Shivangi Singh LL.M (Business Law)

Essay on
Limited Liability Partnership – Critical Analysis
Shivangi Singh
LL.M (Business Law)
INTRODUCTION OF COMPANY
Company
Company law is formed for the business purpose with an association of persons having legal
personality and members are separate from the company. Company is incorporated by an Act of
parliament, by charter or by registration under the company Act. For the purposes of carrying of
business likeminded people can form an association. Company law is a corporate body and
separate legal entity. Corporate body means a body which is legal person created by process of
natural birth .company law is capable of enjoying all the liabilities and rights same as natural
person. The word 'Organization' is an amalgamation of the Latin word 'Com' signifying "with or
together" and 'Agonies' signifying "bread". initially, it alluded to a gathering of people who took
their suppers together. An organization is only a gathering of people who have met up or who
have contributed cash for some regular individual and who have fused themselves into a
particular lawful element as an organization for that reason. Under Halsbury's Laws of England,
the expression "organization" has been characterized as an assortment of numerous people joined
into one body under exceptional control, having interminable progression under a fake structure
and vested by the strategies of law with the limit of acting in a few regard as an individual,
especially for taking and conceding of property, for contracting commitment and for suing and
being sued, for getting a charge out of benefits and invulnerabilities in like manner and
practicing an assortment of political rights, pretty much broad, as per the plan of its foundation
or the forces upon it, either at the hour of its creation or at any ensuing time of its reality. In any
case, the Supreme Court of India has held on account of State Trading Corporation of India v/s
CTO that an organization can't have the status of a resident under the Constitution of India.
An organization as an element has a few particular highlights which together make it an
extraordinary association.
As per Lord Lindley, "By an 'organization' is implied a relationship of numerous people who
contribute cash or cash's worth to a typical stock and utilize it for some normal reason. The basic
stock so contributed is indicated in cash and is the capital of the organization. The people who
contribute it or to whom it has a place are individuals. The extent of funding to which each
accomplice is entitled is his offer."
As indicated by Prof. Haney: "An organization is a counterfeit individual made by law having a
different element with a ceaseless progression and a typical seal."
As indicated by Justice James "An organization is a relationship of people joined for a typical
article."
As indicated by Section 3 of organizations Act "Organization implies an organization shaped
and enlisted under this demonstration or a current organization. ‘Existing Company' signifies an
organization shaped and enlisted under any of the past Company Laws.
1.2 HISTORY OF COMPANY

Origin of company Law in India is based on English Law. First companies act in India is known
as joint stock company Act 1850 which was taken from English companies Act of 1844.
For registration in Joint Stock Company act prior permission is needed from Calcutta, Madras,
and Bombay High court. But this act has drawback that it only includes companies having
unlimited liability.An amendment is done in joint stock Company in 1857, which includes both
limited and unlimited company, but in case of banking and Insurance they are categorized only in
unlimited liability company. After amending the act in 1860 banking and insurance are
categorized in limited and unlimited liability company. Joint stock company act 1866 repealed all
the earlier provisions and included the laws governing incorporation, regulation, wounding up of
company. Than in companies act 1913, defined the laws and functions of companies, commercial
organization and institution of company. Companies’ act 1936 is related to the provisions related
to the directors, managing agents, investigation of any fraudulent activity and guarantee of
security and payment of provident fund to its employees.
After Second World War in 1944 and after independence in 1947.A needs for making companies
act is felt by the government and they made a committee on 25 October 1950 including 12
members and Chairman HC Bhabha and they prepared report on 1952. On this report a new
company’s act 1956 came into force and is applied on whole India except Nagaland, Jammu &
Kashmir and union territory of Goa, Daman & Diu, with some exemption & modification .Main
objective of this act is to provide social and economic needs to the country.
Company bill passed in Lok Sabha on 18 December 2012 and in Rajya Sabha on 8 August 2013
and assent is given by president on 29 August 2013 and finally come into force on September
2013.
1.3 TYPES OF COMPANY

1.3.1 ON THE BASIS OF INCORPORATION
• CHARTERED COMPANY
In olden times, Establishment of company was done by the crown, charter. Chartered company
aimed for exploitation of commercial opportunities. Company formed by chartered company is
East India Company. Now Chartered Company does not exist.
• STATUTORY COMPANY
Statutory company formed by parliament act or by the state and central legislature. For providing
benefit for the people it was created and has limited liability. At low rate of interest, required
capitals can be raised by floating bonds. Annual report are must be provided to parliament. (RBI,
SBI)
• REGISTERED COMPANY
Registered company is a company which was registered or incorporated under companies’ act of
1956 or 2013. After registering under this act Incorporation certificate is given by registrar of
company
1.3.2 ON THE BASIS OF LIABILITY

• UNLIMITED COMPANY
Unlimited company is defined in section 2(92) as A company not having any limit on the
liability of its members extends to the whole amount of company’s debt and liabilities, but he It
will entitle to claim the contribution from other members. Incorporation can be done with or
without share capitals and share capital can be increased or decreased without any restrictions.
With memorandum of association or article of association unlimited company must be registered
at company’s house under the provisions of companies’ act 2006. Unlimited company has
specific advantages and disadvantages.
• LIMITED COMPANY
It is sub-divided in two parts
• Limited by guarantee
• Limited by shares
LIMITED COMPANY
Section 3(2) – “company can be formed either by limited by shares or limited by guarantee”.
• LIMITED BY GARANTEE
Section 2(21) - “companies limited by guarantee as a company having the liability of its
members limited by the memorandum. To such amount as the members may undertake to
contribute to the assets of the company in event of its being wound up”. Payment of guaranteed
amount is to be given when company has gone in liquidation”.
• LIMITED BY SHARES
Section 2(22)- It defines company limited by shares as, a company having the liability of its
members limited by the memorandum to the amount, if any, unpaid on the shares respectively
held by them.
• PRIVATE COMPANY
Section 2(68) - of the companies Act 2013, In Private Company, a company have minimum
paidup share capital of one lakh or such higher paid up share capital as may be prescribed.
Private company required minimum two members. Company in its article of association contains
certain restrictions.
Share transfer rights are restricted.
Members are limited up to two hundred members in case of one Person Company.
A Private company means a company which;
Rights are restricted for transfer of shares
Maximum number of members is limited up to fifty.
To subscribe for the securities, invitations to the public are prohibited.
One person and small companies are included.
For auditing of companies maximum twenty companies
• PUBLIC COMPANY
A company is not a private company.
Minimum paid up share capital is five lakhs.
A public company is accompanied that has limited liability and offers shares to general public.
Minimum seven members are required. No maximum limit is mentioned. Documents required to
be filled by public company with the registrar of companies.
Memorandum of association: It includes objective of the company, total capital, name of the
company.
Article of association: it contains rules and regulations of internal management of company.
Prospectus: It must register and issue a prospectus or a document in lieu of a prospectus.
1.3.3 ON THE BASIS OF CONTOL
• GOVERNMENT COMPANY
Company in which at least 51% of paid up share capital is held by central, state or both
government. A company includes those are subsidiary of government company.
7
• HOLDING COMPANY
It exists for the purpose of owning assets. It provides greater control on small investors and has
independent entities. It formed for the purpose of purchasing and owning shares in other
companies.
• ASSOCIATE COMPANY
It means a company in which that other company has a significant influence, but not subsidiary
company having influence and includes Joint Venture Company.
• SUBSIDIARY COMPANY
The Company that is owned by another company is known as parent company or holding
company.
1.1.4 OTHER TYPES OF COMPANY
• ONE PERSON COMPANY
Section 2(62) - It defines one person company as a company which has only one person as a
member. The memorandum of one person company has to state the name of some other person,
which his prior written consent in the prescribed form, who will in the event of death of the
subscriber to the memorandum or his incapacity to contract, become the member of the
Company. A written consent of such person has to be filed with the Registrar at the time of
incorporation of the company. Only one director is compulsory for such a company. Every
company shall have at least one director who has stayed in India for a total period of not less
than 182 days in previous calendar year would have to be compiled with by one person himself
or in alternative he may have to keep s a director for such compliance. In case of one Person
Company, small company and dormant company, the requirement as to meeting is deemed to
Have been complied with if at least one meeting of board has been conducted in half calendar
year and gap between two meetings is not less than 90 days.
• SMALL COMPANY
It is defined in Section 2(85). Minimum share capital exceed to fifty lakhs and maximum as may
be prescribed but not exceed to five crore rupees.
Turnover of which as per its last profit and loss account does not exceed two crore rupees and
not more than twenty crore rupees. Nothing shall apply to
A holding or a subsidiary company
Company registered in section 8
Company or body corporate governed by any special act.
• SECTION 8 COMPANIES
The Companies Act characterizes a Section 8 organization as one whose goals is to advance
fields of expressions, trade, science, look into, training, sports, good cause, social government
assistance, religion, condition insurance, or other comparable targets. These organizations
additionally apply their benefits towards the assistance of their motivation and don't deliver any
profit to their individuals. These organizations were recently characterized under Section 25 of
Companies Act, 1956 with pretty similar arrangements. The new Act has, in any case,
recommended more goals that Section 8 organizations can have. Renowned instances of Section
8 organizations incorporate Federation of Indian Chambers of Commerce and Industry (FICCI)
and Confederation of Indian Industries (CII). The target of these organizations is encouraging the
development of exchange and business and India.
1.4 CHARACTERISTICS OF COMPANY
• CORPORATE PERSONALITY: It means that company is individual personality and

different from its members. It has its own name, seal and have own assets. Company can own
property, borrow money, have a bank account and can sue or can be sued same as an individual.
If shareholders hold full share capital, they are not liable for the act of company.
● LIMITED LIABILITY: Company having limited liability is great advantage in ease of

doing business. The liability of shareholders is only up to nominal value as they are not
liable to pay the value or debts in company. Shareholders are only limited to be the
member.
• PERPETUAL SUCCESSION: In Section 9 of companies act it is given that

