You are a Company Secretary in practice and your three old architect friends have approached you for setting up their Limited Liability Partnership (LLP). They seek your help in incorporating the LLP as per the provision
CS Executive · Company Law · PYQS · December 2021
You are a Company Secretary in practice and your three old architect friends have approached you for setting up their Limited Liability Partnership (LLP). They seek your help in incorporating the LLP as per the provisions of Limited Liability Partnership Act, 2008 and finalizing the incorporation document. Guide them with the requirements for setting up an LLP and inclusion of important clauses to be included in the incorporation document. Make necessary assumptions needed.
Answer & Explanation:
Requirements for setting up of LLP The incorporation document shall be filed in eForm FiLLiP (Form for incorporation of Limited Liability Partnership) with the Registrar having jurisdiction over the State in which the registered office of the limited liability partnership is to be situated. Procure DSC and DIN: Any person proposed to become the Designated Partner in a new LLP shall have to make an application through E-form FiLLIP. An application for allotment of DIN up to two Designated Partners, shall be filed in E-form FILLIP with the Registrar, in case of proposed Designated Partners not having approved DIN. Name reservation: There are two ways of reserving name of the proposed LLP: File an application under RUN-LLP for ascertaining availability and reservation of the name of an LLP Name can be proposed in E-form FiLLIP, an application for incorporation of LLP. Incorporate LLP: After reserving a name under RUN-LLP, applicant should file E-form FILLIP for incorporating a new LLP. E-form FiLLIP contains the details of LLP proposed to be incorporated, Partners'/ Designated Partners' details and consent of the Partner/ Designated Partners to act as Partners/ Designated Partners. On approval of the form, the RoC will issue the certificate of incorporation. After incorporation of LLP, the partners should execute LLP Agreement and a copy of executed agreement is required to be filed with the RoC in E-form 3 within 30 (thirty) days from the date of incorporation of LLP. The value of stamp paper on which the LLP agreement must be printed or stamp duty to be paid on the LLP agreement is dependent on the state of incorporation and amount of capital contribution from the partners. LLP agreement defines the roles, responsibilities, rights, and powers of the partners to LLP and to each other. Hence, it creates the foundation for the smooth running of LLP. LLP agreement clarifies the managerial, operational as well administrative responsibilities and sets clear methodologies for decision making, adding a new partner and disassociation of existing partner. It defines the outlook and gives a clear idea as to decision making, adding a new partner, removal of existing partner, etc. Well drafted LLP agreement works like a backbone of the LLP. Section 2(1)(o) of the Limited Liability Partnership Act, 2008 defines it as under: 'LLP Agreements means any written agreement between the partners of the Limited Liability Partnership or between the Limited Liability Partnership and its partners which determines mutual rights and duties of the partners and their rights and duties in relation to that limited liability partnership.' LLP Agreement includes following clauses as given below: Interpretation / Definitions, Designated Partners, Name of The LLP And Changes to Its Registered Office of the LLP, Business of the LLP, Capital Contribution, Profit Sharing Ratio, Rights and Duties Of Designated Partners, Admission of Partner, Retirement Resignation and Expulsion of Partners, Remuneration & Interest to be Paid to Partners, Bank Account, Books of Accounts and Accounting Year, Meetings, Indemnity, Dispute Resolution, Term of LLP/Winding Up, General Provisions.
Topics: Limited Liability Partnership (LLP)
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