New LLP Rules in India: Applying for a DPIN
On June 12, India’s Ministry of Corporate Affairs (MCA) notified the Limited Liability Partnership (Amendment) Rules, 2018.
The Amendment Rules make changes to the application process to obtain a Designated Partner Identification Number (DPIN) as well as the process to notify changes by a designated partner.
Applying for a DPIN
The Amendment Rules state that every individual applying to be a designated partner of an existing limited liability partnership firm and obtain a DPIN must file e-Form DIR-3 under the Companies (Appointment and Qualifications of Directors) Rules, 2014. (See MCA notification here.)
Previously, the application to get a DPIN was made through Form 7.
During the application process, the system will generate a provisional DPIN which will be valid for a period of 60 days from the date it was generated.
In case a designated partner (having already been allotted a DPIN) has to make changes to their particulars – as submitted in the application to get the DPIN – they must inform the federal government through Form DIR-6 within 30 days.
Previously, the change was informed through Form DIN-4 of the Companies (Director Identification Number) Rules, 2006.
Limited liability partnerships in India
An LLP is a separate legal entity than its members, which means that the liability of members is limited to their agreed contributions.
Only in sectors where the RBI permits 100 percent foreign direct investment (FDI) can a foreign company establish an LLP.
Under Prime Minister Modi, the Indian government has eased FDI restrictions and the list of sectors under 100 percent FDI is growing.
LLPs can buy and own property, produce revenue, and remit earnings outside of India.
LLPs are taxed at 30 percent, and an additional surcharge of 10 percent is applied to LLPs if total income exceeds one crore – approximately US$155,000.
In comparison to a limited company, an LLP requires less paperwork and minimal record keeping. An LLP also has a reputational advantage over a partnership firm because of the additional registration involved.
All LLPs have to register with the MCA.