BUSINESS REGULATIONS (B.

COM)

Module V- Limited liability partnership Act

Limited liability partnership
Limited liability partnership is a combination of both partnership and
corporation. It has the features of both the forms. In India LPP was
introduced in April 2009.
LLP Agreement
It means any agreement the partners of the limited liability partnership
or between the LLP and its partners and which determine mutual rights
and duties of the partners.
Features/ Nature of LLP
 It has separate legal entity.
 It have continuous existence.
 At least two partners.
 Partners may be individual or body corporate.
 It has limited liability.
 It may be wound up by voluntarily or by tribunal.
Advantages of LLP
1. Easy formation
2. Separate legal entity
3. Limited liability
4. Perpetual succession
5. Combined benefits of partnership and company
6. Flexibility
7. Lower rate of taxation
8. Easy transferability of ownership
Disadvantages of LLP
1. Less credibility
2. Joint liability
3. Public disclosure
4. Retaining profit
5. Unlimited liability
Difference between LLP and partnership
LLP Partnership
Formed asper LLP act 2008. Formed asper partnership act 1932.
It has a separate legal entity. It has no separate legal entity.
Registration is compulsory. Registration is not compulsory.
Minimum number of partner is two. Two to twenty partners.
Foreign nationals can be partner. Foreign nationals cannot be partner.
It has perpetual succession. It comes to end at the time of death,
retirement or insolvency of partners.
Name the end word limited liability No rule for the name.
partnership.
Comparison and difference between LLP and company
LLP Company
Formed by LLP Act 2008. Formed asper companies Act 2013.
Registration is compulsory Registration is compulsory.
It has separate legal entity. It has separate legal entity.
It has perpetual succession. It also has perpetual succession.
Liability limited to contribution to Liability limited to value of shares.
LLP.
Minimum number of partners is 2. Minimum number of members
2- Private company
7- Public company
No limit to maximum partners. Maximum number of members
200- Private company
No limit- Public company
Incorporation by registration of LLP
 In order to incorporate an LLP, two or more persons associated for
carrying on a lawful business with a view to profit shall subscribe
their names to an incorporation document.
 It shall be filed with the prescribed fees, and in the prescribed by the
registrar of the state where the registered office of the LLP is
situated.
 A statement in the prescribed form should also be filed with the
incorporation document.
 Incorporation document contains the following manner.
a) The name of limited liability partnership.
b) The nature of proposed business.
c) The address the registered office.
d) The name and address of the partners.
e) The name and address of the designated partners.
 When all the formalities are compiled with the registrar will register
the LLP in the name specified there in.
Winding up and dissolution of LLP
 Voluntary winding up
 Any LLP may be wound up voluntarily if the LLP passes a resolution.
 Approval of at least three fourth of the total partners is required.
 If LLP has creditors, the approval of such creditors is required.
 Winding up by tribunal
 If the LLP decides that LLP was wound up by the tribunal.
 If the LLP was unable to pay its debts.
 If LLP acted against the interest of sovereignty and integrity of India.
 If there are less than 2 partners for a period of more than 6 months.