Incorporation of Limited Liability Partnership, Business Law B Com Notes | EduRev

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B Com : Incorporation of Limited Liability Partnership, Business Law B Com Notes | EduRev

 Page 1


 
Incorporation of Limited Liability Partnership 
 
Institute of Lifelong Learning, University of Delhi 
 
 
 
 
 
 
 
 
 
 
 
Discipline Courses-I 
Semester-I 
Paper : Business Law 
Unit-III  
Lesson: Incorporation of Limited Liability Partnership  
Lesson Developer: Ruchi Ahuja 
College/Department: Lakshmi Bai College, University of Delhi 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Page 2


 
Incorporation of Limited Liability Partnership 
 
Institute of Lifelong Learning, University of Delhi 
 
 
 
 
 
 
 
 
 
 
 
Discipline Courses-I 
Semester-I 
Paper : Business Law 
Unit-III  
Lesson: Incorporation of Limited Liability Partnership  
Lesson Developer: Ruchi Ahuja 
College/Department: Lakshmi Bai College, University of Delhi 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Incorporation of Limited Liability Partnership 
 
 
 
Institute of Lifelong Learning, University of Delhi2 
 
 
 
 
 
 
Table of Contents: 
Lesson: Incorporation of Limited Liability Partnership 
1. Learning Outcomes 
2. Introduction 
3. Incorporation of Limited Liability Partnership 
3.1: Registration of LLP 
3.2: Online Incorporation of LLP 
3.3: Registered Office of LLP 
4. Name of Limited Liability Partnership 
5. LLP Agreement 
6. Partners and Partners? Relations 
7. Designated Partners 
8. Extent of Liability in an LLP 
Summary  
Exercises 
Glossary 
References 
 
 
1. Learning Outcomes: 
 
After you have read this chapter, you should be able to: 
? comprehend the concept of Incorporation of Limited Liability 
Partnership, 
? explainthe steps required to be undertaken forIncorporation of LLP, 
? differentiatebetween Partner and Designated Partner, 
? appreciaterelationships among different Partners, 
? comprehendthe extent of liability in LLP, 
? analyzethe personal liabilityof partners, 
? developLLP agreement , 
? obtain Digital Signature Certificate, 
? understand the online procedure of registration of LLP, 
? apply the knowledge of online registration of LLP. 
 
 
 
 
 
 
Page 3


 
Incorporation of Limited Liability Partnership 
 
Institute of Lifelong Learning, University of Delhi 
 
 
 
 
 
 
 
 
 
 
 
Discipline Courses-I 
Semester-I 
Paper : Business Law 
Unit-III  
Lesson: Incorporation of Limited Liability Partnership  
Lesson Developer: Ruchi Ahuja 
College/Department: Lakshmi Bai College, University of Delhi 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Incorporation of Limited Liability Partnership 
 
 
 
Institute of Lifelong Learning, University of Delhi2 
 
 
 
 
 
 
Table of Contents: 
Lesson: Incorporation of Limited Liability Partnership 
1. Learning Outcomes 
2. Introduction 
3. Incorporation of Limited Liability Partnership 
3.1: Registration of LLP 
3.2: Online Incorporation of LLP 
3.3: Registered Office of LLP 
4. Name of Limited Liability Partnership 
5. LLP Agreement 
6. Partners and Partners? Relations 
7. Designated Partners 
8. Extent of Liability in an LLP 
Summary  
Exercises 
Glossary 
References 
 
 
1. Learning Outcomes: 
 
After you have read this chapter, you should be able to: 
? comprehend the concept of Incorporation of Limited Liability 
Partnership, 
? explainthe steps required to be undertaken forIncorporation of LLP, 
? differentiatebetween Partner and Designated Partner, 
? appreciaterelationships among different Partners, 
? comprehendthe extent of liability in LLP, 
? analyzethe personal liabilityof partners, 
? developLLP agreement , 
? obtain Digital Signature Certificate, 
? understand the online procedure of registration of LLP, 
? apply the knowledge of online registration of LLP. 
 
