in this clause either by itself or through other institution ;

(b) processing including preserving, drying, distilling, brewing, vinting, canning and packaging of  produce of its Members ;

(c) manufacture, sale or supply of machinery, equipment or consumables mainly to its Members

(d) providing education on the mutual assistance principles to its Members and others ;

(e) rendering technical services, consultancy services, training, research and development and all other activities for the promotion of the interests of its Members ;

(f) generation, transmission and distribution of power, revitalisation of land and water resources, their use, conservation and communications relatable to primary produce ;

(g)  insurance of producers or their primary produce ;

(h) promoting techniques of mutuality and mutual assistance ;

(i) welfare measures or facilities for the benefit of Members as may be decided by the Board ;

(j) any other activity, ancillary or incidental to any of the activities referred to in clauses (a) to (i) or other activities which may promote the principles of mutuality and mutual assistance amongst the Members in any other manner ;

(k) financing of procurement, processing, marketing or other activities specified in clauses (a) to (j) which include extending of credit facilities or any other financial services to its Members.

MINIMUM REQUIREMENTS FOR INCORPORATION:

  • Minimum 5 Directors , Maximum 15 Directors
  • Minimum Authorised Share Capital 5 lakhs.
  • Any of the following Combination of Producers :
    • Ten or More individual producers
    • Two or more producer institutions

Combination of the above 2.

Proceed to incorporate

Post Incorporation Activities

Company Incorporation was the first step that you have completed successfully to establish your business venture. Incorporation of the Company gives it a legal status.

To realise the benefits of working in a company form of business organisation, you need to actively initiate all business transactions through your company.

The work post incorporation is divided into different categories:

  1. Regulatory work :
  • For Companies :
    • Issue of Share certificates
    • Preparation of Notice, Minutes of meetings held.
    • Opening of bank account.
    • PAN and TAN application
    • Appointment of 1st
    • GST Registrations.
    • Shop Act License
  1. Business Activity Based :
  • Professional Tax Registrations
  • Factory License
  • Udyog Aadhar
  • MSME Registration
  • Grant of License under Section 8
  • Start Up Registration
  • FSSAI Registration
  • Import Export License
  • Contract Labour Registrations
  • Foreign Exchange Compliance
  • Drug License etc.
  1. Maintaining requisite documents and records as required under the act:
  • Notice, agenda and Minutes of Board meetings
  • Statutory registers.
  • Disclosures by directors.
  1. Annual Reporting :
  • Filing of various forms annually for Companies within the time frame.
  1. Work as per company requirements:
  • Issue of Shares
  • Change in Composition of Board for companies.
  • Transfer/Transmission of Shares/Capital Contribution.
  • Change of Name, Business activity, registered office address, Capital of Company.
  • Appointment of Cost Auditor.
  • Alteration of MOA/AOA.
  • Registration/Modification of Charge
  • Search report and charge reports.
  • Due Diligence report.
  • Conversion of shares into loan.

 

  1. Corporate Restructuring
  • Conversion of Private Limited Company/Unlisted Public Company into Limited Liability Partnership.
  • Conversion of Section 8 Company into another company.
  • Conversion of Public Company into Private Company and vice versa.
  • Amalgamation, Mergers, Takeover, demerger.
  • Consolidation, Sub Division, Reclassification of capital.
  • Application for Dormant Status.
  • Winding Up.

Proceed to incorporate