Incorporated Company has perpetual succession. Perpetual succession means that
company’s existence shall not affect in case of death or insolvency of members.
• TRANSFERABILITY OF SHARES: In Section 56 it was provided that as

manner given in article of association of the company, member’s interest or shares are
property which are movable and transferable. By selling Shares in open market it can be
dispose by the members of incorporated company and invested amount are get back to
the members.
• CORPORATE FINANCES
In minimum time, maximum capital can be raised and shares are transferable. With the help of
public subscriptions or by way of shares capitals can be raised in incorporated company.
• CENTRALISED MANAGEMENT: For attracting professional persons, independent

functioning plays an important role as members feel independent and can achieve high targets of
production. In management of company shareholders only have formative control. Directors are
liable for the management of company and policy matters are decided in the board of directors
meeting.
• ARTIFICIAL LEGAL PERSON

A company is created by law, other than natural birth and not has any physical attributes in
comparison of natural person. A company cannot enjoy any fundamental rights and is not a
citizen.
• COMMON SEAL
Two directors are witnessed to bind the documents bearing common seal. A company cannot
sign for itself because they are artificial person.
1.2 INTRODUCTION OF PARTNERSHIP
Meaning of partnership in general term – “Two or more persons agreed for carrying business
relations for earning of profit.”
Section 4 of Indian partnership act 1932 defines partnership as: “Partnership is the relation
between persons who have agreed to share the profits of a business carried on by all or any of
them acting for all.”
Indian Partnership act 1932 includes 74 sections, earlier it was a part of Indian contract act1872
in chapter XI from 239-266.Indian partnership act came into force on 1st October 1932 but one
section of this act came into force on 1st October 1933 which was related to impact of non-
registration of firm (section 69). Maximum number of partners in partnership is not provided in
partnership act but it was provided in companies’ act 1956 as 10 to 20. In companies act 2013 the
limit is increased up to 50 if it exceeds more than 50 partners than it was called as illegal
association.
• ESSENTIALS OF PARTNERSHIP
There must be a contract.
Two or more persons are required. (Natural and artificial persons)
Business must be carried by agreed parties.
Profits must be shared.
There must be Mutual agency.
1.2.1 FEATURES OF PARTNERSHIP
• FORMATION OF PARTNERSHIP
Formation of partnership is done in Indian partnership act. An agreement must be signed by two
or more partners for valid business purpose and profit and losses must be distributed equally.
Registration is not compulsory in partnership or can be optional.
• LIABILITY
Liability is unlimited in partnership. It means that in case of loss, partners must sell their
business assets and their personal property for paying debts to the other party.
• RISK BEARING
Risk must be distributed among the partners equally in partnership. Only one partner is not liable
for bearing the risk.
• DECISION MAKING CONTROL
Decision must be taken by all partners for business and control is in the hand of all the partners.
• CONTINUITY
In case of death, insolvency or insanity partnership business must not be continued if there are
only two partners, but if there are more than two partners, so by death of third partner if the
present partners wish to continue the business they are required to renew the partnership contract
or make a new contract.
• MMEMBERSHIP
For membership, minimum two partners and maximum fifty are required. For banking firm 10
partners are necessary.
• MUTUAL AGENCY
All partners are liable for the profits or losses which were done by single partner. Partners must
take mutual decision for the business.
● Number of Partners
At least two people Legally binding Relationship: The connection between the accomplices is
made by contract. They go into organization through an understanding (verbal, composed or
inferred). In the event that the understanding is recorded as a hard copy, it is called 'Organization
Deed'.
● Skill of Partners: Individuals must be able enough to do as such. That implies minors,
crazy people and wiped out people are not qualified to become accomplices. Minors must
be admitted to the advantages of association for example he can have an offer in the
benefit, however can't turn into an accomplice.
● Sharing of Profit and Loss: They share benefit in any proportion as commonly
concurred between them. Without any such understanding, they share it similarly.
● Boundless Liability: The accomplices have joint and boundless risk. Banks can make a
case for the individual properties of any individual accomplice or all the accomplices
together. Indeed, even a solitary accomplice might be called upon to pay the obligations
of the firm. Obviously, he can get back the cash due from different accomplices.
● Head Agent Relationship: Every accomplice is a specialist when he is following up in

the interest of others and he is a primary when others follow up for his sake. It ii
fundamental that there ought to be shared trust and confidence among the accomplices in
light of a legitimate concern for the firm.
● Move of Interest: No accomplice can sell or move his enthusiasm for the firm to
anybody without the assent of different accomplices.
Legitimate Status: An organization firm is only a name for the business overall. The firm
methods accomplices and the accomplices mean the firm. Law doesn't perceive the firm as a
different substance particular from the accomplices.
Intentional Registration: Registration of association isn't obligatory. Be that as it may, since

enrollment qualifies the firm for a few advantages, it is viewed as alluring. For instance, on the
off chance that it is enrolled, any accomplice can document a body of evidence against different
accomplices, or a firm can record a suit against outcasts if there should be an occurrence of
questions, claims, contradictions, and so forth
.Points of interest of Partnership Firm

Simple to Form: The organization can be handily composed. No confused lawful conventions are
associated with the foundation. The accomplices go into an organization understanding and start
business.
Good Credit Standing: The organization appreciates a superior FICO assessment according to
loan bosses. As the risk of each accomplice in the association is boundless the money related
foundation can securely propel advances to the organizations.
More noteworthy Management Ability: As there are numerous accomplices associated with the
activity of a business, the firm can disseminate the obligations and duties to each accomplice for
which one is best qualified and fit. It can advance productivity of the firm.
Benefit Incentive: The benefits are shared by the accomplices according to understanding. They
are urged to accomplish more work to win more benefit. Higher the benefits, higher will be the
accomplices share.
Favorable circumstances of Secrecy: The accomplices can remain quiet about the business
privileged insights. The firm isn't legally necessary to distribute its benefit and misfortune record
and accounting report.
Brake on Hasty/quick Decisions: As obligation of accomplices is boundless, the accomplices,

hence, will in general be cautious in taking business choices. They receive sound practices in the
lead of business. There is a brake on rushed/fast choices.
Extraordinary Protection to Minor: A demise or lunacy of an accomplice may not cause
disintegration of the association. His minor can be conceded uniquely to the advantages of
accomplices with the assent of different accomplices.
Sharing of Risk: In association each accomplice bears the dangers separately as it is simpler
contrasted with sole ownership.
Inconveniences of Partnership Firm
Boundless Liability of Partners: One of the essential imperfections of organization is that the
accomplices are by and by and mutually answerable for all the obligations of the firm. In the
event that the business endures misfortunes and the business resources are not adequate to fulfill
the inquirers on liquidation, the individual property of one or beyond what one accomplices can
be sold under the Court request for the leeway of the obligations of the business. The rich and
well off people, in this manner, maintain a strategic distance from to be enrolled in organization
in light of the fact that every individual accomplice in at risk for the association's obligation.
Restricted Life of Firm: The span of the organization is constantly unsure. On the off chance that
accomplice bites the dust, harmed, pulls back, sells his advantage, or another accomplice is
conceded into the business, or their emerges contrast, the association may reach a conclusion.
There are potential outcomes of the disintegration of the firm because of inward contrasts.
Debates among the Partners: The accomplices ought to be similarly invested, have a typical goal,
be huge hearted, have a cool disposition, ought not pointlessly create erosion and turmoil among
the accomplices. The picking of accomplice is in actuality like picking a spouse. Wed in
scramble and atone in relaxation. In the event of debate among the accomplices, snappy move
ought to be made by all the accomplices for the healing measures.
Plausibility of Misuse of Resources: It is known to every single accomplice that the assets of the
firm are claimed mutually. There can and arises the abuse of assets by an
accomplice/accomplices.
Loss of Business Opportunities: if there should be an occurrence of contrasts among the