 
 
 
 
 
 
Incorporation of Limited Liability Partnership 
 
 
 
Institute of Lifelong Learning, University of Delhi3 
 
 
 
 
 
 
 
2. Introduction: 
 
  Figure 1: Evolution of LLP Act and Rules 
 
 
 
The Limited Liability Partnership Act came into existence in 2009 for the formation of the 
professional enterprises such as consultancy firms of CA, CS, Advocates etc.; SMEs and 
Micro enterprises. The firms registered under LLP Actgets the advantages of both the forms 
of organizations - Companies as well as the Partnership form of organization. A partnership 
firm with Limited Liability registered under this act is a body corporate having perpetual 
succession butconfines the extent of partner's liability to the quantum of their contributions 
towards LLP.  
 
The incorporation of limited liability partnership is covered under Sec 11 of the LLP Act, 
2009. The partnership can be registered as a firm by filing with the Registrar the necessary 
documents or it can also be registered online.According to the requirements of LLP Act 
2009, every LLP shall have a registered office and shall be registered with a name that ends 
with “limited liability partnership” or”LLP”. Anybody whether an individual or a body 
corporate can form LLP or become a partner in LLP. However, the minimum number of 
partners to start LLP is two along with two designated partners. 
 
A formal procedure with regard to the registration of this body corporate, LLP is defined 
under section 11 of this Act and described below. 
 
 
3. Incorporation of Limited Liability Partnership 
 
Figure 2: Beginning of Partnership in the form of LLP  
 
Page 4


 
Incorporation of Limited Liability Partnership 
 
Institute of Lifelong Learning, University of Delhi 
 
 
 
 
 
 
 
 
 
 
 
Discipline Courses-I 
Semester-I 
Paper : Business Law 
Unit-III  
Lesson: Incorporation of Limited Liability Partnership  
Lesson Developer: Ruchi Ahuja 
College/Department: Lakshmi Bai College, University of Delhi 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Incorporation of Limited Liability Partnership 
 
 
 
Institute of Lifelong Learning, University of Delhi2 
 
 
 
 
 
 
Table of Contents: 
Lesson: Incorporation of Limited Liability Partnership 
1. Learning Outcomes 
2. Introduction 
3. Incorporation of Limited Liability Partnership 
3.1: Registration of LLP 
3.2: Online Incorporation of LLP 
3.3: Registered Office of LLP 
4. Name of Limited Liability Partnership 
5. LLP Agreement 
6. Partners and Partners? Relations 
7. Designated Partners 
8. Extent of Liability in an LLP 
Summary  
Exercises 
Glossary 
References 
 
 
1. Learning Outcomes: 
 
After you have read this chapter, you should be able to: 
? comprehend the concept of Incorporation of Limited Liability 
Partnership, 
? explainthe steps required to be undertaken forIncorporation of LLP, 
? differentiatebetween Partner and Designated Partner, 
? appreciaterelationships among different Partners, 
? comprehendthe extent of liability in LLP, 
? analyzethe personal liabilityof partners, 
? developLLP agreement , 
? obtain Digital Signature Certificate, 
? understand the online procedure of registration of LLP, 
? apply the knowledge of online registration of LLP. 
 
 
 
 
 
 
 
Incorporation of Limited Liability Partnership 
 
 
 
Institute of Lifelong Learning, University of Delhi3 
 
 
 
 
 
 
 
2. Introduction: 
 
  Figure 1: Evolution of LLP Act and Rules 
 
 
 
The Limited Liability Partnership Act came into existence in 2009 for the formation of the 
professional enterprises such as consultancy firms of CA, CS, Advocates etc.; SMEs and 
Micro enterprises. The firms registered under LLP Actgets the advantages of both the forms 
of organizations - Companies as well as the Partnership form of organization. A partnership 
firm with Limited Liability registered under this act is a body corporate having perpetual 
succession butconfines the extent of partner's liability to the quantum of their contributions 
towards LLP.  
 
