Secretarial Audit: Applicability, Scope, and Process

What is LLP Form 3?

LLP Form 3 is a mandatory form that captures the LLP agreement, the foundation document that outlines the operational framework of a Limited Liability Partnership. This agreement defines the relationship among partners, including their roles, decision-making powers, profit and loss sharing arrangements, and more.

It serves as a legal document that governs how the LLP will be run and must be submitted to the MCA to make the LLP agreement officially valid.

Purpose of Filing LLP Form 3

Filing LLP Form 3 is essential because it:

• Legally documents the LLP agreement with the government
  Defines the rights, duties, and responsibilities of all partners
  
• Establishes clarity on how the LLP will operate
  
• Ensures regulatory compliance with the MCA
  Helps prevent internal disputes by clearly stating each partner’s role and profit-sharing ratio
  

Without a properly filed LLP Form 3, the LLP risks facing legal and operational complications.

When to File LLP Form 3?

LLP Form 3 must be filed within 30 days from the date of incorporation of the LLP.

In addition to the initial filing, any changes or amendments made to the LLP agreement, such as changes mentioned below, must also be reported by filing a fresh Form 3 within 30 days of the amendment date.

• Partner details
  
• Capital contribution
  
• Profit-sharing ratio
  
• Management structure
  

Key Components of LLP Form 3

LLP Form 3 is designed to capture critical aspects of the LLP agreement, including:

• Capital contributions of each partner
  
• Profit-sharing ratios
  
• Roles and responsibilities of partners
  
• Management structure and authority levels
  
• Decision-making processes
  
• Dispute resolution clauses
  
• Procedures for adding or removing partners
  
• Meeting protocols and voting rights
  

These elements ensure the LLP operates smoothly and fairly for all stakeholders.

Steps to File LLP Form 3

Here’s a step-by-step guide to filing LLP Form 3 online:

1. Log in to the MCA portal.
   
2. Download the latest version of LLP Form 3 under the “MCA Services > LLP E-Forms” section.
   
3. Fill in the required details of the LLP agreement:
   
   • LLP name and LLPIN
     
   • Date of agreement
     
   • Partner details and their contributions
     Rights, responsibilities, and governance structure
     
4. Attach the signed LLP agreement as a PDF
   
5. Upload any other mandatory documents (as specified)
   
6. Validate and pre-scrutinise the form using the MCA tool
   
7. Sign digitally (DSC) by a designated partner
   
8. Submit the form and make the payment online
   

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Filing LLP Form 3 for LLP Incorporation and Changes in LLP Agreement

LLP Form 3 is divided into two key sections:

1. Initial Filing of LLP Agreement (Section 1):

Used at the time of incorporation, this section requires details like:

• Nature of business
  
• Partner contributions
  
• Profit-sharing ratios
  
• Decision-making and meeting procedures
  

2. Filing Amendments to LLP Agreement (Section 2):

Used when there’s a change in:

• Capital contribution
  
• Partners or their roles
  
• Profit-sharing arrangements
  

You must provide:

• Amendment date
  
• Number of changes
  
• SRN (Service Request Number) of related forms previously filed
  

Before proceeding to either section, you must enter basic details like LLPIN, registered address, and jurisdiction.

Additional Disclosure Requirements – Revised Form No. 3 (LLP Rules 2023)

The LLP (Amendment) Rules, 2023 introduced stricter disclosure norms in Form No. 3 to enhance transparency, especially when a corporate body is a partner.

New requirements include filling Table 19(a) with:

• Body Corporate Partner (Yes/No) – Indicates if the partner is a corporate entity.
  
• Partner/Nominee ID – DPIN, PAN, or Passport number of the individual or nominee.
  
• Additional ID Details – Supporting information related to the identification number.
  
• Corporate Type – Type of body corporate (e.g., company, LLP).
  
• Corporate ID – CIN, LLPIN, FCRN, FLLPIN, or other ID numbers.
  
• Additional Corporate Details – Extra info related to the above IDs.
  
• Corporate Name – Legal name of the body corporate partner.
  
• Designation – Whether the person is a Partner or Designated Partner.
  
• Contribution Form – Mode of contribution (Cash/Non-cash/Conversion).
  
• Contribution Value – Monetary value of the contribution.
  
• Profit Share % – Profit sharing ratio assigned to the partner.
  
• Type of Change – Whether the entry reflects an addition, deletion, change, or no change.
  

These disclosures ensure better governance and accountability within LLPs.

Fees for Filing LLP Form 3

The fee for LLP Form 3 varies based on the contribution amount:

Note: Additional charges apply for late filing, which can accrue up to ₹100 per day of delay without any cap.

Penalty for Non-Filing Form 3 LLP

Failing to file the LLP Form 3 on time results in:

• Late filing fees of ₹100 per day
  
• Potential rejection of other compliance forms
  
• Inability to legally enforce the LLP agreement
  
• Legal complications and MCA notices
  
• Difficulty in onboarding new partners or raising capital
  

Common Mistakes to Avoid

Avoid these common errors when filing LLP Form 3:

• Entering incorrect partner details
  
• Uploading unsigned or outdated LLP agreements
  
• Missing the 30-day deadline
  
• Not updating the form after changes in the LLP agreement
  
• Skipping mandatory fields in Table 19(a) (as per 2023 rules)
  

Pro Tip: Always validate and preview the form before submission, and keep a copy of the SRN for future reference.