"accomplices, a deferral may happen in dynamic. This can make misfortune the firm.
Absence of Public Confidence: Partnership type of association may not appreciate open certainty
because of absence of straightforwardness, exposure and nonattendance of guidelines.
1.2.2 TYPES OF PARTNERSHIP
 PARTNERSHIP FOR A FIXED PERIOD

In this type of partnership, partnership is done for a fixed period of time.
If two partners decided for a partnership for a term of five years, after five years partners have
two options as they can dissolve the partnership or can continue the partnership by converting
the partnership into partnership at will.
 PARTICULAR PARTNERSHIP
In particular partnership, there must be a particular project for carrying the partnership. No
specific time limit is provided in this type of partnership. The multiple transactions must be done
by the partners. After the completion of project, they also have two options as they can dissolve
or convert into partnership at will.
 PARTNERSHIP AT WILL
Time limit and project is not specified in partnership at will. Partnership at will work on the
will of the partners. Partnership can be dissolved at their own will. If there are only two partners,
so By giving notice to other partner they can dissolve the partnership but if there are more than
two partners and one partner want to exit so the partnership is dissolve and not the partnership
firm.
1.2.3 TYPES OF PARTNERS
 ACTIVE PARTNERS
Active partners participate in daily management of partnership business having unlimited
liability and those who got shares in profit or loss done in the partnership business. They also
contribute the capital.
 SLEEPING OR DORMANT PARTNERS

Sleeping or dormant partner does not participate in the management of the business and he
cannot advise and not have any right to interfere in the decision taking for the business. Partner
will contribute the capital, get shares in loss or profit and have unlimited liability.
 SECRET PARTNER
Secret partner is a partner whose relation with the firm is not known to the outsiders. Secret
partner will contribute the capital, participate in the business management and have unlimited
liability.
 NOMINAL PARTNER
Nominal partner is not the real partner of firm and does not contribute the capital, not participate
in the business management. Liability is limited and does not get shares in losses.
Nominal partner gives his name or reputation for the benefit of the firm. He is liable for the debts
to the outsiders because his name and reputation is used for the benefit.
TYPES OF NOMINAL PARTNER
NOMINAL PARTNER
A Person who accepts himself as partner by conduct or words of its own and is liable for the
debts taken by using his reputation and name.
NOMINAL PARTNER BY HOLDING OUT

A partner who does not object to be called as partner but he himself not calls him as a partner. He
is liable for the debts which were taken by using his name.
MINOR PARTNER
According to partnership act 1932- Minor cannot become partner.
He can be a partner only for the benefits. He does not contribute the capital and not allowed to
participate in the business management. He will not get share in case of loss. When he attains
the age of majority he will give a public notice about he will remain as partner or not, if he will
not give any notice than he will become an active partner, his liability will unlimited, he will get
share in profit or loss and can participate in business management.
1.3 LIMITED LIABILITY PARTNERSHIP ACT
In India, organizations for the most part work as organizations, sole ownership and association.
The presentation of LLP has given a stage too little and medium endeavors and expert firms of
organization secretaries, sanctioned bookkeepers, advocates and so on to lead their
business/calling proficiently which would, thusly, increment their worldwide seriousness.
Constrained Liability Partnerships have gotten very well-known over the most recent couple of
years.
Requirement for Enactment of Limited Liability Partnership Act
"With the development of the Indian economy, the pretended by its business visionaries just as
its specialized and expert labor has been recognized globally. It is felt fortunate that business
enterprise, information and hazard capital consolidate to give a further catalyst to India's
financial development. In this foundation, the need has been felt for another corporate structure
that would give an option in contrast to the customary association, with boundless individual risk
on one hand, and resolution based administration structure of the constrained obligation
organization on the other, so as to empower proficient aptitude and pioneering activity to join,
compose and work in adaptable, inventive and effective manner.
The presence of Limited Liability Partnership (LLP) which has its beginning by and large
association is currently a reality in India with the sanctioning of the Limited Liability Partnership
Act, 2008, (LLP Act) from March 31, 2009.It was felt that the Companies Act, 1956 (Companies
Act) isn't fit to the risk and administration structure expected for LLPs. The general goal of the
enactment to manage broadly held organizations is unique. Along these lines, as per the
suggestions of the Irani Committee, it was felt suitable to bring another enactment for LLPs. As
per the idea paper on Limited Liability organization arranged by the Government of India in
2005, taking into account the expanding job of administration division in Indian economy, a need
was perceived for presentation of another corporate substance Limited Liability Partnership that
would join the attributes of corporate and non-corporate elements. The organization and
requirement of association firms under the Indian Partnership Act, 1932 (Partnership Act) is at
the State level. Additionally, an organization firm includes full joint and a few liabilities of the
partners. Along these lines, numerous endeavors occupied with biotech, data innovation, and so
on find customary associations unacceptable. Additionally, the customary organization firms are
entirely unacceptable for multi-disciplinary blends like the mix of legal counselors and
bookkeepers, which is the hot mix today. Along these lines, the LLP Act is proposed to evacuate
the inlet which exists between an organization administered by the Companies Act and a general
association firm represented by the Partnership Act. The restricted obligation organization is seen
as an option corporate business vehicle that gives the advantages of constrained risk however
permits its part the adaptability of sorting out their inward structure as association dependent on
a commonly shown up understanding. The LLP structure would empower business visionary,
expert, and ventures offering types of assistance of any sort or occupied with logical and
specialized controls, to frame monetarily proficient vehicles fit to their prerequisites.
Attributable to adaptability in its structure and activity, the LLP would likewise be a reasonable
vehicle for little undertakings for and for speculation by funding.
In general partnership, unlimited accountability and responsibility had come in way of growth of
business during late 20th century. Due to unlimited liability and stringent rules professional are
unable to compete internationally because they don’t have large amount of capital. In 1932,
Steel, Iron and hardware Merchant chamber of India suggested for the limited liability with
partnership enacted by special enactment or part of the partnership act. In India, sole
Proprietorship, company and partnership are some form businesses which are operated. To
benefit the small enterprises, company secretary and advocates limited liability partnership is
introduced so that, they can work efficiently and participate in global competitions. So to
manage the draw backs special vehicles is need that has an advantage of corporate entities and
Partnership. It felt that there is a need of LLP and it was presented as 7th law commission of
India in 1957 as in form of recommendation.
In 1997
Expert committee made the report on small enterprises which was chaired by Mr. Abid hussain
and stated that Establishment of Limited liability partnership, will enable access of skills and
funds which is additional source.
In 2003
‘Regulation of private companies and partnership’ a report was made by Naresh Chandra
committee for the need of limited liability partnership in India. This report also contains
suggestions for the functioning of LLP.
In Report it was mentioned that in initial stage, it was only made available for lawyers, company
secretaries, company accountant those who worked as professionals. For eligibility, it was
governed by regulatory Act that controls and work in discipline manner.
In 2005
‘Enabling new vehicle for business’ J.J. Irani Committee made a report to make limited
liability partnership a separate legislation.
In January 7 2009- President give the assent to LLP bill and LLP act come into force on 31
2009.
1
1. http://www.legalserviceindia.com/articles/eocindia.htm
2. https://www.lawyersclubindia.com/articles/NATURE-OF-LIMITED-LIABILITY-PARTNERSHIP-LLP--999.asp
3. https://www.indialawjournal.org/archives/volume2/issue_2/article_by_bhavesh_sukhada.html
4 http://www.mca.gov.in/MinistryV2/natureoflimitedliabilityparterneshipllp.html
5 https://taxguru.in/corporate-law/limited-liability-partnership-llp-2.html?amp#referrer=https://www.google.com
6 https://www.scconline.com/blog/post/2018/09/07/limited-liability-partnership-in-the-wake-of-start-up-era/ 7
.https://www.businessmanagementideas.com/organisation/types/company-meaning-characteristics-and-kinds-
business-manageme nt/8932
8. https://youtu.be/AdDQ05rP7jE
9. https://youtu.be/oV2v9h5bzIc
10. https://youtu.be/3eNCO4E2uYw
11. https://youtu.be/DitdTFT4ET0
12. https://youtu.be/Vu5EmMaj1bw
13.https://www.lawteach /free-law-dissertations/limited-liability- partnership.php