The incorporation of limited liability partnership is covered under Sec 11 of the LLP Act, 
2009. The partnership can be registered as a firm by filing with the Registrar the necessary 
documents or it can also be registered online.According to the requirements of LLP Act 
2009, every LLP shall have a registered office and shall be registered with a name that ends 
with “limited liability partnership” or”LLP”. Anybody whether an individual or a body 
corporate can form LLP or become a partner in LLP. However, the minimum number of 
partners to start LLP is two along with two designated partners. 
 
A formal procedure with regard to the registration of this body corporate, LLP is defined 
under section 11 of this Act and described below. 
 
 
3. Incorporation of Limited Liability Partnership 
 
Figure 2: Beginning of Partnership in the form of LLP  
 
 
Incorporation of Limited Liability Partnership 
 
 
 
Institute of Lifelong Learning, University of Delhi4 
 
 
 
 
Section 11describes thenecessary conditions that need to be fulfilled by the interested 
partiesfor incorporationof an organization as a LLP firm.  
One while getting registered oneself as a body corporate i.e. LLP, under the provisions of 
this actrequires to see: 
? That the document of incorporation shall be subscribed by two or more persons who 
have joined to carry on a lawful business for earning profit. 
 
 
 
? Sec 11(2) provides that the incorporation document shall be in the prescribed 
formas framed under the LLP Act 2009 and must contain: 
1) The proposed name of the LLP 
2) The prospectivebusiness to be conducted 
3) The place of operation of business 
4) Names and addresses of would be partners on incorporation 
5) Names and addresses of would be designated partners on incorporation 
6) Any other information as may be prescribed 
 
? The document pertaining to registrationshall be submitted to the Registrar of the 
state i.e.where the place of operation of businessis situatedalongwith prescribed fee. 
 
? A „statement? to the effect that all requirements and rules of the LLP Act have been 
complied with, shall be signed by either one of the 1) CA- chartered accountant, or 
Page 5


 
Incorporation of Limited Liability Partnership 
 
Institute of Lifelong Learning, University of Delhi 
 
 
 
 
 
 
 
 
 
 
 
Discipline Courses-I 
Semester-I 
Paper : Business Law 
Unit-III  
Lesson: Incorporation of Limited Liability Partnership  
Lesson Developer: Ruchi Ahuja 
College/Department: Lakshmi Bai College, University of Delhi 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Incorporation of Limited Liability Partnership 
 
 
 
Institute of Lifelong Learning, University of Delhi2 
 
 
 
 
 
 
Table of Contents: 
Lesson: Incorporation of Limited Liability Partnership 
1. Learning Outcomes 
2. Introduction 
3. Incorporation of Limited Liability Partnership 
3.1: Registration of LLP 
3.2: Online Incorporation of LLP 
3.3: Registered Office of LLP 
4. Name of Limited Liability Partnership 
5. LLP Agreement 
6. Partners and Partners? Relations 
7. Designated Partners 
8. Extent of Liability in an LLP 
Summary  
Exercises 
Glossary 
References 
 
 
1. Learning Outcomes: 
 
After you have read this chapter, you should be able to: 
? comprehend the concept of Incorporation of Limited Liability 
Partnership, 
? explainthe steps required to be undertaken forIncorporation of LLP, 
? differentiatebetween Partner and Designated Partner, 
? appreciaterelationships among different Partners, 
? comprehendthe extent of liability in LLP, 
? analyzethe personal liabilityof partners, 
? developLLP agreement , 
? obtain Digital Signature Certificate, 
? understand the online procedure of registration of LLP, 
? apply the knowledge of online registration of LLP. 
 
 
 
 
 
 
 
Incorporation of Limited Liability Partnership 
 
 
 
Institute of Lifelong Learning, University of Delhi3 
 
 
 
 
 
 
 
2. Introduction: 
 
  Figure 1: Evolution of LLP Act and Rules 
 
 
 
The Limited Liability Partnership Act came into existence in 2009 for the formation of the 
professional enterprises such as consultancy firms of CA, CS, Advocates etc.; SMEs and 
Micro enterprises. The firms registered under LLP Actgets the advantages of both the forms 
of organizations - Companies as well as the Partnership form of organization. A partnership 
firm with Limited Liability registered under this act is a body corporate having perpetual 
succession butconfines the extent of partner's liability to the quantum of their contributions 
towards LLP.  
 
