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    Limited Liability Partnership

    What is Limited Liability Partnership (LLP)?

    LLP is a partnership formed and registered under LLP Act, 2008. It is a hybrid of partnership firm and a company. Ministry of Corporate Affairs is the administrative ministry and Registrar of Companies is the administrative authority. It is a body corporate having perpetual succession and is a legal entity separate from its partners.

    Applicable law

    Limited Liability Partnership Act, 2008.

    Limited Liability Partnership Formation
    Stages:

    Stage I - Partners To form a LLP, there Minimum two partners and at least two shall be designated partners having DIPN. In case of body corporate as partners, their nominee can be act as designated partners. Out of two designated partners, one must be resident in India. (Who has stayed in India for a period of not less than one hundred and eighty two days during the immediately preceding financial year).

    Stage II - Obtaining DPIN & Digital Signature DPIN can be obtained by making an application online with www.llp.gov.in After submitting the online application, signed physical copy of Form 7 has to be submitted to Ministry of Corporate Affairs along with certified copies of address proof and Identity proof of the applicant. Digital Signature can be obtained from any of the Certifying Authorities in India.

    Stage III - Name filing After finalization of name, an application of name availability has to be filed in form 1 with www.llp.gov.in for approval. Please note that selection of name is subject to Guidelines issued by MCA.

    Stage IV - Agreement LLP agreement has to be drafted in line with LLP Act. It is not mandatory to file LLP agreement at the time of registration and same can be file with in 30 days. If no agreement is framed, provisions of Schedule I of the LLP Act shall be applicable.

    Stage V - Filing of Incorporation Documents Form No. 2, 3 and 4 along with required attachments has to be filed with www.llp.gov.in Above said documents are required to be filed after signing digitally. After verification, registrar will register all documents and issue Certificate of Incorporation.

    Documents Required:
    • eForm 1-Name Availability Application
    • eForm 2-Incorporation Document
    • eForm 3- Details of LLP Agreement
    • eForm 4-Consent of Partners
    • eForm 7-Application for Designated Partners Identification Number
    • Subscription Sheet
    • LLP Agreement duly stamped as per relevant Stamp Act of the State.
    • Proof of Address of Registered Office
    • Consent of Partners and Designated Partners
    Benefits of LLP
    • Separate legal entity
    • Limited Liability to partners
    • Simple process of Registration
    • Perpetual existence irrespective of changes in partners
    • Less tax as compared to company
    • No requirement of minimum capital contribution

    NBFC Registration

    A non-banking financial company (NBFC) is a company registered under the rules and regulations of Companies Act, 1956 and is engaged in the business of loans and advances acquisition of shares/stock/bonds/debentures/securities issued by government or local authority or other securities of like marketable nature, leasing, hire-purchase, insurance business, chit business, but does not include any institution whose principal business is that of agriculture activity, industrial activity, sale/purchase/construction of immovable property.

    NBFC needs registration number from reserve bank to carry on the financial business. After receiving the registration number, Non banking financial company is able to carry on their business of financial nature in India and around the world. The total number of Non-Banking Financial Companies should be registered with RBI.

    NGO Registration Methods – 1

    1. Trust 2. Society, and 3. Non profit Company

    In India non profit / public charitable organizations can be registered as trusts, societies, or a private limited non profit company, under section-25 companies. Non-profit organizations in India (a) exist independently of the state; (b) are self-governed by a board of trustees or ‘managing committee’/ governing council, comprising individuals who generally serve in a fiduciary capacity; (c) produce benefits for others, generally outside the membership of the organization; and (d), are ‘non-profit-making’, in as much as they are prohibited from distributing a monetary residual to their own members.

    Section 2(15) of the Income Tax Act – which is applicable uniformly throughout the Republic of India – defines ‘charitable purpose’ to include ‘relief of the poor, education, medical relief and the advancement of any other object of general public utility’. A purpose that relates exclusively to religious teaching or worship is not considered as charitable. Thus, in ascertaining whether a purpose is public or private, one has to see if the class to be benefited, or from which the beneficiaries are to be selected, constitute a substantial body of the public. A public charitable purpose has to benefit a sufficiently large section of the public as distinguished from specified individuals. Organizations which lack the public element – such as trusts for the benefit of workmen or employees of a company, however numerous – have not been held to be charitable. As long as the beneficiaries of the organization comprise an uncertain and fluctuating body of the public answering a particular description, the fact that the beneficiaries may belong to a certain religious faith, or a sect of persons of a certain religious persuasion, would not affect the organization’s ‘public’character.