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CHAPTER-II
NATURE AND SCOPE OF LIMITED LIABILITY PARTNERSHIP
Limited liability partnership is a corporate body and has common seal. It can hold property or
enter into contracts in its own name and can sue or can be sued and provide the advantages of
company as limited liability and flexibility as in partnership and having perpetual succession, it
means its existence will not affected by change in partners. Partners are only liable for the agreed
contribution but limited liability partnership is liable for the full assets. By making an agreement
between partner’s duties and rights are governed. Partners are not liable for un-authorized
actions of other’s act. If any wrongful act and misconduct done by one partner, other partners are
shielded from the joint liability of all partners. LLP is new form of body corporate in India. This
act was established to compete internationally. In International perspective, LLP is most
preferred business vehicle especially in Industry service or professionals activities. LLP is
accepted widely as it is being a model of advantageous business because it operates on the basis
of agreement. Due to its flexible rules, it can enable expertise those are professionals and can
initiate for combining financial risk taking capacity in efficient manner.
As in LLP structure, the partners liability is limited only to his stake and no one is liable for
others un-authorized acts. In Traditional Law, in partnership firm there is mutual agency as one
partner is jointly liable for all the acts of others and also severally liable for all acts of the firm
irrespective of his stake.
Under model of LLP, Multi- disciplinary firms can be set by Company secretary, chartered
accountant and advocates who can act as “one-stop” shop for availing various professional
services. Laws that existing can impose the restrictions that services can be carried only through
partnership firms and not by company. Lawyers and accountants would be more benefited
because with this they can organize their business in efficient manner. Foreign nationals can also
come to India and set up business as in proposed law it allow them to become a partners in any
LLP.
LLP can be used for many enterprises such as:
• Enterprises with funds small sector (including medium, small and micro enterprises).
• Venture capital (where capitals risk combines expertise and knowledge).
• For professional such as company secretary, chartered accountant advocates etc.
• Those professionals who are engaged in the field of science, art and technical discipline.
Partners and Designated partners

There should be minimum two partners and maximum numbers are unlimited having sound
mind, not insolvent and not applied for adjudication of insolvency In case of designated partners,
these two partners must be individual and one of them shall be resident of India
Resident of India- Resident for not less than 182 days immediately preceding one year.
Designated partners is liable for all the acts such as filing of document, statements, return and
like reports provided in limited liability partnership and in case of vacancy in limited liability
partnership thirty days period is provided for filling up the vacancy and by filing the particulars
including consent of individual to the registrar within thirty days of appointment. Designated
partner identification number shall be provided to every designated partner.
PUNISHMENT FOR CONTRAVENING

CONTRAVENTION OF SECTION 7(1) - Ten thousand to five lakh Rupees
CONTRAVENTION OF SECTION 7(4) AND SECTION 7(5) -Ten thousand to one lakh rupees.
Extent of Liability Of LLP

Segment 27 characterizes the degree of risk of a LLP.
(1) Limited risk association isn't limited by anything done by an accomplice in managing an
individual if-
(a) The accomplice in actuality has no position to represent the restricted risk organization in
doing a specific demonstration; and
(b) The individual realizes that he has no power or doesn't have the foggiest idea or trust him
be an accomplice of the constrained risk association.
(2) The constrained obligation organization is at risk if an accomplice of a restricted risk
association is at risk to any individual because of an unfair demonstration or oversight on his
part throughout the matter of the constrained obligation organization or with its power.
(3) A commitment of the restricted risk association in the case of emerging out in contract or
something else will be exclusively the commitment of the constrained obligation organization.
(4) The risk of the restricted obligation organization will be met out of the property of the
constrained obligation association
Case
● Hosking v Marathon Asset Management LLP
An organization benefit offer can be relinquished for break of guardian obligation The ongoing
choice in Hosking v Marathon Asset Management LLP [2016] EWHC 2418 (Ch.) has stretched
out into the association law setting the entrenched rule that an operator can relinquish their
entitlement to compensation by penetrating the trustee obligations they owe to their head (i.e.,
the relinquishment standard).
Judgment
In the Hosking case, the court maintained an arbitral honor of harms against an accomplice of a
LLP speaking to both relinquishment of half of the accomplice's benefit share (£10.4m) and
remuneration for misfortune (£1.5) emerging from the accomplice's penetrate of trustee
obligations. The break of guardian obligation came about when the accomplice proposed the
foundation of an opponent business with sure of the LLP's representatives, including creating a
marketable strategy.
In spite of the fact that the LLP deed, similar to sculpture law on organizations, was quiet with
regards to the idea of relinquishing compensation/benefits for break of obligation, the course
readings on evenhanded standards and the relinquishment line of case law bolster a general
guideline of relinquishment, independent of the setting in which the trustee obligations emerge.
Newel J hence maintained the arbitral use of the general fair standards and affirmed that
relinquishment is a cure accessible to a LLP for break of an accomplice's or part's trustee
obligations to it. Since the relinquishment guideline joins to compensation for administrations,
instead of to benefit picked up, the court expected to describe the accomplice's offer in the LLP's
benefits as compensation. It did as such by reference to the particulars of the LLP deed, which
determined that "non-official individuals" were qualified for half of the offer that the "official
individuals" were qualified for. The court presumed this must imply that half of an official part's
benefit share is earned as compensation for the presentation of his/her dynamic obligations for
the benefit of the LLP (for example obligations that the non-official individuals don't perform).
This choice implies that when drafting LLP deeds (or in reality association/constrained
organization understandings – to which the standard ought to likewise apply) in future,
gatherings should contemplate the results of how they describe association benefits. The
suggestion is that if the gatherings need to keep away from the chance of relinquishment, they
should plainly express the benefit shares don't compare to compensation. Different gatherings
may wish to do the opposite, or make a particular split (similar to the 50/50 split in the Hosking
case, or something else.
2.2 FEATURES OF LIMITED LIABILITY PARTNERSHIP
 LLP is form of hybrid organization having features of company and partnership law.
 Registrar of company administered the LLP.

 Partner’s liability is limited except in the case where an Act is done with the intention to
defraud the creditors or for the fraudulent purpose.
 LLP is a corporate body and separate legal entity and have perpetual succession. It can
acquire, hold, own or dispose the property in its own name whether the property is
tangible, intangible, movable or immovable. It is capable of to do or to suffer on others
act.
 No maximum limit of partners is prescribed in LLP.
All the duties and rights of partners and LLP and all rights and duties of partners are governed
by the LLP Agreement.
Appointment of Auditors
Inspecting of Accounts is a significant necessity that has obviously been disregarded by the
Idea Paper and the model Act is quiet on any evaluating necessity. In the perspective on the
creator, there must be in law a commitment upon each LLP to get its records reviewed by an
evaluator. As to who can be an inspector, the conditions ought to be like those predefined in
the Companies Act under area 226. The examiner ought to be made capable in law for the
records of the
LLP and ought to be offered with all the imperative forces similar to those under area 227 of the
Organizations Act so as to guarantee that the records show a valid and reasonable perspective on
the condition of issues of the LLP, and makes sure about the interests of banks and every other
individual managing it.
Compulsory Insurance
It must be called attention to that a significant part of LLP laws over the world is the
arrangement for necessary protection. Mandatory Insurance is required to secure the interests of
peoTexaguaranteeing against the LLP and to guarantee that they get what is expected. The
Delaware and Texas rules necessitate that a LLP put aside a base measure of assets or their
identical, or acquire risk protection for the assurance of people with carelessness or misbehavior
claims against thefirm. In Texas, the base budgetary obligation is $100,000 while in Delaware, it
is $1,000,000. Liability protection is commonly intended to cover various types of exclusions,
carelessness, unjust acts, acts of neglect and unfortunate behavior for which obligation is in any
case restricted. Insurance agencies in UK give proficient reimbursement protection to cover all
sensible costs brought about in the protection or settlement of cases emerging from the
abovementioned, as long as they are incidental or accidental acts. It is unquestionably objective
that, to get the advantage of restricted risk, firms must be asked to obligatorily protect
themselves. The Concept Paper contains genuine lacunae in this regard which should be expelled
to guarantee the business practicality of this substance
Money related Disclosures
The Indian Partnership Act, 1932 doesn't set out a particular arrangement with respect to any
strategy identified with budgetary revelations or in regards to any legal upkeep of Books of
Accounts. Accordingly, a Partnership firm is required to follow the arrangements of the Income
Tax Act, 1961.Sections 44AA and 44AB of the Income Tax Act give just to upkeep of Books of
Records and for Audit of Accounts past a specific constraint of gross receipts. As an outcome
thereof there is no harsh guideline with respect to money related exposure. While, as expressedin
the Concept.Paper, a LLP has an increasingly grim arrangement of money related exposures to
follow in as much as it isn't just required to keep up the best possible Books of Accounts for
assessment16 yet in addition to every year document an affirmation of dissolvability with the
Registrar17, pronouncing whether the firm can pay its obligations as they happen in the ordinary
course of business. Accordingly, an endeavor has been made to refresh furthermore, redress the
missing arrangements of the matured Partnership Act. Simultaneously, the Act maintains a
strategic distance from the itemized budgetary revelations required if there should be an
occurrence of organizations under Sections 209 to 223 of the Organizations Act, 1956. The
Registrar, be that as it may, is enabled to call for additional data and clarification vital for the
reasons for completing the arrangements of the Act. The creator wishes to feature a couple
lacunae that continue in the current type of the arrangements. As per the Concept Paper, the risk
for keeping up the books of records falls on the director, however, there is no premise
accommodated deciding this risk. Dissimilar to Section 209 of the Companies Act, 1956 which
endorses the support of appropriate books of records as for all the aggregates got and consumed
by the organization and the issues in regard of which the receipt and consumption has occurred,
all deals and acquisition of products by the organization, the benefits and liabilities of the
organization and so on., segment 27 of the LLP Act, 2006 is completely quiet on the sorts of
books of records to be kept up by the LLP. It just uses an equivocal articulation „books of
records identifying with its issue for every time of its existence‟ and consequently it is out of
line to hold the administrator at risk for any inconsistency in the support of the Books of
Accounts if the law doesn't bring as far as anyone is concerned the idea of the books that are to
be kept up. Lastlythere is a the oversight of any express arrangement or obligation upon the
accomplices to outfit data to the chief wherein he can construct a feeling on the LLP‟s
dissolvability, as a definitive duty of the reasonableness of the report of Declaration of Solvency
is on the supervisor and In default of which he is obligated. Therefore, the manager‟s position
has been rendered incredibly powerless and there is a need to consolidate in the law such an
obligation upon the accomplices of the LLP.
. All partners are agents of LLP, but not the agents of other partners.
 In LLP, A body corporate and an individual may become a partner.

