Incorporation of LLP under Companies Act, 2013

Limited Liability Partnerships

Recently most entrepreneurs have started opting for Limited Liability Partnership, considering it has most positive features of Partnership and Companies. It is hybrid form which incorporates benefits of both partnership and companies.

Limited Liability Partnerships (LLPs) are commercial vehicles which combine the features of partnership and company form of business .The concept of Limited Liability Partnership (LLP) has been introduced in India by way of Limited Liability Partnership Act, 2008 (notified on 31st March 2008).

• A Limited Liability Partnership combines the advantages of both the Company and Partnership into a single form of organization.
• In an LLP one partner is not responsible or liable for another partner’s misconduct or negligence.
• In an LLP, all partners have limited liability for each individual’s protection within the partnership, similar to that of the shareholders of a limited company.
• However, unlike the company shareholders, the partners have the right to manage the business directly. An LLP also limits the personal liability of a partner for the errors, omissions, incompetence, or negligence of the LLP’s employees or other agents.
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REQUIREMENTS FOR INCORPORATION OF LLP:

PARTNER:

1. A minimum of two partners will be required for formation of an LLP. There will not be any limit to the maximum number of partners.
2. A body corporate can also be Partner of LLP.

How to make a Company under Companies Act 2013 ?

Incorporation of Company- Under Section 7 Of Companies Act 2013 read with the Companies (Incorporation ) Rules 2014 

For incorporation of a company following steps is required to be followed:-

 1.     First of all the company should obtain the Digital signature of atleast one person out of Managing Director , Manager or secretary of the company as now a days various documents are required to be signed online which is possible only through DSC.

 2.     That after the company should apply for the DIN allotment for the persons who are going to be appointed as a director of the company. In case the person already holding a DIN then no such application is required to be made

General Meetings:Secretarial Standard

Companies will soon have to follow stringent norms such as providing detailed explanation on implications of particular resolutions while conducting board and shareholders' meetings. These provisions are part of new Secretarial Standards, which will have to be mandatorily followed by companies from 1st july 2015  Standards can be read at:

Download: Secretarial Standard on General Meetings

Meeting of Board of Directors:Secretarial Standard

Companies will soon have to follow stringent norms such as providing detailed explanation on implications of particular resolutions while conducting board and shareholders' meetings. These provisions are part of new Secretarial Standards, which will have to be mandatorily followed by companies from July 1 2015.

Download : SS1 : Secretarial Standard on Meeting of Board of Directors

Common Seal of Company

Common Seal of Company under Company Act 2013

As we all know that a Company being an artificial person does not have a physical presence, it acts through its Board of Directors for carrying out its activities and for entering into various agreements. Therefore, Company uses Common Seal as its Signature. Common Seal is the signature of the company to any document on which it is affixed and binds the company for all obligations undertaken in the document. Companies Act, 2013 provides that, the company shall have a Common Seal from the date of its incorporation. However, Companies Act, 2013 does not describe the form, mode of affixing Common Seal or its custody etc. To remove the ambiguity and to prescribe best and uniform practices with respect to affairs pertaining to Common Seal, Council of the Institute of Company Secretaries of India has issued Secretarial Standard-8 (SS-8): “Affixing of Common Seal”.

In this Article we have thrown light on provisions pertaining to Common Seal contained in Companies Act, 1956, Companies Act, 2013 and SS-8.

DEFINITION OF COMMON SEAL

In general, Common Seal means a metal stamp for stamping documents with the name of the company to show that they have been approved officially.

There is no definition prescribed under the Companies Act, 1956 and Companies Act, 2013. As per the Secretarial Standards issued by Institute of Company Secretaries of India, Common Seal means, the metallic seal of a company which can be affixed only with the approval of the Board of Directors of the Company. It is the signature of the company to any document on which It is affixed and binds the company for all obligations undertaken in the document.

In other words, Common Seal is the official signature of the company and each company shall have only one seal, on its incorporation. It is to be used in the manner prescribed in the Articles of Association and the Companies Act, 2013. Any document, on which the company’s seal is affixed and is duly signed by the authorized official of the company becomes binding on the company.

Secretarial Standard-8 (SS-8) – Affixing of Common Seal

Secretarial Standard-8 (SS-8)

SECRETARIAL STANDARD ON AFFIXING OF COMMON SEAL

The following is the text of the Secretarial Standard-8 (SS-8) issued by the Council of the Institute of Company Secretaries of India, on “Affixing of Common Seal.”

In the initial years, adherence by a company to this Secretarial Standard will be recommendatory.

Introduction

Common seal means the metallic seal of a company which can be affixed only with the approval of the Board of directors of the company. It is the signature of the company to any document on which it is affixed and binds the company for all obligations undertaken in the document.

A company shall have only one common seal.

The Act provides that from the date of incorporation mentioned in the certificate of incorporation, the company shall have a common seal

The Articles of Association provides the procedure relating to affixing of common seal.

Private Company Vs Public Company under Companies Act 2013

Introduction: The Companies Act of 2013 has done away with the relaxation to private companies in several provisions. The concept of “not applicable to private company” is no more in existence in the Act of 2013. Such a move in the Companies Act of 2013 has taken away certain privileges enjoyed by private companies. The privileges are of two types. One is for the directors and to their interest and the second one is for the private company itself. The Directors were hitherto enjoying certain pleasure from the application of certain provisions are now withdrawn. Further, the Companies Act, 2013 have mandated certain new requirement like that of internal audit to both public and private companies.

Comparison 

Companies (Auditor’s Report) Order,2015 : CARO 2015

The MCA has issued Companies (Auditor’s Report) Order,2015. It shall come into force on the date of its publication  in the Official Gazette.

[TO BE PUBLISHED IN THE GAZETTE OF INDIA EXTRAORDINARY, PART II, SECTION 3, SUB-SECTION (ii)]

GOVERNMENT OF INDIA

MINISTRY OF CORPORATE AFFAIRS

Order

New Delhi, the 10th April, 2015

S.O. __________ (E).- In exercise of the powers conferred by sub-section (11) of section 143 of the Companies Act, 2013 (18 of 2013 ) and in supersession of the Companies (Auditor’s Report) Order, 2003, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 480 (E), dated the 12(11 June, 2003, except as respects things done or omitted to be done before such supersession, the Central Government, after consultation with the Institute of Chartered Accountants of India, constituted under the Chartered Accountants Act, 1949 (38 of 1949), hereby makes the following Order, namely:-