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LIMITED LIABILITY

PARTNERSHIP
Professor &
Lawyer
Puttu Guru Prasad
Senior Faculty for
Management Studies-
VVIT
Contents LIMITED LIABILITY PARTNERSHIP

1 INTRODUCTION

2 RATIONALE OF LLP

3 HIGHLIGHTS

4 KEY ISSUES AND ANALYSIS

5 COMPARISON

6 CONCLUSION
INTRODUCTION
LIMITED LIABILITY PARTNERSHIP

Idea emerged out of the report of the Naresh


Chandra Committee and Dr. J.J. Irani Committee.

Tabled in Rajya Sabha on 15th December 2006.

Introduced in order to adopt a corporate form.

It has perpetual succession.


LIMITED LIABILITY PARTNERSHIP
RATIONALE OF LLP

Fill the gap between business firms.

Foster the growth of the services sector.

Viewed as a path-breaking reform initiative.

Provides an effective alternate corporate


business vehicle.
HIGHLIGHTS LIMITED LIABILITY PARTNERSHIP

The LLP shall be a body corporate and a legal entity


separate from its partners.

A minimum of two partners will be required for the


formation of an LLP with no limit on the maximum
number of partners

Liability of the partners of an LLP will be limited to


the extent of investment made by them in the LLP.

The concept of whistleblower has been introduced.


HIGHLIGHTS LIMITED LIABILITY PARTNERSHIP

Partnerships, private limited companies and


unlisted public limited companies may convert
into LLPs.

Any change in the partners will not affect the


existence, rights or liabilities of the LLP.

The Central Government shall have powers to


investigate the affairs of an LLP, if required.
KEY ISSUES AND LIMITED LIABILITY PARTNERSHIP

ANALYSIS
It is not specified how LLPs will be taxed.

It is unclear if limit of 20 will also apply to


LLPs.

The Bill does not specify whether capital


gains tax or stamp duty will be payable when
a partnership or a company converts into an
LLP.
KEY ISSUES AND LIMITED LIABILITY PARTNERSHIP

ANALYSIS
Even after this Bill there is no legislation
under which a single-member entity can
function with limited liability in India.
COMPARISON LIMITED LIABILITY PARTNERSHIP

PARTNERSHIPS LLP PRIVATE LIMITED


COMPANIES
Number of 2 to 20. Minimum 2 2 to 50
Members partners. shareholders.
Liability Unlimited. Limited Limited

Registration Registration with Registration with Registration with


RoC optional. RoC required. RoC required.
Dissolution By agreement, By agreement or by By court order once
mutual consent, order of National the affairs of the
insolvency, certain Company Law company have been
contingencies, and Tribunal. wound up or courts
by court order. discretion.
Transfer / Not transferable. Transferable Transferable
Inheritance of
share
COMPARISON LIMITED LIABILITY PARTNERSHIP

PARTNERSHIPS LLP PRIVATE LIMITED


COMPANIES

Documents to be None required, Designated Annual statement


Filed unless registered. partners have to of accounts,
If registered, file annual minutes of Board
annual accounts accounts, and meetings, share
mandatory. submit an annual register, register of
statement on charges.
solvency.
Taxation Income of partners Unspecified. Income of
taxed, not of company is taxed,
partnership. income distributed
to shareholders is
also taxed.
CONCLUSION LIMITED LIABILITY PARTNERSHIP

In trend in various other countries.

Allows individual partners to be


restricted from joint liability of partners.

A great relief to the partners, particularly


professionals like Company Secretaries,
CAs, Advocates and other professionals.

A good beginning towards a long journey.