 for designated partners, At least two individual are needed in LLP and one of them
designated partners must be resident if India. A partner who is body corporate may
nominate an individual as a designated partner.
A proper books of account must be maintained in LLP. The Accounts may be on cash or
accrual basis.
 LLP accounts are required to be audited. A LLP is exempted from the provisions of audit
whose turnover in any financial year does not exceed ₹40 lakhs or the contribution
capital does not exceed ₹25 lakhs.
 Statement of account and solvency and Annual return of LLP is to be filed every year in
the
prescribed form.
 Any Information, changes and changes in particulars of designated partners of LLP is

required to be filed by LLP.
 Partner’s rights to share losses and profits are transferable.
 A Person who is representing him to be a partner or get the permission to be represented

as a
partner is liable for giving credit the LLP on that representation.
 ‘Whistle blower’ concept is incorporated in the LLP Act.
An unlisted public company, private company or partnership can be converted into LLP. No
security interest subsists on the application date for conversion.
 for investigation of the affairs of LLP, Central government must appoint an inspector as
provided in the provisions of LLP.
 Provisions regarding compromise, arrangement, reconstruction or amalgamation of LLP
an application to be made to National Company Law Tribunal according to section 10FB
of company’s act of 1956/ 408 of 2013 Act.
 Information is to be furnished by the registrar and provide copies and extracts certifying
by affixing digital signature. In LLP Act, All filing are done automatically.
 In case of non-compliance, heavy penalties have been provided in LLP Act.
 For the Taxation purpose, LLP in India is treated on par with a partnership firm.
 LLP system is integrated with MCA-21.
 As LLP is integrated with MCA-21; there has been sync between LLP and company
filings.
2.3ADVANTAGES OF LIMITED LIABILITY PARTNERSHIP
▪ Limited liability
In LLP, partners liability As LLP, is separate legal entity and liability of members are limited so
personal assets are protected. Unless happening of fraud. Liability is only extended to the
contribution of capital undertaken by the partners. LLP and partners functions separately.
▪ Flexibility
Profit distribution and partnership operation are determined between partners by written
agreement. They can draft the agreement as they want, recognizing their rights and duties.
▪ Separate legal entity

It means that LLP is separate Legal person and can be sued or can sue in its own name. Mutual
Agency is not present as one partner is not responsible for the act of other person.
▪ Easy winding up
Winding up of LLP is easy in comparison of company. It takes two to three months for the
process of winding up as in company it can take one year for winding up of company.
22
▪ Easy to create
LLP is more flexible and less complicated than company. So, it is easy to create LLP. The
minimum incorporation fee is 800 and maximum 5600.
▪ Body corporate
LLP is a corporate body as same as company, means LLP has existence of its own. Distinct
entities are there between LLP and its partners. LLP is not known to its partners but known by its
own name.
Conversion of LLP
With the expanding mindfulness and effortlessness in joining LLP, the LLP development rate is
expanding consistently. In the budgetary year 2014 - 15, LLP enrollment increment by 55%. The
vast majority of the independent venture business visionaries are picking LLP as it is anything
but difficult to begin with a base capital, altered LLP understanding, tax break and least
consistence. As the LLP develops, the necessity of value capital emerges. Consequently,
numerous business visionaries feel the rising need the LLP transformation into an organization
for development and extension of business by raising capital through value reserves.
The structure of a LLP shields accomplices from unfortunate behavior.
The restricted risk organization gives a preferred position over the general association structure
in that it offers a layer of obligation assurance. In a general organization, all accomplices are
answerable for the direct of each other. In an occurrence of offense, all accomplices would be
obligated. Under the LLP structure, the lead of the culpable accomplice is applied to that
individual as it were. That implies the carelessness of one individual isn't applied to every other
person.
LLPs offer an extraordinary expense advantage for accomplices.

At the point when a LLP is shaped, the individual accomplices get a similar tax cuts as though
they were a standard organization. That implies they should document their own personal duties
and pay evaluated burdens on their salary. Any credits or findings produced by the LLP are gone
through to the accomplices, who are allowed to put them on their own expense form. When there
are Accomplices who have a constrained stake in the organization or have explicit assessment
prerequisites to meet, this structure can give focal points as the real association itself doesn't
cover charges.
Accomplices get a great deal of adaptability with a LLP.
A LLP is run along these lines to a restricted obligation organization. The accomplices included
must think of an operational consent to decide how every individual will add to the activities of
the business. The executive’s obligations can be isolated similarly or inconsistent, in view of the
encounters each accomplice brings to the table. Accomplices can choose to have zero authority
over business choices, yet still keep up possession rights with their value in the business.
It very well may be framed in numerous states to expand the compass of the business. From
a basic angle, the LLP is fundamentally the same as the LLC. For most associations, it bodes
well to enlist their business in the state where they intend to work. In the event that the state
doesn't allow the restricted obligation association, in any case, it is conceivable to record in an
alternate state. You would then have the option to work as a LLP in that state. Despite the fact
that this causes numerous recording necessities, it likewise offers you the chance to expand the
span of the organization if business is acceptable. In Washington State, the internet documenting
expense for a LLP is $200, with an ensured 2 business day handling on the application for
out-of-state associations.
LLPs might not have charge obligations; however they have a legitimate position.
Accomplices may be answerable for announcing benefits from a LLP on their own government
forms. That doesn't prevent the LLP from having the privileges of a legitimate substance. Under
the structure of a constrained risk organization, you are allowed to buy, rent, lease, or own
property to lead business. You are allowed to utilize staff when you have gotten your duty
documentation. The organization can go into contracts. It can likewise be considered responsible
to its activities when fundamental, which is the place the constrained risk advantage, becomes an
integral factor.
Authorization is given to name organizations as individual as LLP.
Inside LLP structure, in certain regions corporate proprietorship is allowed in which two
organizations can be delegated as individual from a LLP. At any rate one accomplice is required
to be an individual rather than organization in different business structures. At the point when
this structure is allowed, it will give adaptability to LLP and by taking components of joint
endeavor in excess of a genuine startup.
In LLP various levels participation is allowed
In LLP structure, It can have both assigned and non-assigned part which permits the organization
to work the participation with various levels. At first all the part is allowed for equivalent portion
of value. In LLP money related stake is took into account the part without taking on job of the
board and still win benefits from the business
Authorization is given to pick own business name.
- When LLP is shaped, Permission is given to pick the name of the organization. Name can be
likewise being in unmistakable structure identified with administrations by the accomplices. It is
a favorable position for whom who wishes to seek after marking openings. By LLP enlistment,
one can ready to keep another organization from enrolling with same name Restricted
obligation organization cost is exceptionally serious.
For the development of LLP the expense is like the expense of arrangement of the LLC. To keep
up the status of the business yearly charges is required to be recorded every year. LLP is more
costly than organization, yet it is less expensive than the partnership.
DISADVANTAGES OF LIMITED LIABILITY PARTNERSHIP

▪ Legal uncertainty
LLP is a totally a new concept and in various laws it is not recognized for carrying various
businesses. People feel difficult to understand and clarity of provisions is serious issues among
them. It creates problem to function smoothly.
▪ Inability to raise VC funding
In LLP structure VCs are not willing to invest. Because in LLP all share holder must be partner
and are responsible toward t entity. VC is not unwilling to take these responsibilities and would
likely want to invest in private limited company.
▪ Partners Right
Structure of LLP is established in such a way that other partner have more rights than another
partner. It doesn’t include a system of one vote per. So, higher share holder can choose their
interest to move the business and lesser share holder may feel compromised.
▪ High Penalties
Compliance of LLP are minimum but dues in LLP can end up with more fines and penalty as
same as private limited company. These fines can be up to 5 lakh for a single year.
▪ LLP structures do not protect against employee negligence.
All the partners are responsible for the negligence of one person working for the company.
Single partners who have done fraud are excluded from the liability protection. If Criminal
conduct witnesses by the partner and he does not report it the partner status can be loosed.
● Partners are not under in an obligation to consult each other.