Conclusion

LLP Form 3 is an important compliance document that legally records your LLP agreement with the Ministry of Corporate Affairs. It captures critical aspects like partner roles, profit-sharing arrangements, and decision-making protocols that define how your LLP functions.

If you’re forming an LLP or planning amendments to your existing agreement, don’t overlook LLP Form 3. Stay compliant to not only avoid hefty penalties but also build a solid foundation for the growth and scalability of your LLP.

Frequently Asked Questions

What is Udyog Aadhaar?

Udyog Aadhaar was introduced as a unique identification number for MSMEs to simplify the registration process. It replaced the older Small Scale Industries (SSI) registration system, allowing businesses to register with just a single-page form.

The primary purpose of Udyog Aadhaar was to ease the bureaucratic burden on small businesses and provide them with access to government schemes, subsidies, and financial assistance. This simplified registration made it easier for MSMEs to establish credibility and seek funding opportunities.

What is Udyam Registration?

Udyam Registration is the updated and more comprehensive registration system for MSMEs under the Ministry of Micro, Small, and Medium Enterprises.

Unlike Udyog Aadhaar, Udyam Registration is mandatory for businesses to avail themselves of government benefits after 2020. The online registration allows businesses to self-certify their classification as micro, small, or medium enterprises.

The Udyam Registration Certificate is an official document issued by the Ministry of Micro, Small, and Medium Enterprises (MSME) to businesses that successfully register under the Udyam portal. This certificate serves as legal proof of a business’s MSME status and contains a unique Udyam Registration Number.

Since the entire process is online and paperless, businesses can obtain their Udyam Registration Certificate quickly, ensuring seamless access to financial aid and growth opportunities.

Difference Between Udyog Aadhaar and Udyam Registration

Here is the difference between Udyog Aadhaar and Udyam Registration:

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Top 5 Benefits of Udyog Aadhaar

1. Access to Government Schemes and Subsidies

• Udyog Aadhaar holders could apply for various MSME support programs, including credit-linked subsidies and financial aid.
  

2. Easier Loan Approvals

• Banks and financial institutions provided loans at lower interest rates to Udyog Aadhaar-registered businesses.
  

3. Enhanced Business Credibility

• Registration helped businesses gain recognition and build trust with customers, investors, and suppliers.
  

4. Simplified Government Tender Applications

• Businesses could easily apply for government tenders, increasing their opportunities in public sector projects.
  

5. Tax Rebates and Concessions

• Udyog Aadhaar allowed businesses to benefit from various tax exemptions, reducing operational costs.
  

5 Key Benefits of Udyam Registration

1. Official Recognition and Credibility

• Udyam Registration serves as proof of a business’s legal status, making it easier to secure partnerships and attract investors.
  

2. Better Financial Support

• MSMEs registered under Udyam get easier access to bank loans, credit facilities, and government funding programs.
  

3. Simplified Access to Government Schemes

• Registered businesses can avail themselves of subsidies, grants, and financial incentives tailored for MSMEs.
  

4. Tax Benefits

• Udyam-registered MSMEs enjoy tax rebates and exemptions, reducing their overall financial burden.
  

5. Priority Access to Government Contracts

• Udyam Registration ensures that businesses get priority consideration in public sector tenders, helping them grow through government contracts.
  

How to Migrate to Udyam Registration?

With Udyam Registration now mandatory for government benefits, MSMEs registered under Udyog Aadhaar must migrate to the new system. The migration process is straightforward:

1. Visit the Udyam Registration Portal
   • Go to the official Udyam Registration website.
2. Enter Udyog Aadhaar Details
   • Provide your Udyog Aadhaar number along with Aadhaar-linked mobile details.
3. Submit PAN and GSTIN
   • Enter PAN and GSTIN details for verification.
4. Complete Self-Declaration
   • Fill in business classification details based on investment and turnover.
5. Receive Udyam Registration Certificate
   • After successful verification, the Udyam Registration certificate is generated.

Migrating to Udyam Registration ensures businesses continue to enjoy financial aid, easier access to credit, and government compliance.

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Conclusion

Understanding the differences between Udyog Aadhaar and Udyam Registration is essential for MSMEs to stay compliant and competitive.

While Udyog Aadhaar served as a stepping stone for MSMEs, Udyam Registration is now mandatory for accessing government benefits, funding opportunities, and enhanced business credibility.

Migrating to Udyam Registration ensures businesses remain eligible for financial support and government schemes, enabling them to grow and thrive in India’s evolving economic landscape. If you haven't yet migrated, now is the time to secure your business's future with Udyam Registration!

Frequently Asked Questions

What is a Farmer-Producer Company in India?

