Nature and

Chapter 1

Incorporation of LLP

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professor, SGGSCC, D.U.
Definition
• Section 2(1)(n) of the LLP Act defines LLP as
“limited liability partnership means a partnership
formed and registered under this Act”.
• A limited Liability Partnership is a body

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Corporate, which is an artificial person, having a

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separate legal entity with a perpetual succession,
a common seal and carrying limited liability.
Characteristics
1. Body Corporate. A body corporate is generally
taken to be legal entity distinct and separate from
its constituents and having perpetual existence
and a common seal with a capacity to hold

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property, sue and be sued in its own name.

professor, SGGSCC, D.U.

Just as a company formed and registered under
the Companies Act, similarly a ‘limited liability
partnership’ is a body corporate formed and
incorporated under the LLP Act.
2. Artificial Legal person. A limited liability
partnership is an artificial legal person in the sense
that on the one hand it is created by a process
other than natural birth and does not possess the
physical attributes of a natural person and on the
other hand, it is clothed with many of the rights of

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a natural person.
It is invisible, intangible and exists only in the eyes

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of law.
It has no body, no soul and it is because of these
physical disabilities that an LLP is called an artificial
person.
3. Separate legal entity. A limited liability
partnership is a legal person having a personality
entirely distinct from and independent of the
individual persons who are for the time being its
partners.
It has the right to own and transfer the title to

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property in any way it likes.

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No partner can either individually or jointly claim
any ownership rights in the assets of the LLP
during its existence or in its winding up.
It can be sue and be sued in its own name by its
partners as well as outsiders.
4. Perpetual existence. A limited Liability
partnership alike an incorporated company, is a
stable form of business organization.
Its life does not depend upon the death, insolvency
or retirement of any or all partners.
Law created it and law can only dissolves it.

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Partners may come and go but the LLP can go on

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for ever.
5. Common seal. An LLP acts through its partners.
But having a legal personality, it may have common
seal if it decides to have one.
Thus, it is optional for an LLP to have a common
seal.
It shall be used as a substitute for its signature.

6. Limited liability. Every partner of an LLP would

be, for the purpose of the business of the LLP, an
agent of the LLP.
Liability of partners shall be limited only to the

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extent of their investment except in case of
unauthorized acts, fraud and negligence.

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But a partner shall not be personally liable for the
wrongful acts or omission of any other partner.
Nature of LLP
1. An LLP is a body corporate formed and
incorporated under the LLP Act and as such it
is a legal entity separate from that of its
partners.

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2. An LLP shall have perpetual succession.

professor, SGGSCC, D.U.

3. Any change in the partners of an LLP shall not
affect the existence, rights or liabilities of the
LLP.
Incorporation of LLP
• Before an LLP can be incorporated, the persons
desirous of forming an LLP should find out the
availability of the proposed name from the
registrar of companies.

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• Any suitable name can be chosen subject to the

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following restrictions:
1. Every LLP shall have either the words “limited
liability partnership”.
2. The name chosen must not be undesirable in
the opinion of the central government or a
name which is identical or resembles.
• Once name is chosen and the LLP is registered in
that time, law requires that every LLP shall
ensure that its name, address or its registered
office, registration number and a statement that
it is registered with limited liability is mentioned
an all its invoices, official correspondence and

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publications.
• Two or more persons associated for carrying on a

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lawful business with a view to earn profit will be
required to subscribe their names to an
‘incorporation document’ for getting an LLP
incorporated.
• A statement in the prescribed form shall be filed
with the ‘incorporation document’ stating that all
the requirements of the LLP act and the rules
made thereunder precedent to incorporation have
been complied with.
• The ‘statement’ must be signed by either an
advocate, or a company secretary, or a chartered

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accountant, or a cost accountant who is engaged
in the formation of the LLP and by anyone who

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subscribed his name to the incorporation
document.
• The ‘incorporation document’ is a public
document and it is open to public inspection in the
office of registrar on payment of prescribed fee.
Contents of incorporation document

1. The name of the LLP.

2. The proposed business of an LLP.
3. The address of the registered office of the LLP.
4. The name and address of each of the persons

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who are to be partners of the LLP on

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incorporation.
5. The name and address of the persons who are to
be designated partners of the LLP on
incorporation.
6. Such other information concerning the
proposed LLP as may be prescribed.
• The Registrar of Companies (ROC) will scrutinize
whether the incorporation document and other
papers presented to him satisfy the
requirements of the act and if they are in order,
he will register the LLP within a period of 14 days
from the date presentation.

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• On registration, the ROC shall issue a ‘certificate
of incorporation’ signed by him and

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authenticated by his official seal stating therein
that the LLP is incorporated by the name
specified in the incorporation document.
• This certificate is the LLP’s ‘birth certificate’.
• Once the certificate of incorporation is issued nothing
is to be inquired into as to regularity of the prior
proceedings.
• Now the LLP becomes a body corporate, having a
separate legal entity and perpetual succession.
• The LLP shall be capable of exercising the following
powers:-

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(a) Suing and being sued

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(b) Acquiring, owning, holding and developing or
disposing of property, whether movable or
immovable, tangible or intangible.
(c) Having a common seal, if it decides to have one.
(d) Doing and suffering such other acts and things as
bodies corporate may lawfully do and suffer.
• Every LLP shall have a registered office to which
all communications and notices may be
addressed.
• The LLP may change its registered office from
one place to another following the procedure:
1. The procedure as laid down in the LLP

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agreement should be followed. Where the LLP
agreement does not provide any procedure,

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consent of all the partners shall be required.
However, in case of change of office from one
state to another state, consent of secured
creditors shall also be required.
2. In case of change of office from one state to
another state, the LLP shall publish a public notice
at least 21 days before with the registrar in a daily
newspaper published in english and local
language.
3. Where the change in place of registered office

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from one place to another place within the state,
the LLP shall file the notice(form 15) with the

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registrar.
4. Notice in form 15 of change of place of
registered office shall be filed with the registrar
within the 30 days of complying with the
procedural requirements and requisite filing fee.
5. Form 15 should be signed by a designated
partner and certified by Company Secretary or
Chartered Accountant in practice.

If any person or persons carry on business under

any name or title of which the words ‘limited

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Liability partnership’ or ‘LLP’ is or are last word or
words, that person or each of those persons shall

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unless duly incorporated as Limited liability
partnership, be punishable with fine which shall
not be less than Rs 50,000 but may extend to Rs 5
lakhs.