Initial agreement makes limited liability partnership which governs the structure of the business.
Partners and stakeholders are not in an obligation to consult with each other when they are into
new business agreement. Every partner has the right to negotiate on behalf of the company
when
entered into contract. It can be restricted by partnership agreement.
▪ Public disclosure is required in LLP.

According to the governed rules of LLP, It is required to offer Public disclosures of finances by
the company. Financial accounts are to be submitted for the public record. This is major
disadvantage because it will create declaration of income of all members among everyone and
some of them don’t want to become it public.
● Profits cannot be retained in LLP.

Structure of Limited liability partnership is also designed as company, so the profits cannot be
retained itself or to be reinvested into the business. The profits for the partners is to be carried
by the only one way i.e. by taking the income and report it on their taxes and then reinvest
amount back into the company for next financial year. From earned profits all partners receive
their
equity shares each year.
▪ Single-member entity is not permitted in LLP.

Minimum two partners are required to form an limited liability partnership as same as LLC, If
one of them leave the partnership and only one partner remain in the LLP, then it will get
dissolved. LLP can be dissolved if partner dies unexpectedly, or decide to leave the LLP or is
forced to file bankruptcy. Certain exceptions are applied where there are 2+ Members and one of
them leave the LLP.
i https://brandongaille.com/16-limited-liability-partnership-advantages-and-disadvantages/
iihttps://taxguru.in/corporate-law/india-llp-act-2008-llp-
india.html6/Other%20Laws/limited_liabilhttp://www.mca.gov.in/MinistryV2/classification+and+registr
ation+of+companies.html
CHAPTER-III
COMPARISON OF LLP WITH OTHER FORM OF BUSINESS
3.1COMPARISON OF LIMITED LIABILITY PARTNERSHIP WITH COMPANY
COMPARISON
BASIS
LLP
COMPANY
Registration
Registrar of LLP done registration.
Registrar of ROC
Creation
Created by law.
Created by law.
Name of entity
‘Limited liability partnership’
Use as suffix.
In case of Private company, Name to be contain ‘ Private Limited’ or in company

‘Limited’ is use Public as suffix.
Distinct Entity
Under limited liability partnership Act 2008, It is separate legal entity.
Under companies Act, Company is a separate legal entity.
Perpetual succession
It has perpetual succession
It has perpetual succession

Common seal
LLP has its own common seal, depending upon the terms of agreement.
Every company has its own common seal, and it denotes company signature.
Legal proceedings
LLP can sue or can be sued.
Company can sue or can be sued

Participation of foreign
Foreign Nationals can be Partners in LLP.
Foreign Nationals can be members in company.
Number of members
Minimum two partners and maximum are not limited

In private company, minimum 2 partners and maximum 50 and in case of public company,
minimum 7 members and maximum members can be unlimited.
Incorporation Document
Incorporation document of LLP is LLP Agreement which denotes rights and duties of LLP.
Article of association and memorandum of association

Assets ownership
LLP is independent and partners have ownership of assets.
Company is independent and members have its ownership of assets.

Tax Liability
LLP income is taxed at 30 rate with education cess
Company income is taxed 30 rate with surcharge
Rights of inheritance/Transfer
It is related by LLP agreement
It is easy to transfer
Director Identification Number [ DPIN ]
Designated partner are required to have
DPIN before appointment
Director are required to have DPIN before appointment
Digital signature
Digital signature of at least one designated partner is required
digital signature of at least one director partner is required
Voting rights
By LLP agreement voting rights are to be decided
By number of shares of member voting rights are decided

Transferability of interest
Interest is transferred as per LLP agreement
They can transfer their interest freely

Maintenance of minute
By LLP agreement they may decide to record the meeting proceeding of partners
Meeting proceeding of shareholder and BOD are required to record in minutes

Contract with director or partner
They are free to enter in any contract
There are some restrictions regarding specified contracts

Dissolution
By NCLT or voluntary
By NCLT or voluntary
Capital Required
Rs 1 Lac
No minimum amount
Registration time
Seven to ten days
Seven to ten days

Cost of Formation
It is lesser than the formation fee than company
It is high in company law

Formalities for Incorporation
With prescribed fees, various e- forms are to be filed with registrar of LLP
With prescribed fees, various e- forms with Memorandum of association & Article of association
is to be filed with Registrar of company.
Liability of partners
Extent of contribution in LLP, it is limited
It is limited to the required amount to be paid up to each share.
Partner agent relationship

Partners act as agents but not of other partners
Directors act as agents and not the members.
Admission as partner/member
A person can be admitted as a partner as per the LLP Agreement
By buying shares a person can become a member

Transfer of Share / Partnership rights in case of death
If legal heir not become a partner, so they have right to get the refund of contribution of capital
and accumulated profit in share
Shares are transferred to legal heir, in case of death of member.
Cessation as partner / member
By giving 30 days prior notice to LLP, A person can cease to be a partner
By selling his share, A member can be ceased to be a member

Requirement of Managerial Personnel for day to day administration
Management of day to day business and other compliances are done by designated partner
On behalf of the members, Directors manage the day to day business compliances
Statutory Meetings
No provisions regarding statutory meetings
General and board meeting held at appropriate time

Managerial personnel remuneration for day to day Administration
It depends upon the LLP Agreement.
As subject to law, company can pay remuneration to its directors

Maintenance of Statutory Records
It is necessary to maintain record of books of account

Share Certificate
By LLP Agreement, the ownership of partners is evidenced
Share Certificates are proof of ownership of shares held by the members in the Company
Audit of accounts
Whose turnover is less than 25 lac or 40 lac contribution in financial, they have to get there
accounts audited annually
Accounts are audited annually as per the companies act 2013
Compromise / arrangements / merger / amalgamation
LLP can enter into compromise/arrangement/merger/ amalgamation
Company can enter into compromise/arrangement/merger/ amalgamation
Oppression and mismanagement
There is no provision relating to oppression and mismanagement
There is provision relating to oppression and mismanagement
Credit Worthiness of organization
Creditworthiness is higher than partnership but lesser than company
High degree of creditworthiness, due to highest stringent compliances and disclosure of various
laws.
3.2COMPARISON OF LIMITED LIABILITY PARTNERSHIP WITH PARTNERSHIP
COMPARISON BASIS
LIMITED LIABILITY PARTNERSHIP
PARTNERSHIP
Liability of partners
Limited liability of partners
Unlimited liability of partners
Mutual Agency
No mutual agency, one Partner will not liable for act of other partner.
There is mutual agency, as partner are liable for profits and debts
Governed
LLP governed under Limited liability partnership Act, 2008
Governed under Indian Partnership Act,1932

Registration
Mandatory Registration
Optional Registration
Document
LLP Agreement
Partnership Deed
Number of Partners
Unlimited number of partners
Not more than 100 partners

Perpetual Succession
Perpetual succession is allowed
No perpetual succession
Partner as Agent
They are agents of partners
They act as agent of firm or partners
Separate legal entity
LLP is separate legal entities as it holds property in its name.
Partnership is not a separate legal entity as it is not allowed to hold property in its name.
Oppression and mismanagement

There is no provision relating to oppression and mismanagement
There is no remedy, in case of oppression and mismanagement

Audit of Accounts
Whose turnover is less than 25 lac or 40 lac contribution in financial, they have to get there
accounts audited annually
In partnership only have to audit there tax accounts

Voting Rights
As per LLP agreement, voting
rights shall be decided
As per partnership agreement , voting rights depend

Required capital
Minimum amount is not mentioned
Minimum amount is not mentioned

Registration time
In LLP , it takes seven to ten days for completing the registration
In partnership, it takes 5 to 7 days to complete the registration

Entity Name
In LLP, name must contain ‘ limited liability partnership’ or,’ LLP’ as suffix
As per chose any name

Registration
It is required in LLP, registrar of LLP do registration
Registration is not required or it is optional

Cost of Formation
Cost of formation filing fee is comparatively less than company
No need of cost of formation in partnership

Common seal
LLP have its own common seal and have its signature. According to LLP agreement
In partnership no common seal is present

Legal preceding
LLP can be sued or can sue the other party
In partnership third party can be sue only by register partnership
Dissolution
Dissolution can be done by NCLT or voluntarily
By order of court, mutual consent or by any contingencies occurred dissolution can be done
Creation
Created by law.
Created by two persons by contract
Incorporation Document
LLP agreement is a charter document
Partnership deed is a charter document in partnership
Formalities of Incorporation
With prescribed fees, various e- forms are to be filed with registrar of LLP
Along with forms/affidavit, and partnership deed is to be filed to registrar of firms with
prescribed fee.
Foreign Participation
They are allowed to form LLP
Participation of foreigners are not allowed
Asset ownership
LLP is independent as they have their own asset.
Joint ownership of all partners In partnership firm

Tax Liability
Flat rate 30% of LLP income is taxed with educational cess as applicable.
Flat rate 30% of partnership income is taxed with educational cess as applicable.
Principal agent relationship
Partners act as agents but not of other partners
Partners are the agents of the firm and other partners
Transfer / Inheritance of Rights
It is related to the provisions of LLP agreement
Financial value of share in case of death will be transferred to legal heirs
Admission as partner/member
A person can be admitted as a partner as per the LLP Agreement
A person can be admitted as a partner as per the partnership Agreement
Transfer of Share / Partnership rights in case of death
Director Identification Number / Designated Partner Identification Number (DIN / DPIN)

Before appointed as Designated partner, Every designated partner is required to have DPIN
No need of DPIN
Digital Signature
At least One designated partner should have digital signature as forms are filed electronically
It is not required
Cessation as partner / member
By giving 30 days prior notice to LLP, A person can cease to be a partner
As per the agreement, A person can be ceased to be a partner.

