A Limited Liability Partnership (LLP) is an incorporated business form that combines the features of a partnership and the company form of businesses. The LLP form of organization was introduced in India by the Limited Liability Partnership Act, 2008. LLP is a body corporate with all the features of a limited LLP. This is a new business organization in India with all the features of an LLC in the US and an LLP in the UK. This is an ideal organization for business as compared to an LLP. The law governing LLPs in India is contained in the Limited Liability Partnership Act, 2008.
An LLP combines the advantages of both—‘LLP’ and ‘Partnership’—in a single business entity. In an LLP, a partner is not responsible or liable for another partner's misconduct or negligence. Instead, all partners have limited liability, limited to their own acts of commission or omission, similar to partners’ liabilities in a limited LLP.
Foreign Direct Investment (FDI) is permitted in LLPs operating in sectors/activities where 100% FDI is allowed through the automatic route. FDI in LLPs will not be allowed in sectors such as agricultural/plantation activity, print media or real estate business.
LLP registration is administered by the Ministry of Corporate Affairs (MCA), Government of India, through the office of the Registrar of Companies (ROC). The incorporation/registration process is fully electronic, similar to the LLP registration process, i.e. applications and documents are filed online and the ROC issues a digitally signed Certificate of Incorporation (COI).
An LLP should have a minimum of two ‘Designated’ partners who are individuals and at least one of them should be resident in India. Only individuals can be designated as partners in an LLP. Where a corporate body is one of the LLP partners, it should nominate an individual as a Designated Partner.
Designated partner of an LLP shall be responsible for all acts and things that are required to be carried out by the LLP in respect of compliance of the provisions and filing of documents/returns/statements under the LLP Act as well as things specified in the LLP agreement.