Detailed Naming Guidelines For Your Limited Liability Partnership

You must comply with specific regulations when naming your limited company or limited liability partnership. The name you choose will not be able to be used if it does not meet these requirements. This article provides detailed guidance on choosing a name and gives examples of how you can apply these restrictions to prescribed words and other sensitive words. Also, this article describes LLP names, LLP name reservations, and LLP name examples in India.

Did You Know? The number of companies registered in June 2020 increased by 126.55% over the previous month. The number of LLPs registered in June 2020 is 2,273 compared to 2,979 in June 2019.

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What Is an LLP?

In recent years, Limited Liability Partnerships (LLP) have gained popularity as a business organization since they combine the benefits of a partnership firm and a corporation.

In 2008, India introduced the idea of Limited Liability Partnerships. LLPs combine the characteristics of a partnership firm and a corporation. There is an Act of 2008 that regulates the Limited Liability Partnership in India. Incorporating an LLP requires at least two partners. An LLP can, however, have an unlimited number of partners. 

At least two partners should be individuals, and one of them must be an Indian resident. According to the LLP agreement, designated partners have rights and duties. The LLP agreement and all provisions of the LLP Act, 2008, are directly responsible for compliance.

Key Features of LLP

The Limited Liability Partnerships Act, 2008 specifies the characteristics of a Limited Liability Partnership as follows: 

• It is a legal entity separate from its partners under the Act. 
• The succession of a limited liability partnership shall be perpetual. 
• Changes in the partners of a limited liability partnership will not affect the partnership's rights, existence, or liabilities.
• A limited liability company has a low formation cost.
• There is less compliance and regulation.
• It is optional to contribute a minimum amount of capital.

Advantages of LLP

Below are some benefits of LLP -

1. An Entity With Its Legal Status

Like companies, an LLP is a separate legal entity. There is a distinction between the LLP and its partners. Suing and being sued in the name of an LLP is possible. Customers and suppliers have confidence in the business when contracts are signed in the name of the LLP.

2. Partners Are Limited in Their Liability

The limited liability applies to the partners of an LLP. Partners are liable only for the contributions they make. Accordingly, they are liable only for their contributions and not for business losses. When an LLP company winds up, only its assets are responsible for paying its debts if it becomes insolvent. The partners can operate as credible businessmen since they do not have any personal liabilities.

3. Less Compliance and Lower Costs 

Public and private limited companies cost more to incorporate than an LLP. In addition, the LLP has fewer compliance requirements. An LLP must file only two annual statements: an Accounts and Solvency Statement and an Annual Return.

4. A Minimum Capital Contribution Is Not Required

It is possible to form an LLP without a minimum capital requirement. Before incorporating, there is no requirement to have a minimum paid-up capital. The partners can contribute any amount of money to the company.

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LLP Company Name: Guidelines

Limited liability partnerships have names that identify them as limited liability partnerships. Names of LLPs typically describe their trade names or brand names along with their main activities.

LLPs should have the following naming guidelines

• Ensure that it is unique,
• Following the noun with a word that reflects the project's objective is essential.
• Comply with the Ministry of Corporate Affairs' guidelines on LLP names.

The naming guidelines of LLP company should not follow the below-mentioned terms:

• A company or LLP cannot have a name identical or similar to another already registered company or LLP. Avoiding phonetically similar names is also recommended.
• Patents and trademarks registered or already filed share the same characteristics.
• Make sure you do not offend.
• It must not be considered undesirable by the Central Government (the government explains the undesirability of names separately)
• The Limited Liability Partnership Rules 2009 govern India's approval and allocation of LLP names.

Prohibited words in company names in India:

• If there is any word or phrase that offends any section of the population
• If an existing limited liability partnership already exists in Hindi or English, the proposed name is the exact translation of that name
• There is a substantial phonetic similarity between the proposed name and the name of an existing LLP, such as JK LLC and Jay Kay L.L.C.
• There are also regional words for 'cooperative' and 'cooperative.'
• If it includes the terms National, Union, Central, Federal, Republic, President, Rashtrapati, and others, it implies government participation or patronage; e.g., if a name contains any of the words National, Union, Central, Federal, Republic, President, Rashtrapati, etc., it may be considered undesirable in specific contexts.
• 'British India' appears in the proposed name.
• There is an association with the proposed name that implies a connection with any Consulate or Embassy or a foreign government, which means a relationship with local authorities, like Municipalities, Panchayats, Zila Parishads, or any other body affiliated with the government of any state or union.
• The proposed name is unclear, like IVNR Limited liability partnership or DIMO Limited liability partnership, or SSRP Limited liability partnership.
• Limited liability partnerships differ only because they have the name of a place in brackets before the word 'limited liability partnership'; an existing limited liability partnership should not prevent Indian Press (Delhi) LLP from forming.
• You may include the trademark name with the owner's consent
• Names proposed with the registrar are identical or closely related to those reserved by firms, LLPs, or companies incorporated outside of India
• A name that is identical or too identical to the name of limited liability partnerships or a company in bankruptcy, or a name that is identical or too similar to that of LLP or a company that is in liquidation, up to 5 years in the past
• If the regulatory authority does not approve the use of words like 'Insurance,' Bank, 'Banking,' 'mutual fund,' or 'Venture capital' and such similar names
• If it is intended to mislead people as to the scope or scale of the organization's activities that are beyond its resources
• It can include words like French, German, British, etc. unless the partners satisfy themselves that there is some collaboration with the foreign citizens of that country or place whose name is incorporated in the proposed name

Limited liability partnerships are proposed to include words such as chartered accountant, company secretary, advocate, or similar expressions that indicate a professional status. However, the same name must be approved by the Council governing that profession or by the government authority appointed for that purpose.

Name Reservation by Foreign LLP

A foreign LLP or company (already registered in the country incorporated) can reserve its existing name to register an LLP in India. It is possible to make such a reservation initially for three years and to renew it upon submitting a new application.

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Conclusion

After reading this article, you would have got a clear picture of the naming guidelines of LLP. It is essential to choose a name that meets the requirements of the Companies Act, 2013, or the Limited Liability Partnership Act, 2008, before incorporating. 

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