Requirement of Managerial Personnel for day to day administration
Management of day to day business and other compliances are done by designated partner
There is no requirement of any managerial person.

Statutory Meetings

Maintenance of Minutes
Partners/designated partner meeting proceeding may be decided to record by the LLP
Agreement
There is no concept of minutes maintenance

Managerial personnel remuneration for day to day Administration
It depends upon the LLP Agreement.
Remuneration to be paid by firm to its partners
Contracts with Partners/Director
Partners are free to enter into any contract.
Partners are free to enter into any contract.
Maintenance of Statutory Records

Annual Filing
With Registrar of company, It is required to file annual return and annual financial statement.
No annual returns is necessary

Share Certificate
By LLP Agreement, the ownership of partners is evidenced
By partnership deed, the ownership of partners is evidenced

Compromise / arrangements / merger / amalgamation
LLP can enter into compromise/arrangement/merger/ amalgamation
Partnership cannot enter into compromise/arrangement/merger/ amalgamation

Credit Worthiness of organization
Creditworthiness is higher than partnership but lesser than company
It depends upon the partners and the goodwill
Case related to partnership and limited liability partnership

In Flanagan v Lion trust Investment Partners LLP & Ors [2015] EWHC 2171(ch)
Facts
In 2011, the inquirer, Mr Flanagan, joined the litigant LLP where he dealt with a fence stock
investments with an accentuation on developing markets values (the 'Reserve'). His associations
with the LLP and its different individuals were represented by a LLP Agreement and a Side
Letter. Among different issues, the LLP Agreement: accommodated the LLP to be overseen by a
Management Committee (of which Mr Flanagan was a part) endorsed a method whereby
individuals could be constrained to resign from the LLP as per a choice by the Management
Committee at a gathering
explicitly avoided the default arrangements under Regulations 7 and 8 of the LLP2001.
The issues
Mr Flanagan acquired procedures against the Fund the Chancery Division, asserting
presentations with respect to the status of the LLP Agreement and side letter, and regarding the
utilization of the default runs under the LLPR 2001. He additionally simultaneously appealed to
for unjustifiable preference under area 994 of the Companies Act 2006.
Mr Flanagan's case turned on two key issues:
regardless of whether the primary retirement notice and choice to put him on garden leave were
invalid, adding up to a renunciation (for example a repudiatory break) of the LLP Agreement and
Side Letter
in the event that the LLP Agreement and Side Letter had been denied, regardless of whether the
default manages under the LLPR 2001 applied with the goal that Mr Flanagan was qualified for
an equivalent portion of the LLP's capital and benefits and couldn't be ousted by a larger part of
the LLP's individuals.
On this premise, Mr Flanagan kept up that he was as yet an individual from the LLP and that the
fitting cure ought to be a request that the LLP purchase out his 'share'. On the other hand, the
LLP's position was that the teaching of repudiatory break doesn't matter to multi-party LLP
understandings under segment 5 of the LLPA 2000 and, appropriately, that Mr Flanagan didn't
stay a part and his solitary cure was harms, determined by reference to the non-installment of his
yearly fixed assignment of £125,000 since the date of the main retirement notice.
Judgment
The Court dismissed Mr Flanagan's case, holding as follows.
The principal retirement notice and choice to put Mr Flanagan on garden leave were invalid. This
was on the grounds that, for a notification of retirement to be substantial, the language of the
Side Letter necessitated that it be given for a time of exactly a half year lapsing on or after the
two year commemoration date. Be that as it may, the notification had been served early and the
Side Letter (and LLP Agreement) didn't allow a more drawn out notification period. The LLP
Agreement additionally required a goals of the Management Committee, which there had not
been. Concerning the impact of this penetrate, the LLP had revealed an unmistakable expectation
not to be limited by the LLP Agreement, heading off to the base of the agreement between Mr
Flanagan and the LLP. The break was in this way repudiatory and Mr Flanagan had
acknowledged it.
In any case, Parliament can't have expected the teaching of repudiatory break to apply to LLP
understandings under segment 5 of the LLPA 2000, aside from maybe if the LLP has just 2
individuals. On the off chance that it did, the default runs under the LLPR 2001 would apply to
the wronged part and his relationship with the LLP, while different individuals from the LLP and
their relationship would keep on being represented by the LLP Agreement. Among different
issues, this result would prompt legitimately incomprehensible outcomes, negated business
sound judgment and repudiated the express avoidance of the default runs under the LLP
Agreement. This choice was reached without any former expert on the activity of the principle
corresponding to multi-party LLP Agreements
https://taxguru.in/chartered-accountant/difference-partnership-firm-llp-company.html
39
CHAPTER-IV
CRITICAL ANALYSIS OF LIMITED LIABILITY PARTNERSHIP

Limited liability partnership act is hybrid form of organization of companies and partnership act.
In companies and partnership act there are many advantages or disadvantages as in companies
act there is limited liability and rules are very rigid, and in partnership rules are flexible and have
unlimited liability which means that their personal property can also be acquired for debt
payment and they are jointly liable for each other’s act . Limited liability partnership act was
made to remove the disadvantages of companies and partnership act. Limited liability
partnership act is formed to provide benefits of limited liability of company and flexible rules
Key provided in partnership. They are liable for the full extent of its assets.
It consists of two LLP models. First one is the LLP Texas model. Under This model, vicarious
liability of Partners is limited for the wrongful acts of partnership and they are not liable for the
ordinary course of business. Second model is known as Delaware Model, Where partners are not
liable personally for any act related to torts and contract etc. LLP drafting of LLP act is done to
make transparency in LLP regulations and it also prevent creditors defrauding and it gives
flexibility in internal affairs. Main element of LLP is LLP’s agreement drafted by partners it can
also be called as Magna Carta. LLP act as a watch dog, it provides for investigation and it
empowers for information before incorporation and also to central government for appointment
of inspectors for the inquiry of affairs of LLP.
• Global perspective of Limited Liability Partnership
• United Kingdom
In English and scots Law, By an Act of Parliament in 2000 Limited Liability partnership is
introduced. It is same as Law in India as it is corporate legal body and separate from its
members. It is a mixture of company and partnership Act. For the incorporation of LLP, All the
40
Documents must be submitted to Registrar of company and at least two people are required to
form a LLP.
• Singapore
Any Misconduct created by one partner, other partner is shielded from joint liability in
Singapore LLP. Liability of partners is not limited in case of where the partner has knowledge
about the misconduct. Only that person can form LLP who want to earn profit with or without
any terms and conditions and agreed upon that by following the registration date, LLP business
shall be carried; contribution of skill and efforts; and as per the agreement profit must be
distributed accordingly.
• UNITED STATES
In 1980, Due to crisis of energy prices and real estate in Texas It creates failure in loans and large
wave in banks. Many efforts were made for recovering the assets because the amount in banks is
small to recover. Due to huge claims, it will create them bankrupt personally.
By critically analyze the provisions of LLP we get to know that LLP is a suitable form of
business for carrying of the business because all other forms have certain ambiguity by which
the smooth flow of business is not possible. LLP is made to remove the ambiguity and add the
pros of all the other form of business in one form of organization. Due to stringent rules and
regulations with unlimited liability led to the partners in a situation of personal loss and they
have to face problem by an act of wrongful conduct done by other partner. LLP provided them
shield to cover the liability of them. In company law stringent rules and large number of forms
created a burden on the arms of the partner LLP provide the flexibility to them and by
introduction of LLP, Large number of forms are abolished and only few forms are taken into
consideration
41
Further, we will discuss how LLP is great business form other than businesses:
• LIMITED LIABILITY PARTNERSHIP AGREEMENT

