| Overview |
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The concept of Limited
Liability Partnership (LLP) has been introduced
in India through Limited Liability Partnership
Act, 2008. In this commercial vehicle one
partner is not responsible or liable for another
partner's misconduct or negligence. Unlike the
company shareholders, the partners have the
right to manage the business directly. An LLP
also limits the personal liability of a partner
for the errors, omissions, incompetence, or
negligence of the LLP's employees or other
agents. |
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| Limited Liability partnership provides all
the benefits of an incorporated company and a
partnership firm as it is a unique business
entity model which eradicates all the
disadvantages of both company and a partnership
firm. In an LLP, all partners have limited
liability for each individual's protection
within the partnership, similar to that of the
shareholders of a limited company.
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| International Status
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The limited liability
partnership is a very popular form of business
vehicle in United States of America and United
Kingdom. In United States of America limited
liability partnership has emerged in 1990’s. In
UK it is introduced a decade ago under the
limited liability act 2000. This act was enacted
as a law in April 2001. The share of Limited
Liability Partnership is certain in the growth
and development of the economies of all the
developed nations. |
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| Introduction in India |
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India is a springing market for investments.
The government of India is vigorously
promoting infrastructure development as one
of the key area of Focus. It offers high
Prospects for growth and earning potential
in all areas of business. Introduction of
limited liability partnership company
service in India will not only bring the
Indian Partnership in the frame work of
international practices but also will
provide an effective alternative corporate
business. The main purpose of limited
liability partnership is growth of Indian
economy with international acknowledgement
of the roles played by technical and
professional experts. The trend of such
business enterprise is fast catching in
India and across its territories making it
popular word wide
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| Steps to be taken to Set
Up Limited Liability Partnership |
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Two or more persons associated for carrying
on a lawful business with a view to profit
shall subscribe their names to an
incorporation document.
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The incorporation document shall be filed in
such a way as may be prescribed with the
registrar of the state in which the
registered office of the limited liability
partnership is to be situated.
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A statement be filed in a prescribed form
made by either an advocate, or a company
secretary or charted accountant who is
engaged in the formation of limited
liability partnership, and by any one who
subscribed his name to the incorporation
document, that all the requirements of this
act and the rules made there under have been
complied with in respect of incorporation.
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| The incorporation
documents |
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| Two or more persons associated for carrying
on a lawful business with a view of profit shall
subscribe their names to an incorporation
document. |
| The incorporation document shall be filed in
such a way as may be prescribed with the
registrar of the state in which the registered
office of the limited liability partnership is
to be situated. |
| A statement be filed in a prescribed form
made either by an advocate, or a company
secretary or charted accountant who is engaged
in the formation of limited liability
partnership, and by anyone who subscribed his
name to the incorporation document, that all the
requirements of this act and the rules made
there under have been complied with in respect
of incorporation. |
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| The necessary incorporation documents |
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| Be in a form as may be prescribe State the
name of the limited liability partnership State
the proposed business of limited liability
partnership State the address of the registered
office of limited liability partnership State
the name and address of the person who are to be
the partners of the limited liability
partnership State the name and address of
designated partners of limited liability
partnership When the requirements imposed by the
clause (B) and (C) of sub section (1) of sec 11
have been complied with, the registrar shall
retain the incorporation document and unless the
requirement imposed by clause (A) of that sub
section has not been complied with, he shall
within a period of 14 days Register the
incorporation document. Give a certificate of
incorporation that the limited liability
partnership is incorporated by the name
specified there in. Every limited liability
partnership shall have a registered office to
which all communication and notices may be
addressed and where they shall be received.
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On registration, a limited liability
partnership shall by its name be capable of
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• Suing and being sued
• Acquiring, owning, holding & developing/
disposing of property whether movable/
immovable, tangible/ intangible.
• Having a common seal if it decides to have
one.
• Doing and suffering such other acts as
bodies corporate may lawfully do and suffer.
Every limited partnership shall have either
words ‘Limited Liability Partnership’ or the
acronym “LLP” as the last two words of its
name. No limited liability partnership shall
be registered by a name which in the opinion
of the central government is
• Undesirable or,
• Identical or too nearly resemble to that
of any partnership firm or limited liability
partnership or body corporate.
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| Advantages and
Disadvantages of Limited Liability Partnership |
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| • Separate legal entity |
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| • Easy to establish |
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| • Flexibility without imposing detailed
legal and procedural requirements
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| • Perpetual existence irrespective of
changes in partners |
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| • Internationally renowned form of business
in comparison to Company
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| • No requirement of minimum capital
contribution |
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| • No restrictions as to maximum number of
partners |
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| • LLP & its partners are distinct from each
other |
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| • Partners are not liable for Act of other
partners. |
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| • Easy to dissolve or wind-up |
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| • Professionals like CS / CA / CWA / Lawyers
can form Multi-disciplinary Professional LLP
firms. |
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| • No requirement to maintain statutory
records except Books of Accounts. |
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| • Less Cost of formation (Compared to a
company) |