    Whether a trust, society or section-25 company, the Income Tax Act gives all categories equal treatment, in terms of exempting their income and granting 80G certificates, whereby donors to non-profit organisations may claim a rebate against donations made. Foreign contributions to non-profits are governed by FC(R)A regulations and the Home Ministry.

    CAF would like to clarify that this material provides only broad guidelines and it is recommended that legal and or financial experts be consulted before taking any important legal or financial decision or arriving at any conclusion.

    Formation and Registration of a Non -Profit organisations in India
    • Trust
    • Society
    • Section-25Company
    • Additional Licensing/Registration
    Trusts
    • A public charitable trust is usually floated when there is property involved, especially in terms of land and building.
    • Legislation : Different states in India have different Trusts Acts in force, which govern the trusts in the state; in the absence of a Trusts Act in any particular state or territory the general principles of the Indian Trusts Act 1882 are applied.
    • Main Instrument : The main instrument of any public charitable trust is the trust deed, wherein the aims and objects and mode of management (of the trust) should be enshrined. In every trust deed, the minimum and maximum number of trustees has to be specified. The trust deed should clearly spell out the aims and objects of the trust, how the trust should be managed, how other trustees may be appointed or removed, etc. The trust deed should be signed by both the settlor/s and trustee/s in the presence of two witnesses. The trust deed should be executed on non-judicial stamp paper, the value of which would depend on the valuation of the trust property.
    • Trustees : A trust needs a minimum of two trustees; there is no upper limit to the number of trustees. The Board of Management comprises the trustees.
    Application for Registration

    The application for registration should be made to the official having jurisdiction over the region in which the trust is sought to be registered.

    After providing details (in the form) regarding designation by which the public trust shall be known, names of trustees, mode of succession, etc., the applicant has to affix a court fee stamp of Rs.2/- to the form and pay a very nominal registration fee which may range from Rs.3/- to Rs.25/-, depending on the value of the trust property.

    The application form should be signed by the applicant before the regional officer or superintendent of the regional office of the charity commissioner or a notary. The application form should be submitted, together with a copy of the trust deed.

    Two other documents which should be submitted at the time of making an application for registration are affidavit and consent letter. /p>

    II.Society

    According to section 20 of the Societies Registration Act, 1860, the following societies can be registered under the Act: ‘charitable societies, military orphan funds or societies established at the several presidencies of India, societies established for the promotion of science, literature, or the fine arts, for instruction, the diffusion of useful knowledge, the diffusion of political education, the foundation or maintenance of libraries or reading rooms for general use among the members or open to the public, or public museums and galleries of paintings and other works of art, collection of natural history, mechanical and philosophical inventions, instruments or designs.’

    Legislation : Societies are registered under the Societies Registration Act, 1860, which is a federal act. In certain states, which have a charity commissioner, the society must not only be registered under the Societies Registration Act,but also, additionally, under the Bombay Public Trusts Act.

    Main Instrument : The main instrument of any society is the memorandum of association and rules and regulations (no stamp paper required), wherein the aims and objects and mode of management (of the society) should be enshrined.

    Trustees : A Society needs a minimum of seven managing committee members; there is no upper limit to the number managing committee members. The Board of Management is in the form of a governing body or council or a managing or executive committee

    Application for Registration :

    Registration can be done either at the state level (i.e., in the office of the Registrar of Societies) or at the district level (in the office of the District Magistrate or the local office of the Registrar of Societies).(2)

    The procedure varies from state to state. However generally the application should be submitted together with: (a) memorandum of association and rules and regulations; (b) consent letters of all the members of the managing committee; (c) authority letter duly signed by all the members of the managing committee; (d) an affidavit sworn by the president or secretary of the society on non-judicial stamp paper of Rs.20-/, together with a court fee stamp; and (e) a declaration by the members of the managing committee that the funds of the society will be used only for the purpose of furthering the aims and objects of the society.

