Lecture Objectives

• To know about the features of LLP

• Identify the differences between the forms
of organization
Meaning :PARTNERSHIP

According to section 4, Partnership Act of 1932

"Partnership is defined as the relation between two or

more persons who have agreed to share the profits
according to their ratio of business run by all or any one
of them acting for all".
Meaning : COMPANY

A company is:
an association of many persons who contribute
money or money’s worth to a common stock and
employ it in some common trade or business
and who share the profit or loss arising there
from.
 Company
Vs.
Partnership
 Company Partnership
Governing Act Companies Act 2013 Partnership Act 1932
Registration Registration is Registration is optional
compulsory
Legal Status It has separate Legal No separate Entity
Entity
Liability Limited liability Unlimited liability
Name of the Entity Must have words...Pvt Any name as per the
Ltd /Ltd./ OPC choice

Transfer of Interest Shares are Freely Cannot transfer without

Transferable the consent of the
partners
Agency Directors are the agents Partners are agents of
to company and not the firm and other
others. partners
Powers Can only carry out Can do anything that the
objectives in the partners agree to do.
memorandum
 Company Partnership
Creation By law By agreement

Perpetual succession Perpetual Succession No perpetual succession

Minimum members For Public Company : 7 Min. Partners : 2

For Private Company : 2

Maximum Members Unlimited :Public 100

company
200 :Private Company

Maintenance of Books Maintenance and No such compulsion by

Auditing by qualified law
auditors annually

Charter document MoA Partnership Agreement/

deed
 Company Partnership
Formalities of MoA, Various e forms, Partnership deed, forms
Incorporation prescribed fee and affidavit, prescribed
With Registrar of fee
companies With Registrar of Firms

Can it sue third party Being legal entity can Only registered firm can
sue sue

Can Foreign national Yes subject to certain No

enter in Indian laws
business?

Ownership of assets Independent of the Partners have joint

partners has ownership ownership of all the
assets

Dissolution May take place by May take place by

voluntarily or by the mutual agreement,
order of NCLT or under insolvency, court order
IBC
 Company Partnership
Annual filing with the Annual statement of No return is to be filed
Registrar accounts, statement of
solvency, annual return
to be filed every year
Digital signature Required as e forms No requirement
are filled electronically
Meaning :Limited Liability Partnership

LLP Act, 2008 passed by Lok Sabha on 12th of

December 2008 and the President gave assent to the
Bill on 7th January 2009.

Limited Liability Partnership means a partnership

formed and registered under LLP Act,2008
 INTRODUCTION
 Limited Liability Partnership
 Hybrid between private ltd. company & partnership firm

Partnership Limited
Private Limited Liability
Firm Companies Partnership

 Indian government passed LLP Act on 09/01/2009

 LLP Act,2008 gets notified w.e.f March 31st, 2009
 The first LLP was registered on April 2,2009
 Incorporation
Requirements
Partners:- Minimum two designated partners are required and no
limit on maximum
Capital:- No limit on maximum and minimum capital contribution
Names:- At least two proposed names are required
Objects:- As per LLP Agreement
Documents:-1) ID, Address proof and photo of all Partner and DPs
(Designated partners).
2) LLP Agreement duly stamped as per relevant Stamp Act
of the State.
3) Subscriber Statements
4) Consent Letter from all Partner and DPs as per form9
5) Proof of Address of Registered Office
 Features :

1. Body corporate

2. Separate legal entity

3. Perpetual succession

4. Non-applicability of IPA
provisions

5. Hybrid of companies &

Partnerships
FEATURES
 Examples
• WOMEN ART CARE SOLUTION LLP
• WHITE WINGS FOODS AND BEVERAGES LLP
• WEAVERNEST ADVISORSLLP
• VICTORY AUTOSPARES LLP
• VALUECO INNOVATIONSLLP
• STONEPLATE RESTAURANT LLP

• http://www.mca.gov.in/MinistryV2/incorporatedorclosedd
uringthemonth.html
Company
Vs.
LLP
 Company LLP
Prevailing Law Governed by The Governed by LLP
Companies act,2013 act,2008

Motive Can be formed for profit Can be formed only for

or service motive profit motive

Charter document MoA defines scope of LLP agreement denotes

operations the scope of operations

Common seal Must have its own official May have its own
signature common seal

Formalities of MoA, Various e forms, LLP agreement, Various

Incorporation prescribed fee to be filed e forms, prescribed fee
with the Registrar of to be filed with the
companies Registrar of LLP
 Company LLP
Minimum members For Public Company : 7 Min. Partners : 2
For Private Company : 2
For OPC : 1
Maximum Members Public company = No limit on maximum
unlimited number of partners
Private Company=200

Liability of Generally limited to the Limited to the extent of

partners/members amount stated in MoA their contribution towards
LLP
Transfer of Shares transmitted to Legal heirs cannot be
share/partnership legal heirs partners but can get
rights in case of death refund of contributed
capital plus share in
accumulated profits
Transferability of Free transfer Transfer subject to the
interest LLP agreement
 Company LLP
Voting rights As per number of shares Decided as per LLP
held by the members agreement
Admission as By buying shares Admitted as per LLP
partner/member agreement

Meetings Board and general No such provision

meetings are required to
be conducted at proper
time
Cessation as By selling the shares As per the LLP
partner/member agreement OR prior 30
days notice to the LLP

Share certificate Ownership is evidenced Ownership is evidenced

by share certificates by LLP agreement
 Company LLP
Maintenance of Meeting minutes are to May decide to record
minutes be recorded meeting minutes
Audit of accounts Accounts to be audited Accounts to be audited
annually as per The annually as per The LLP
companies act,2013 act,2008 if its turnover
exceeds 40 lacs or the
capital contribution
exceeds 25 lacs in any
financial year.

Cost of formation High cost specially in Comparatively less cost

case of public companies is involved
Comparison between firm and LLP
Basis Partnership Firms LLP
Governing Partnership Act, 1932 Limited Liability Partnership
Law Act, 2008
Registration Not Compulsory; but is Compulsory
preferred
Creation By partnership Agreement By Law
Legal Status Partners collectively known LLP has separate legal status
as ‘Firm’; no separate legal apart from partners
status
Succession Firm would cease to exist LLP would not be affected on
on change in partnership, change in partnership
unless otherwise provided in (Perpetual Succession)
agreement
Ownership of Partnership cannot own LLP can own assets in its own
Assets assets in its name; assets name
must be in name of Partners
Liability of Unlimited Limited
Partners
Minor’s Minor can be admitted to Law is silent on position of
Position benefits of Partnership Minors
MULTIPLE CHOICE
QUESTIONS
• An ordinary partnership business can
have:

(a) Not more than 50 partners.

(b) Not more than 20 partners.
(c) Any number of partners.
(d) Any number more than 2 partners.
• A banking partnership business can have:

(a) Not more than 10 partners.

(b) Not more than 20 partners.
(c) Not more than 50 partners.
(d) Any number of partners.
• The written agreement of partnership is
called:

(a) Partnership deed

(b) Articles of association
(c) Memorandum of association
(d) Certificate of incorporation