ARE YOU A PROFESSIONAL (LAWYER, ACCOUNTANT AND HR OFFICER?


Login or Create account


We'll never share your details with anyone else.

Note:Government fees for incorporation are extra and it varies from state to state. T&C

ttl-logo

Not sure about the packages?

Talk to our experts to kickstart your business registration process.

Limited Liability Partnerships (LLPs) - An Overview

comma

Companies And Allied Matters Act (CAMA) 2020

Registering your entity as a limited Liability Partnership is a welcomed idea and acceptable under the Company and Allied Matters Act (CAMA 2020). in this article you will get to know what a Limited Liability Partnership (LLP) is, the features of LLP, the requirements and the effect of registering your entity as Limited Liability Partnership(LLP)..

A limited liability partnership (LLP) provides the ideal legal structure for entrepreneurs looking to launch their own businesses, especially in a professional sector such as law, accountancy, architecture, or engineering.

Advantages of Registering Limited Liability Partnerships (LLPs)

For an entity to carry on business as a limited liability partnership, that entity must first be incorporated as a Limited Liability Partnership with the Commission by two or more partners for a lawful purpose. The steps in registering a limited liability partnership are:

1. Take Instructions: The instruction is as follows: name and alternative name of the partnership; type of partnership; the business of the LLP; registered address and head office (if any) of the LLP, Partners detail (for example, name, nationality, gender, date of birth, identity type, identity number); partners usual address, details of designated partners, details of the person with significant control, remuneration, dispute resolution, dissolution and winding up.

Limited Liability Protection

The legal liability of a Limited Liability Partnerships (LLPs)'s stockholders is restricted. You will be responsible for paying the liabilities of the company as a shareholder to the extent of your contribution. This protects your personal assets to cover the company's debts.

Separate Legal Entity

The company in itself is recognised as a legal entity and is responsible for the management of its liabilities and assets. This prevents the creditors from claiming personal assets of the directors and shareholders for money recovery.

Perpetual Succession

Registered Company Limited By Guarantee functions continuously until it is officially dissolved and this is called perpetual succession. It is a state where the death of any founders of the company does not affect its existence.

Easy to Raise Capital

A registered Company Limited By Guarantee is perceived as a legal entity and is capable of raising funds. Entrepreneurs can raise capital through equity and expand their business within the provided time limits of the liability.

Trustworthiness

Registered private limited companies provide access to director information and other crucial data of the company. This increases the trust factor of the general public and the investor. All the important details of the company and the directors are published in the MCA portal.

< /div>

Free and Easy Transferability of Shares

Unlike public limited companies, in a Limited Liability Partnerships (LLPs), shares can be easily transferred from one person to another without having an impact on the company's operations. This provides greater flexibility for shareholders and also makes it attractive for investors.

Owning Property

Private companies are treated as separate legal entities and can own properties acquired and cell under their name. This helps the company manage its assets independently of the personal assets of the shareholders.

Dual Relationship

Members of a Limited Liability Partnerships (LLPs) can act as both shareholders and employees of the company. This improves the company's operational efficiency and overall governance.

Capacity to Sue and Be Sued

The company can initiate legal proceedings and can also have legal actions taken in its name. This ensures that all the legal matters handled in the company's name protect the shareholders from their personal liability.

Borrowing Capacity

Private limited companies, when registered, have better access to funding from banks and other financial institutions. This enables the company to fund itself and operate as a separate legal entity in the future.

Eligibility Criteria for Limited Liability Partnerships (LLPs) Online Registration

As per MCA guidelines, a Company Limited By Guarantee must be registered with at least two directors and shareholders. While stockholders may be either natural people or corporate entities, directors must be people. Additionally, a registered office address in Nigeria is mandatory. The following criterias must be met while filing for Limited Liability Partnerships (LLPs) registration:

  • The applicant's minimum age should be eighteen years old
  • The applicant must be a citizen or resident of Nigeria
  • There should be between 200 and 300 members
  • Minimum number of Directors or shareholders must be 2

Checklist for Limited Liability Partnerships (LLPs) Registration

As per the MCA, a checklist has to be met for registering your company. Here is a clear outline of a checklist for Limited Liability Partnerships (LLPs) registration to follow:

  • At least 2 Directors
  • Directors and shareholders can be the same person
  • All the Directors should have DIN and DSC
  • Have the minimum Authorised share capital
  • Have the minimum Paid up share capital
  • Draft and MoA and AoA
  • Need details of the company working address
  • NOC and Rental Agreement from the landlord
file-collection

Limited Liability Partnerships (LLPs) Registration Documents Required

The following necessary documents are crucial for Limited Liability Partnerships (LLPs) registration in Nigeria:

  • Photographs of directors in passport size
  • Residential address proof for directors
  • Photo identification proof for directors
  • Sample signatures
  • A self-declaration confirming directorship in other companies
  • Lease/Rent agreement for the registered office
  • Letter of no objection from the property owner
  • Aadhaar card
  • PAN card
  • Director Identification Number (DIN)
  • Digital Signature Certificate (DSC)
  • Memorandum of Association (MoA)
  • Articles of Association (AoA)

Documents necessary for filing SPICe+ form (INC-32) for the registration of a Limited Liability Partnerships (LLPs) are outlined as follows:

A. For Nigerian Nationals serving as directors and subscribers:

  • Affidavit on stamp paper: a declaration by all subscribers affirming their intention to become shareholders of the company
  • Office address proof like the Rental Agreement or Ownership Deed
  • Electricity bill, water bill and other utility bills of the last two months
  • Copy of approval if required
  • Trademark registration details
  • NOC from property owner
  • Proof of identity and address

B. Required Documents For Foreign Nationals serving as directors/Shareholders

  • Passport: Proof of identity
  • Address proof: Accepted documents include a driving license, residence card, bank statement, or government-issued identification with a valid address.

Types of Limited Liability Partnerships (LLPs)

In Nigeria, private limited businesses are differentiated into different types based on share distribution and other aspects. Here are 3 different types of PVT ltd Companies:

Companies Limited by Shares

These are the most common types of private limited companies.In this type the company has a share capital. And the liability of the shareholders are capped based on the quantity of unpaid shares.

PVT Companies Limited by Guarantee

This type of company does not have a share capital. The firm's members commit to donate a specific sum to the company's assets in the event that the company is wound up.

Unlimited Company

In this type there is no limit on the liability of the members. This type is uncommon as it puts its members at greater risk.

Characteristics/Features of a Limited Liability Partnerships (LLPs)

The characteristics of a Limited Liability Partnerships (LLPs) include restricted share transfers, a separate legal entity status, and limited responsibility for shareholders. Here is a clear outline of the same:

  • It is a separate legal entity with a Limited Liability Structure
  • Property and assets can be owned under the name of the company
  • Legal Business activity can be conducted under the company name
  • There is no minimum paid up capital for registering a Company Limited By Guarantee
  • A Company Limited By Guarantee is separate from the shareholders
  • The shareholders enjoy limited liability with respect to the shares in the company
  • The total number of shareholders is limited to around 200
  • Individuals and corporate entities can be shareholders
  • Companies And Allied Matters Act (CAMA) 2020
  • The Company Limited By Guarantee should file legal requirements like annual financial statements
  • Registered private limited companies should hold annual general meetings
  • Shares of the Company Limited By Guarantee cannot be traded publicly
  • Transfer of shares is highly restricted and requires approval of existing shareholders and the board of directors
  • The shareholders can appoint the directors to manage the company's day-to-day task
  • The shareholders and the directors can be one and the same
  • Registered private limited companies can issue shares to investors to raise capital
  • The capital can be generated through loans from banks and other means
  • Company capital is not based on the personal assets of the shareholder.

Steps to Register Limited Liability Partnerships (LLPs)

To register a Company Limited By Guarantee in Nigeria, you need to obtain a Digital Signature Certificate (DSC) and Director Identification Number (DIN) for the proposed directors, and then file the incorporation documents with the Ministry of Corporate Affairs (MCA) through the online SPICe+ (Simplified Proforma for Incorporating Company Electronically Plus) form. E-legal offers an easy, three step process for business registering:

logo

Consult our Experts

downarrow
logo

Provide all the Required Documents

downarrow
logo

FIle MoA, AoA, PAN, TAN and Get
Incorporation Certificate

1. Name Approval Process

After you finalise an unique name for your company our team will check for the name availability we will file a RUN form or SPICe-A form. Post name approval our team will file SPICe-B form.

