What is a Limited Liability Partnership
A Limited Liability Partnership (LLP) is a type of a legal entity in India which has the characteristics of both a partnership firm and company.
It is a body corporate having perpetual succession and a separate legal entity distinct from its partners. The liability of each partner is limited.
Who can set up a LLP in India
In India, the Limited Liability Partnership Act, 2008 states the various provisions which are applicable to an LLP.
In terms of the LLP Act, there needs to be a minimum of two members. Each member is known as a Designated Partner. There is no limit on the maximum number of the members.
A foreign citizen can be a member of an LLP. However, in such instances there needs to be atleast one Indian Designated Partner. Foreign Direct Investment of upto 100% is permissible under the LLP route.
A foreign LLP which is incorporated and registered outside India can establish a place of business in India.
Is there any contractual obligation between the Designated Partners
There needs to be LLP Agreement between all the Designated Partners. This Agreement states the mutual rights and duties of the partners as well as their rights and duties in relation to the LLP.
The LLP Agreement needs to be registered with the Ministry of Corporate Affairs. Appropriate stamp duty on the LLP Agreement needs to be paid.
The above article provides a general overview on the topic. For further information on registration of an LLP or information on drafting of an LLP Agreement, kindly contact services@jneela.com.
