Limited Liability Partnerships: What Are They?
Limited liability partnerships (LLPs) combine the advantages of partnerships and the protections of corporations. LLPs have each partner responsible for their own legal liabilities, so the partners are not jointly and severally liable for the LLP’s debts and other obligations. Business structures such as this are best suited to businesses with multiple owners who want some degree of independence and control while sharing profits and losses.
The formation of a Limited Liability Partnership is the result of two or more individuals agreeing to create a limited liability company by filing documents with MCA. In most states, a Limited Liability Partnership must have a name, articles of organization, and a shareholder agreement specifying how profits are to be divided among the partners.
There can be one or more partners in an LLP. In an LLP, each partner is responsible for his or her own legal liabilities and shares equally in profits and losses. The other partners of an LLP must consent to a partner’s withdrawal.
Creating a Limited Liability Partnership from a Partnership
There are a few things you should know before converting your partnership into a limited liability partnership.
LLPs are treated as separate legal entities from their partners, so any assets or liabilities that the members of the partnership might have shared will be attributed to the LLP.
The second step is to file articles of organization on the MCA website to form an LLP.
You’ll also have to modify your partnership agreement so that it reflects that your LLP is now a limited liability partnership once you’ve filed your articles of organization and registered it.
The conversion process involves the following steps:
- Obtain the digital signatures of all partners
- All partners should apply for DINs
- On the MCA website, submit the RUN-LLP Form
- Fill out the FiLLiP conversion application
- The MCA website is the place to register an LLP agreement
- You must obtain a Certificate of Incorporation for your LLP.
How Does Getting an Incorporation Certificate Affect You?
A Certificate of Conversion is issued by the Registrar of Companies when a partnership becomes a limited liability partnership (LLP). A certificate proving that all of the necessary paperwork has been filed and the conversion has been completed. Legally, the certificate is also proof of formation.
If I want to convert my partnership, who should I contact?
You can easily answer this question if you own a partnership. It is possible to simplify the conversion process by following these steps.
The first thing you should do is make sure your partnership firm registration information is accurate. It includes information such as the number of partners, their positions, and their ownership percentages.
You will also need to gather any relevant documents, such as articles of organization or partnership agreements.
There are several key factors to consider when converting your partnership into an LLP. To begin with, you will need to update your formation documents. As a second step, you will need to update your corporate governance structure and management team. A good LLP operating plan must also be developed and implemented. Legal counsel should be consulted on all of these decisions. In summary, this article summarized the process involved in converting a partnership into an LLP.