Limited Liability Partnership.pptx

Introduction to Limited Liability Partnership, LLP Act 2008, Features of LLP, Advantages and Disadvantages, Difference Between LLP and Traditional Partnership

1. Limited Liability Partnership

2. INTRODUCTION Limited liability partnership is a new form of business entity a form of business model which combines the advantages of a corporate structure and traditional partnership structure. Traditional partnership – (mutual agency among partners) – (unlimited liability) – (uncertainty of life) = LLP form of organisation Main drawback of company form of organisation is excessive legal compliance that too has been reduced by LLP form of organisation . LLP combines the advantages of flexibility of organising management on the basis of an agreement and tax benefit like traditional partnership firm and limited liability and status of body corporate like a company It is a hybrid between a company and traditional partnership, much closer to private company form.

3. LLP ACT 2008 Limited liability partnership is governed by LLP act 2008 and LLP rules 2009. The limited liability partnership bill received the assent of the president on 7 January 2009. The limited liability partnership act 2008 was thereafter notified in the official gazette dated 9 January 2009.  The act came into force by way of notification dated 31st march 2009 The act is divided into XIV chapters containing 81 sections and 4 schedules . T he LLP rules 2009 were notified in the official gazette on 1st April 2009. The first LLP was in India established on 2nd April 2009. At present more than 10000 LLPs are registered all over India Limited liability partnership act 2008  applies to whole of India. 

4. Salient features of LLP Proper definition of concept of limited liability partnership does not find any place in the LLP Act 2008 Section 2(1)(n)  of LLP Act 2008 defines LLP as “an incorporated partnership formed and registered under the LLP Act 2008” Salient features of LLP   Body corporate Perpetual succession Change in Partner not affecting LLP Non Applicability of the Indian Partnership Act 1932 Partners Minimum number of Partners

5. Benefits Of LLP It is more flexible to organize the internal structure of LLP. Comparatively, it is complex to organize the internal structure of a company. There is no maximum limit for the number of partners in LLP. Raising and utilisation of funds depends on the partners will. LLP is exempt from Divident Distribution Tax. Professions like CA, CMA, sdvocates , engineers and doctors may prefer to register as LLP. No requirement of Compulsory audit.

6. Disadvantages of LLP Any act of a partner without the other partner may bind the LLP. LLP cannot raise money from public. Angel investors and venture capital firms generally prefer not to invest in LLP.

7. S.no Basis LLP Traditional partnership 1. Liability Limited Unlimited 2. Act LLP act 2008 The Indian Partnership act 1932 3. Incorporation/ registration Compulsory Not Compulsory 4. Legal entity Separate Legal entity No Separate Legal entity 5. No of Partners Minimum 2 and maximum – no limit Minimum 2 and maximum 20 6. Administrating Authority Registrar of Companies Registrar of Firms 7. Legal Compliance Statutory Compliance Not Many 8. Implies agency Every partner of LLP is an agent of LLP firm. Every partner of firm is an agent of firm and also of other partners . General Comparison between LLP and traditional Partnership

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