Limited Liability Partnership (LLP)

khassociates0
Mar 7, 2015
4 min read

A Limited Liability Partnership (LLP) is a partnership in which some or all partners (depending on the jurisdiction) have limited liability. It therefore exhibits elements of partnerships and corporations. In an LLP, one partner is not responsible or liable for another partner’s misconduct or negligence. This is an important difference from that of an unlimited partnership. In an LLP, some partners have a form of limited liability similar to that of the shareholders of a corporation. In some countries, an LLP must also have at least one “General Partner” with unlimited liability.

Salient features of an LLP

a. An LLP is a body corporate and legal entity separate from its partners. It has perpetual succession.

b. The provisions of Indian Partnership Act, 1932 are not applicable to an LLP.

c. Every Limited Liability Partnership shall use the words “Limited Liability Partnership” or its acronym “LLP” as the last words of its name.

d. Every LLP shall have at least two designated partners being individuals, at least one of them being resident in India and all the partners shall be the agent of the Limited Liability Partnership but not of other partners.

e. LLP agreement is not mandatory but in the absence of LLP agreement, mutual rights and liabilities of partners shall be determined as provided under Schedule I to the LLP Act.

Advantages of an LLP

Liability of partners is limited to their agreed contribution in the LLP and no partner is liable on account of the independent or un-authorized actions of other partners.
LLP has more flexibility and lesser compliance requirements as compared to a company.
Simple registration procedure, no requirement of minimum capital, no restrictions on maximum limit of partners.
It is easy to become a partner or leave the LLP or otherwise.
It is easier to transfer the ownership in accordance with the terms of the LLP Agreement.
As a juristic legal person, an LLP can sue in its name and be sued by others. The partners are not liable to be sued for dues against the LLP.
No restriction on limit of the remuneration to be paid to the partners like companies, but the remuneration must be authorized by the LLP agreement and it cannot exceed the limit prescribed under the agreement.
The Act also provides for conversion of existing partnership firm, private limited Company and unlisted public Company into an LLP by registering the same with the Registrar of Companies (ROC).
No exposure to personal assets of the partners except in case of fraud.

Limited Liability Partnerships

A Limited Liability Partnership (LLP) is a partnership in which some or all partners (depending on the jurisdiction) have limited liability. It therefore exhibits elements of partnerships and corporations. In an LLP, one partner is not responsible or liable for another partner’s misconduct or negligence. This is an important difference from that of an unlimited partnership. In an LLP, some partners have a form of limited liability similar to that of the shareholders of a corporation. In some countries, an LLP must also have at least one “General Partner” with unlimited liability.

Salient features of an LLP

a. An LLP is a body corporate and legal entity separate from its partners. It has perpetual succession.

b. The provisions of Indian Partnership Act, 1932 are not applicable to an LLP.

c. Every Limited Liability Partnership shall use the words “Limited Liability Partnership” or its acronym “LLP” as the last words of its name.

d. Every LLP shall have at least two designated partners being individuals, at least one of them being resident in India and all the partners shall be the agent of the Limited Liability Partnership but not of other partners.

e. LLP agreement is not mandatory but in the absence of LLP agreement, mutual rights and liabilities of partners shall be determined as provided under Schedule I to the LLP Act.

Advantages of an LLP

a. Liability of partners is limited to their agreed contribution in the LLP and no partner is liable on account of the independent or un-authorized actions of other partners.

b. LLP has more flexibility and lesser compliance requirements as compared to a company.

c. Simple registration procedure, no requirement of minimum capital, no restrictions on maximum limit of partners.

d. It is easy to become a partner or leave the LLP or otherwise.

e. It is easier to transfer the ownership in accordance with the terms of the LLP Agreement.

f. As a juristic legal person, an LLP can sue in its name and be sued by others. The partners are not liable to be sued for dues against the LLP.

g. No restriction on limit of the remuneration to be paid to the partners like companies, but the remuneration must be authorized by the LLP agreement and it cannot exceed the limit prescribed under the agreement.

h. The Act also provides for conversion of existing partnership firm, private limited Company and unlisted public Company into an LLP by registering the same with the Registrar of Companies (ROC).

i. No exposure to personal assets of the partners except in case of fraud.

(for any services with regard to Limited Liability Partnerships, please contact us at khassociates.consultants@gmail.com. Ph- 0481 3167423. Mob- +91- 85477 59484, 90375 19386).