    All the aforesaid documents which are required for the application for registration should be submitted in duplicate, together with the required registration fee. Unlike the trust deed, the memorandum of association and rules and regulations need not be executed on stamp paper.

    Comparision among Trust, Society and Non profit Company
      Trust Society Section-25 Comapny
    Statute/Legislation Relevant State Trust Act or Bombay Public Trusts Act, 1950 Societies Registration Act, 1860 Indian Companies Act, 1956
    Jurisdiction Deputy Registrar/Charity commissioner Registrar of societies (charity commissioner in Maharashtra). Registrar of companies
    Registration As trust As Society
    In Maharashtra, both as a society and as a trust
    As a company u/s 25 of the Indian Companies Act.
    Registration Document Trust deed Memorandum of association and rules and regulations Memorandum and articles of association. and regulations
    Stamp Duty Trust deed to be executed on non-judicial stamp paper, vary from state to state No stamp paper required for memorandum of association and rules and regulations. No stamp paper required for memorandum and articles of association.
    Members Required Minimum – two trustees. No upper limit. Minimum – seven managing committee members. No upper limit. Minimum three trustees. No upper limit.
    Board of Management Trustees / Board of Trustees Governing body or council/managing or executive committee Board of directors/ Managing committee
    Mode of Succession on    Board of Management Appointment or Election Appointment or Election by members of the general body Election by members of the general body

    Partnership Firm Registration

    Documents/Information Required for Registration of Partnership Firm under Partnership Act, 1932:
    • Application for Partnership Registration in Form-1.
    • Partnership Deed.
    • ID & Address proof of all Partners. (Copy of Passport/PAN/Voter ID/Driving License).
    • Two Photographs of all Partners.
    • Ownership Proof eg. Electricity bill/ water bill/Property receipts, POA, sale deed etc. in the name of applicant in case it is self own or Rent agreement and copy of ownership proof in the name of Land Lord accompanied by NOC, in case it is rented.
    • Power of attorney.
    • Information required in partnership deed:-
    • Firm Name,
    • Whether all partners are actively engaged in business of Firm,
    • Remuneration of Partners,
    • Profit Sharing Ratio and Dissolution Ratio,
    • Whether bank A/c be operated by all partners jointly or severally

    Whether all bonds, bills, notes, bills of exchange, hundies or promissory notes or other securities given on behalf of the partnership (except cheques) shall be signed, endorsed, accepted or executed jointly or severally

    Advantages of a Partnership

    Partnerships have many of the same advantages of the sole proprietorship, along with others: Except for the time and the legal cost of crafting a partnership agreement, it is easy to establish. Because there is more than one owner, the entity has more than one pool of capital to tap in financing the business and its operations.Profits from the business flow directly to the partners personal tax returns; they are not subject to a second level of taxation.The entity can draw on the judgment and management of more than one person. In the best cases, the partners will have complementary skills.

    Disadvantages of a Partnership

    As mentioned earlier, partners are jointly and severally liable for the actions of the other partners. Thus, one partner can put other partners at risk without their knowledge or consent. Other disadvantages include the following:Profits must be shared among the partners. With two or more partners being privy to decisions, decision making may de slower and more difficult than in a sole proprietorship. Disputes can tie the partnership in knots.As with a sole proprietorship, the cost of some employee benefits may not be deductible from income taxation. Depending on the partnership agreement, the partnership may have a limited life. Unless otherwise specified, it will end upon the withdrawal or death of any partner.

    The company secretarial services include

    • Incorporation of Private and Public companies, limited by shares or guarantee, unlimited companies.
    • Their conversions and re-conversions.
    • Alterations, modifications and changes with respect to the names of companies, objects, share capital, situation of registered office, amendments and alterations in the Memorandum and Articles of Association.
    • Allotment, consolidation/sub-division of shares, share transfer and transmission, conversion of shares into stocks or warrants, issue of shares certificates, dematerialization of shares, forfeiture of shares etc.
    • Changes with respect to appointment, re-appointment, regularization, resignations, fixation and revisions of the remunerations of Directors, Managers,Company Secretary, Compliance officer, secretary in whole time practice,auditors, cost auditors, sole selling agents etc.