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CS Executive · Setting Up of Business, Industrial and Labour Laws · Startups and its Registration

Kaveri Robotics LLP was formed in Chennai by transferring the existing machinery and customers of a partnership firm that had been running a similar business for six years. The LLP now applies for DPIIT startup recognition, claiming to be an innovative venture. Which statement correctly reflects the eligibility position?

The LLP is not eligible. A startup must not be formed by splitting up or reconstructing an existing business, and Kaveri Robotics LLP was created by transferring the assets and customers of an older firm. A new registration number does not cure this disqualification.

  1. AIt is eligible because the LLP is a new legal entity with a new registration number
  2. BIt is not eligible because an entity formed by splitting up or reconstructing an existing business is not treated as a startupCorrect
  3. CIt is eligible provided its turnover is below Rs 100 crore in any year
  4. DIt is eligible only if the partners are all first-generation entrepreneurs

Explanation

The startup definition requires that the entity is not formed by splitting up or reconstruction of a business already in existence. Here the LLP took over the machinery and customers of an existing firm, so it is a reconstruction. The turnover limit is not the issue, and there is no first-generation requirement.

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