2. Get Your (DSC) and (DIN)

We file form DIR-3 and help you to procure your Director Identification Number (DIN) and Digital Signature Certificate (DSC), which are essential for online document filing.

3. Filing and Incorporation

We will file your Incorporation Documents like MoA, AoA, Spice+ form and will make sure that your company gets its PAN and TAN ensuring all necessary paperwork is submitted accurately. MCA provides the certificate of incorporation post registration.

Limited Liability Partnerships (LLPs) Registration Fees

There are several criteria that determine the total fees structure to form a private limited business in Nigeria. Fees like stamp duty and government fees are required. Professional fees will be assessed if you engage any experts. Apart from this, applications for filing DSC, DIN, Notary fees, PAN, TAN and GST registration should be accounted for. An all-in-one platform for online Company Limited By Guarantee registration in Nigeria is offered by E-legal. Depending on your demands, you can choose from our affordably priced packages and begin the registration process.

Post-Registration Compliances After Filling of FORM 3

As per Section 12(1), a company must have a registered office within 30 days of incorporation. Additionally, PAN and TAN applications should be submitted, leading to the company's registration under the Income Tax Act, 1961. As per MCA guidelines all the registered private limited companies should meet all the following compliance requirement:

Conduct the Initial Board Meeting

As per Section 173(1) the companies Act 2013 registered Company Limited By Guarantee should conduct its first board of directors meeting within 30 days of incorporation.

Open a Bank Account

Having a current account under the company's name is crucial for business operations.. As per law, a company is a legal entity and the financial transaction should be conducted in its name not in the name of an individual.

Have an Official Address

With respect to Section 12 (1) of the Companies Registration Act of 2013 registered business should have an official address within 30 days of incorporation. This address is the point of contact for receiving communications from government authorities. The official address should be informed to the resistor within the first 30 days of company incorporation.

Branding and Legal Compliance

Registered company name should be displayed in all the business locations. The local language should be used in the billboards. Seals and Letterheads should be prepared.

Appoint an Auditor

The board of directors should appoint an auditor as per Section 139(1) within 30 days of company registration.

Interest Disclosure and Statutory Compliance

In the first board meeting, all the directors of the company should declare their interests with respect to other companies. According to Section 184 of the Companies Act of 2013, this is required. Companies are required by law to keep a statutory register at the registered office.

Share Certificate Issuance

Share certificates must be issued to shareholders within 60 days from the date of incorporation, or in the case of additional share allotments, within 60 days from the allotment date.

< h3 class="font-[500] text-[18px] md:text-[24px] text-[#231F20]">Bookkeeping and Financial Reporting

As per Section 128, every company must maintain accurate and fair books of accounts, adhering to the double entry system and accrual basis of accounting.

Commencement of Business Certification

A company needs to get a certificate of commencement of business within 180 days. A disclosure attesting to each subscriber's payment of the outstanding balance on their shares must be filed by directors.

Copyright Registration

For a Company Limited By Guarantee, copyright registration is essential to protect its original works, such as software, manuals, logos, promotional materials, and other creative content. We have a dedicated team of IP lawyers who can help in copyright registration and other IP related issues.

Professional Tax Registration

Professional tax is a state-level tax imposed on professionals and businesses in Nigeria. Employers are required to deduct professional tax from the salaries of employees and remit the same to the state government. The tax rates are fixed by the state government and vary for other states. Our team of chartered accountants can help in the registration and filing of Professional tax in Nigeria.

Tax Implications of Business Structures

A Business entity must comply with a number of tax compliances that are divided into three categories namely:

Monthly Requirements

  1. File a challan-cum-statement where tax is deducted under sections 194-IA, 194-IB, 194M, or 194S (by a designated person)
  1. Pay TDS and TCS if taxes are deducted or collected
  1. Issue TDS certificate if you withheld under sections 194-IA, 194-IB, 194M, or 194S (by a designated person)

Quarterly Requirements

Businesses need to follow these quarterly obligations to comply with Income-tax laws:

  1. Pay advance tax
  1. Submit TDS/TCS returns if taxes are deducted/collected
  1. Provide TDS certificates for payments other than salary
  1. Provide TCS certificates for collected taxes and submitted returns

