LLP for Start-ups/SME’s – Part I

LLP (Limited Liability Partnership) has its own advantage when compared to the traditional partnership and the Private Limited, as it picks the best of these two structures in one solid viable package. It tackles various challenges that entrepreneur faces when using a traditional partnership structure.

The main focus of any Start-up is to keep the recurring cost at a bare minimum and yet run the company without any hiccups,  as one of the major costs are related to accounting & compliance when compared to Pvt Ltd.

In this article (Part I), we take positive things of LLP and delve on its pros and cons thereby understand the LLP offerings.

Click here to read the full article published in MarketExpress  –  a Financial & Business News, Analysis, Insights, Opinions & Research Portal

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The information / articles & any replies to the comments on this blog are provided purely for informational and educational purposes only & are purely based on my understanding / knowledge. They do not constitute legal advice or legal opinions. The information / articles & any replies to the comments are intended but not promised or guaranteed to be current, complete, or up-to-date and should in no way be taken as a legal advice or an indication of future results. Therefore, I can not take any responsibility for the results or consequences of any attempt to use or adopt any of the information presented on this blog. You are advised not to act or rely on any information/article contained without first seeking the advice of a Practicing Professional.

30 thoughts on “LLP for Start-ups/SME’s – Part I

  1. I want to form an LLP in India with a resident and an OCI holder… My query is can we take OCI holder as partner without contributing to capital (since his investmet in LLP will require RBI apptoval)
    and how will he sign on subscription sheet and LLP deed since it has yo be done in presence of professional and notary..?

    Thanks in advance

    • Whoever is the partner has to contribute in LLP. Being OCI holder, any investment towards capital of LLP will attract the provisions of FDI Policy and needs to obtain prior approval of RBI before investment in India. The subscription sheet, consent to act, LLP agreement shall be separately signed by you outside India and then obtain notary from Foreign Public notary and Indian Consulate. The person who is residing in India shall get documents notarised from Local Lawyer.

  2. I need to know the whole procedure of document need to start a biofertilizer manufacturing unit

  3. Mam,

    Can a LLP be converted into Private Limited Company under Companies Act?

    Does the Companies Act, 2013 contain any provisions relating to conversion of LLP into private limited company?

  4. You have a very informative blog.

    We are a Pvt Ltd company with 4 director and we are 3 years old company.

    TO is Rs.1Cr. Would you suggest us to change to LLP from Pvt Ltd.?

    Kindly reply.

    Thanks and regards.

  5. MAM,

  6. What is the procedure for conversion of LLP to Pvt Ltd Company?

  7. Madam,

    I want to form a LLP with 2 Designated Partners.

    Following are my queries,

    1. One DP is OCI (non resident Indian) and does not have a DPIN. So what are the formalities to be done for getting his DPIN as he is a non resident?

    2. As per the rules of new Act 2013 DIN will require approval of Central Government. So how much time it will take to obtain a permanent DPIN?

    3. If the Designated Partners wants a fixed salary per month then how to put this in LLP Agreement and can the Designated Partners give loans to LLP and vice versa?

    • OCI holder can apply for DIN by submitting his identity proof and address proof ( like passport and address proof like driving licence). DIN is approved under Straight Through process. You can insert clauses in LLP agreement as per your wishes.

  8. madom,
    can u tell me the cost incured in connection with the formation of an LLP

  9. Hi,

    Want to know pros and cons of converting Pvt. Ltd. to LLP. Have a business for 5 years. Also, have a name trademarked, will I loss the same due to conversion.

    • After conversion of Private into LLP, the advantage will be :- no need to appoint Statutory auditor as per LLP Act. There are less compliance with regards to annual filing with ROC. Due to conversion there will not be any loss only you will have to intimate the change in type of company to Trade Mark Registry.

  10. Hi Mam…Myself Vishal and am trying for Australian PR through one of the Agency here in bangalore. To check wether the company is genuine i checked for LLP registration with Ministry of Corporate Affairs and its found that the company is been registered. So should i think that the company is a genuine if its registred under Minstry of Corporate Affairs.. Please guide me mam.Will really appreciate ur valuable time in guiding me in this regards as i am bit confused……Vishal

  11. Hello Madam,
    I would likes to start a company and is an IT product based company.I have a dilemma interms of registration process whether to register it as a pvt ltd or llp company.Could you help me to take a right decision.

  12. Madam,

    Your blog is really very informative, I appreciate your sincere efforts.

  13. can a llp be shareholder/member in company??

    • Yes, LLP can be shareholder or member in company because LLP is a body corporate having separate legal entity.

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