The incorporation of limited liability partnership is covered under Sec 11 of the LLP Act, 
2009. The partnership can be registered as a firm by filing with the Registrar the necessary 
documents or it can also be registered online.According to the requirements of LLP Act 
2009, every LLP shall have a registered office and shall be registered with a name that ends 
with “limited liability partnership” or”LLP”. Anybody whether an individual or a body 
corporate can form LLP or become a partner in LLP. However, the minimum number of 
partners to start LLP is two along with two designated partners. 
 
A formal procedure with regard to the registration of this body corporate, LLP is defined 
under section 11 of this Act and described below. 
 
 
3. Incorporation of Limited Liability Partnership 
 
Figure 2: Beginning of Partnership in the form of LLP  
 
 
Incorporation of Limited Liability Partnership 
 
 
 
Institute of Lifelong Learning, University of Delhi4 
 
 
 
 
Section 11describes thenecessary conditions that need to be fulfilled by the interested 
partiesfor incorporationof an organization as a LLP firm.  
One while getting registered oneself as a body corporate i.e. LLP, under the provisions of 
this actrequires to see: 
? That the document of incorporation shall be subscribed by two or more persons who 
have joined to carry on a lawful business for earning profit. 
 
 
 
? Sec 11(2) provides that the incorporation document shall be in the prescribed 
formas framed under the LLP Act 2009 and must contain: 
1) The proposed name of the LLP 
2) The prospectivebusiness to be conducted 
3) The place of operation of business 
4) Names and addresses of would be partners on incorporation 
5) Names and addresses of would be designated partners on incorporation 
6) Any other information as may be prescribed 
 
? The document pertaining to registrationshall be submitted to the Registrar of the 
state i.e.where the place of operation of businessis situatedalongwith prescribed fee. 
 
? A „statement? to the effect that all requirements and rules of the LLP Act have been 
complied with, shall be signed by either one of the 1) CA- chartered accountant, or 
 
Incorporation of Limited Liability Partnership 
 
 
 
Institute of Lifelong Learning, University of Delhi5 
 
2)CS- company secretary, or 3)an advocate, or 4)an ICWA who is involvedin 
formation of LLP and by any other subscriber to the document. This must be filed 
alongwith incorporation document. 
 
Penalty  
Section 12 subsection 2 provides that a registrar may accept the statement of compliance 
submitted under Section 11subsection 1 and clause (c) as a proof that all the rules, 
requirements etc. related to incorporation have been adhered completely.  
 
However, if any of the provision for incorporation is ignored and/or falsely represented to be 
complied, the subscriber shall have to face a penalty defined under section 11 (3). 
 
A punishment with a fine which may range from ten thousand rupees to five lakh rupees 
and imprisonment up to two years may be levied for a person who makes a false statement 
regarding compliance of the provisions of the LLP Act. 
 
3.1Registrationof LLP 
 
Section 12 prescribes that thepartners have to comply with the provisions defined under 
section 11. Upon compliance of these provisions by the firm, the Registrar 
shallwithinfourteendays; 
(a) Register the document(s) pertaining to incorporation. 
(b) Issue a “Certificate of Incorporation” duly signed and sealed for authentication. 
 
The certificate so issuedby the registrar, shall be a conclusive proof of incorporation of a LLP 
by the name specified in the incorporation documents.Once the Certificate is given, an entry 
has to be made in the „Register of LLP „ and a LLP Identification Number (LLPIN)is given to 
the LLP for further correspondence and reference.  
 
 
 
Effects of Registration  
 
Sec14  deals with the effects of registration. Once a limited liability partnership firm is 
registered, that is, it receives the certificate of incorporation in the name applied and at 
the address defined, it acquires the following rights. It can by its name: 
(a) Sue any party or be sued by anyone who is affected by its deeds, 
(a) All Movable or immovable,tangible or intangible property can be 
acquired,owned,held and developed by the LLP, 
(b) Have a common seal, if the firm decides to have, 
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