The full form of FPC is Farmer-Producer Company. It is a special type of company introduced under the Companies Act, 2013, specifically designed for farmers and agricultural producers.

An FPC is essentially a hybrid between a private limited company and a cooperative society. It allows farmers to organise as shareholders while retaining the cooperative principles of collective benefit.

An FPC empowers farmers to collectively undertake agricultural production, procurement, processing, storage, marketing, and even export of their produce. It enhances bargaining power, reduces intermediaries, and helps members achieve better income and sustainability.

Objectives of the Farmer-Producer Company in India

The key objectives of an FPC under the Companies Act, 2013 include:

• Production & Procurement: Collective farming, sourcing seeds, fertilisers, and raw materials.
• Processing & Marketing: Grading, packaging, branding, and selling agricultural produce.
• Export of Produce: Facilitating access to international markets.
• Technical Services: Training, consultancy, and advisory services to members.
• Insurance Services: Providing crop, livestock, and health insurance for farmers.
• Welfare Measures: Improving the standard of living through infrastructure, education, and employment initiatives.

Eligibility for Farmer-Producer Company Registration

To register a Farmer-Producer Company in India, the following eligibility conditions must be met:

• Minimum 10 individuals who are farmers
• Two or more Producer Institutions
• A combination of 10 or more individuals and Producer Institutions
• All members must be engaged in agricultural or related activities.
• The company must deal with activities directly linked to agriculture, animal husbandry, horticulture, aquaculture, or related rural activities.

Documents Required for Farmer-Producer Company Registration

Essential documents for FPC registration include:

• Identity Proof of all members (PAN Card, Aadhaar Card, Voter ID, Passport, or Driving License)
• Address Proof (Utility bill, Bank statement, Passport)
• Passport-sized photographs of members and directors
• Registered office proof (Electricity bill, Rent agreement, or Ownership papers)
• No Objection Certificate (NOC) from the property owner (if rented)
• Drafted Memorandum of Association (MoA) and Articles of Association (AoA)

How to Register a Farmer-Producer Company?

The step-by-step registration process under the Companies Act, 2013 is:

1. Obtain DSC: Digital Signature Certificates for directors.
2. Name Reservation: Apply to the ROC for name approval through the RUN (Reserve Unique Name) service.
3. Draft MoA & AoA: Clearly define objectives and rules of the company.
4. File Incorporation Forms (SPICe+): Submit incorporation documents to MCA.
5. Obtain Certificate of Incorporation: Once approved, the ROC issues the incorporation certificate and a CIN (Corporate Identification Number).

How Much Time Does It Take to Register a Farmer-Producer Company?

On average, FPC registration in India takes 10–15 working days, depending on:

• Accuracy of documentation
• Speed of DSC/DIN approvals
• MCA and ROC processing time

Farmer-Producer Company Registration Fees

The cost of registering a Farmer-Producer Company depends on multiple factors:

• Government filing fees (varies with share capital)
• Stamp duty (depends on the state of incorporation)
• Professional service charges (if consultants or company secretaries are involved)

Typically, total costs can range from ₹20,000 to ₹50,000 depending on complexity and the number of members.

Benefits of Farmer-Producer Company

Key advantages of FPC formation include:

• Collective bargaining power and reduced input costs
• Better market access with bulk sales and branding opportunities
• Legal recognition under the Companies Act, 2013
• Tax benefits on agricultural income
• Access to government subsidies and grants
• Easier access to credit and funding from NABARD, SFAC, and banks
• Professional management with structured governance

Farmer-Producer Company Business Model

The business model of an FPC is based on collective operations, including:

• Collective farming and procurement of seeds, fertilisers, and equipment
• Processing and packaging for value addition
• Branding and marketing for better market positioning
• Storage and warehousing to reduce post-harvest losses
• Providing training and consultancy to farmers
• Export and large-scale distribution to expand market reach

This model ensures sustainability, scalability, and improved income for farmer members.

Farmer-Producer Company vs Cooperative Society

Compliance Requirements of a Farmer-Producer Company

Key compliance requirements include:

• Annual audits of financial statements
• Annual return filing with ROC
• Statutory reserves to be maintained
• Tax compliance under the Income Tax Act
• Profit distribution based on shareholding and patronage
• NABARD registration for support and funding
• Board meetings & governance norms per the Companies Act

Tax Benefits for Farmer-Producer Company

Farmer-Producer Companies enjoy special tax benefits:

• Exemption for agricultural income under Income Tax provisions
• Reduced tax burden for activities directly related to farming and allied services
• Eligibility for government subsidies and financial assistance, lowering overall operational costs

Government Schemes for Farmer-Producer Companies

The Indian government has launched multiple schemes to support FPCs:

• NABARD Support: Credit, training, and promotional support
• SFAC (Small Farmers’ Agri-Business Consortium): Equity grants and credit guarantees
• Credit Guarantee Fund Scheme: Easy collateral-free loans for FPCs
• Subsidies and Grants: For cold storage, warehousing, and agri-infrastructure
• Central & State Schemes: Tailored programs to strengthen FPCs and boost rural income

Frequently Asked Questions (FAQs)