Yearly Requirements

  1. Provide TDS certificates to all the employees with respect to salary payments and taxes withheld from their paychecks from the previous year
  1. Send in the yearly income return, updated and revised
  1. Submit audit reports in accordance with Section 44AB
  1. Provide transfer price reports in accordance with Section 92E for assesses participating in foreign or designated domestic transactions

Role of Company Directors and Shareholders in a Limited Liability Partnerships (LLPs)

Directors and shareholders play a major role in the governance and decision-making processes of a Limited Liability Partnerships (LLPs). The directors are chosen by the shareholders and are responsible for managing day-to-day operations, creating strategic plans, and ensuring legal compliance.The role of a company director is to handle the daily operations of the organisation and make significant strategic and operational decisions to ensure the company meets its objectives. If the company has shareholders, the director may be accountable to them, overseeing how the directors manage the company and sharing in the profits in return for their investment.

Company Directors

  • Approving major business decisions like investments, expansions, mergers, and acquisitions.
  • Establishing ethical company procedures, adhering to legal and regulatory standards, and keeping accurate financial records.
  • Appointing and overseeing the management team, setting performance objectives, and monitoring progress.
  • Serving the interests of the business, its creditors, employees, and shareholders.
  • Maintaining financial stability and profitability, ensuring responsible allocation of resources.

Shareholders

  • Providing financial resources to the company through purchasing shares
  • Selecting competent and qualified individuals to serve on the board of directors
  • Taking part in shareholder meetings and using one's voting rights on specific issues in accordance with the articles of association of the business
  • Sharing in the company's profits through dividend distributions (subject to board approval and financial performance)
  • Holding the board of directors accountable for their performance and ensuring responsible management of the company

Comparison Between Limited Liability Partnerships (LLPs) and Other Business Structures

Choosing the right company type is crucial for registration. Every company type has different characteristics and provides different benefits to the individuals. Here is a clear outline for the different types of companies:

Proprietorship

No formal registration required

Partnership

Optional registration under the Partnership Act, 1932

LLP

Registered with the Ministry of Corporate Affairs under the LLP Act, 2008

Limited Liability Partnerships (LLPs)

Registered with the Ministry of Corporate Affairs under the Companies Act, 2013

Limited Liability Partnerships (LLPs) FAQs

questionmark

What is the minimum capital required to start a Limited Liability Partnerships (LLPs)?

There's no specific minimum capital requirement for a Company Limited By Guarantee in Nigeria. It can be started with any amount of capital deemed appropriate by the promoters.

questionmark

Can a foreign national be a director in an Nigerian Limited Liability Partnerships (LLPs)?

Yes, a foreign national can be a director in an Nigerian Company Limited By Guarantee. However, at least one director should be an Nigerian citizen.

questionmark

How long does the company registration process take?

The registration process duration varies. On average, it takes about 15 to 25 working days, subject to government processing times, document preparation, and other procedural factors.

questionmark

Who is eligible to register a Limited Liability Partnerships (LLPs) in Nigeria?

Any individual or entity, including foreigners, can register a Company Limited By Guarantee in Nigeria. The company must have a minimum of two directors and can have up to 200 shareholders.

questionmark

Which is more advantageous for a startup: One Person Company (OPC) or Limited Liability Partnerships (LLPs)?

Both have their own merits. OPC is the best choice for small firms, and Private Limited Companies are better for larger businesses with several founders.

questionmark

Who can qualify to be a director in a Limited Liability Partnerships (LLPs)?

Any individual, Nigerian or foreign, who is above 18 years old and not disqualified under the Companies Act can qualify as a director in a Limited Liability Partnerships (LLPs).

questionmark

Are Private Limited Companies permitted to issue shares to the general public?

No, Private Limited Companies cannot issue shares to the general public. They are restricted to offering shares to a select group of individuals, typically existing shareholders or private investors.

questionmark

Can the subscriber pages of the Memorandum of Association (MOA) and Articles of Association (AOA) be altered?

No, the subscriber pages of the MOA and AOA, once filed with the Registrar of Companies during incorporation, cannot be altered. Any changes to these documents require passing a special resolution and filing updated documents with regulatory authorities.