Today, one can start a business by incorporating a company through an on-line process without visiting any Government office. This was achieved in January 2016 by establishing Central Registry Centre (CRC) for online incorporation of the company and reserving its unique name. Two on-line forms that were introduced for the purpose, are Simplified Proforma for Incorporating Company Electronically (SPICe) and Reserve Unique Name (RUN). Today, as part of the online process for company incorporation, PAN and TAN are issued on near real-time basis by integrating the online process with the Department of Income Tax. Through process re-engineering, DIN is also allotted to the individuals at the time of their appointment as Director of the Company. Every week, 2700 number of companies are incorporated through the online company incorporation system.
What is LLP?
LLP is an alternative corporate business form that gives the benefits of limited liability of a company and the flexibility of a partnership. The LLP can continue its existence irrespective of changes in partners. It is capable of entering into contracts and holding property in its own name.
The LLP is a separate legal entity, is liable to the full extent of its assets but the liability of the partners is limited to their agreed contribution in the LLP. Further, no partner is liable on account of the independent or un-authorized actions of other partners, thus individual partners are shielded from joint liability created by another partner’s wrongful business decisions or misconduct.
Mutual rights and duties of the partners within an LLP are governed by an agreement between the partners or between the partners and the LLP as the case may be. The LLP, however, is not relieved of the liability for its other obligations as a separate entity. Since LLP contains elements of both ‘a corporate structure’ as well as ‘a partnership firm structure’ LLP is called a hybrid between a company and a partnership.
LLP form is a form of a business model which:
- Is organized and operates on the basis of an agreement.
- Provides flexibility without imposing detailed legal and procedural requirements.
- Enables professional/technical expertise and initiative to combine with financial risk-taking capacity in an innovative and efficient manner.