It is soul of limited liability partnership. A written agreement between partners of LLP and
between LLP and its partners is the LLP Agreement. All the provisions regarding duties and
rights shall be governed in the absence also.
● Ederer v. Gursky - 2007 NY Slip Op 9960, 9 N.Y.3d 514, 851 N.Y.S.2d 108, 881
N.E.2d 204
Association Law § 26 has consistently been comprehended to mean what it obviously says:
general accomplices are together and severally at risk to non-accomplice banks for every single
illegitimate act and breaks of trust submitted by their accomplices in completing the
organization's business, and mutually subject for every single other obligation to outsiders. This
recommendation follows normally from the very idea of an association, which depends on the
law of head and operator. Similarly as a chief is subject for the demonstrations of its specialists,
each accomplice is by and by liable for the demonstrations of different accomplices in the
standard course of the organization's business. Notwithstanding this vicarious risk to non-
accomplice loan bosses, each accomplice correspondingly has a commitment to share or bear the
misfortunes of the association through commitment and reimbursement with regards to a
continuous organization.
Realities:
Offended party Ederer, a pulling back accomplice of a Limited Liability Partnership, recorded a
suit for bookkeeping and penetrate of agreement against respondent accomplices. The
preliminary court had verified that offended party was qualified for a bookkeeping against all
litigants since Partnership Law § 26, which put restricts on the individual risk of accomplices in
a LLP, applied to obligations of the organization or the accomplices to outsiders and had nothing
to do with an accomplice's guardian commitment to record to his accomplices for the advantages
of the association. The Appellate Division avowed Supreme Court's structure, inferring that
Partnership Law § 26(b) didn't absolve . . . accomplices from their individual commitments to
record to a pulling back accomplice under the prior authorized and unamended Partnership Law
§ 74" and "doesn't absolve the individual litigants from obligation to offended party for breaks of
firm-related understandings between them." singular respondents contended that they had not
gone into any concurrences with offended party. Litigants consequently moved in the Appellate
Division for leave to speak to the Court of Appeals, which the Appellate Division conceded.
ISSUE:
Does Partnership Law § 26 shield a general accomplice in an enrolled LLP from individual risk
for penetrates of the organization's or accomplices' commitments to one another?
ANSWER:
No.
End:
The Court of Appeals of New York dismissed litigants' contention and held that the expression
"any obligations" in part of § 26 consistently and just represented an accomplice's risk to
outsiders. This suggestion follows normally from the very idea of an organization, which
depends on the law of head and operator. Similarly as a chief is at risk for the demonstrations of
its specialists, each accomplice is by and by answerable for the demonstrations of different
accomplices in the standard course of the association's business.
• CONTRIBUTIONS BY PARTNERS
In the form of intangible, tangible or money or by performed contract in services, Partners can
contribute in LLP .All the shares of profits and losses are shared equally to all the partners.
• BOOKS OF ACCOUNT, OTHER RECORDS

For the financial year, books of accounts must be maintained by every LLP. It can be maintained
on the basis of accrual basis or cash basis of accounting, books of accounts must be maintained.
With designated partners a solvency or statement of account must be prepared and annual return
within 60 days of closure of financial year must be filed with the ROC.
• ASSIGNMENT AND TRANSFER OF PARTNERSHIP RIGHT

Wholly or partially, the profits and losses of a partner in LLP and distribution received according
to LLP agreement. Transferee or assignee rights are not entitled to transfer to the participation in
the management of activities conducted in LLP or access to information of LLP.
(6) Assignment and Transfer of Partnership Rights
The proposed law accommodates a novel element of Assignment and Transfer of Partnership
Rights.
Under segment 36, the monetary privileges of an accomplice are unreservedly transferable, and
the non-financial
rights can be moved whenever allowed by the LLP Agreement. Segment 2(8) characterizes
"monetary
rights" as the privileges of the accomplice to a portion of the benefits and misfortunes of the
association and to
get circulations as per the constrained obligation association understanding. In any case,
not at all like segment 108 of the Companies Act, 1956 whereby the method of move on a
properly stepped
move instrument is recommended, the area is quiet on any unique method of task of
organization rights. Additionally, no force has been given to different accomplices to decline to
recognize the exchange interestingly with area 111 of the Companies Act. Be that as it may, area
37 while allowing the exchange of organization rights gives that the exchange doesn't ipso
facto qualifies the chosen one for take an interest in the administration or lead of the constrained
obligation
association's exercises or to get to data concerning the restricted risk organization's
exchanges. Accordingly, an association understanding is required between the trustee and the
current
accomplices according to segment 14(2) for qualification to such rights. While this is agreement
with the law
of association, a deviation has been made under area 37 whereby the organization isn't
broken up by move of rights by one of accomplices. Such an exchange is beyond the realm of
imagination under the Indian organization act 1872
• FOREIGN LLP
Within 30 days, establishment of Business in India foreign LLP shall file the document with
registrar with Form 27 specifying1. Incorporation certificate and LLP purpose
2. Full address of their deemed office in India
.3. All the list specifying partners and designated partners name, address and any other additional
information which is too provided.
42
• COMPROMISE ARRANGEMENT, MERGER
Compromise, arrangement, mergers and amalgamation is provided in section 58 of LLP Act.
Winding up and dissolution is discussed from sec 59-61in LLP Act. By tribunal or voluntarily
winding up of LLP is done.
Some grounds are provided in LLP for the winding up:
1. by resolution
2. Partners is reduced below two
3. Debts are not paid
4. Against integrity of India, sovereignty, security of state any act is acted upon
5. In filing of annual return, solvency or accounts statement to the registrar any default is done
for consecutive five years
6. by just and equitable ground decided by tribunal
• INVESTIGATION IN LLP
For the process of investigation in LLP's affairs the central government by way of suo Moto or
by tribunal recommendations or court can appoint inspectors. The power is provided to get the
expenses used for their reports during search and seizure.The arrangements identifying with
examination of organizations under the Companies Act, 1956 viz.
segments 235 to 246 have been actually thrown into segments 38 to 49 of the LLP Act, 2006
without
any fundamental distinction in the forces of the Central Government or the Tribunal to arrange
examination and the forces of the researching official. Under segment 46 the LLP might be
ended up by an appeal before the Tribunal by the Central Government on the off chance that it is
fulfilled that that
the matter of the constrained obligation association is being led with a plan to cheat its
loan bosses, accomplices or some other people, or in any case for a deceitful or unlawful reason,
or in a
way severe or unreasonably biased to a few or any of its accomplices, or that the constrained
obligation association was framed for any fake or unlawful reason and that the accomplices of
LLP have been blameworthy of extortion, misfeasance or other wrongdoing towards the
restricted risk
association or towards any of its accomplices. Segment 55 is similar to area 425 of the
Companies
Act, 1956 whereby ending up of a LLP may either be deliberate or by the Tribunal. The
conditions under which twisting up should be possible by the Tribunal have not been determined
and
nor is the technique thereof given in the Act. The vaccum is to be filled by the guidelines to be
made by the Central Government and appropriate course is broaden the arrangements of
Organizations Act with essential alterations by ideals of intensity allowed to the

CentralGovernment under segment 57 of the model LLP Act.
● SKY LIGHT HOSPITALITY LLP V ASSISTANT COMMISSIONER OF
INCOME(2 February 2018
Sky light hospitality (SH) limited liability partnership had acquired the rights and liabilities of
sky light hospitality private limited (SHPL) upon the conversion under LLP act 2008. The return
for the non subjected to scrutiny assessment. However,upon further receipt of a tax evasion
report a reassessment notice has been issued under sec148.the petitioner-LLP has fuled a writ
petition to quash the notice and the reassessment proceedings
ISSUE
The issue is whether a notice for reassessment issued under section 148 on the basis of tax
evasion from the investigation unit of the income tax department can be treated as valid,if such
notice has been converted into an LLP.
DELHI HIGH COURT DECISION
The high court dismissed the petitioner contention as there is reason to believe not reason to
suspect.there is clear evidence that notice was errneously addressed to SHPL instead of SH LLP.
The error was that notice did not record the conversion of SHPL into SH LLP.It is clear evident
that notice was meant for the assessee -LLP and no one elseThe high court held that the notice
issued on the basis of tax evasion report recieved from the investigation unit of the income tax
department is valid, since there was no reason to believe on the basis of the said report that
income had escaped assessment,even though the notice was errneously issued in the name of the
erstwhile company which has now been converted into LLP. The court clarifies that it has passed
no opinion on the merits of the case which will be duly dealt with, by Assessing officer.The
petitioner-LLP is required to appear before the Assessing officer to deal with the merits of the
issues pertaining to the notice
• Liabilities are Limited

Main advantage of having LLP is that control management is balanced and liabilities are limited.
Partners are not liable for the wrong act done by other partner. To protect public from claims of
liability it is necessary to post a bond of financial security and carry less minimum liability
insurance.
Henry v. Masson, __ S.W.3d __, 2010 WL 5395640 (Tex. Application. 2010)

.
Henry and Masson were accomplices in an orthopedic medical procedure practice. They
framed their training as a LLP in 2001, and individual
questions prompted case in 2003. During a consultation for the situation, they concurred on a
basic level to wrap up the LLP
also, cut off all ties between them. Extra questions and issues emerged, and another suit was
recorded. In an
endeavor to determine every one of their disparities, they executed a settlement understanding.
Prosecution followed over affirmed
penetrates of the settlement understanding. Among the issues tended to in this intrigue was a
claimby Masson that
the preliminary court failed in requesting Henry and Masson to make capital commitments to the
association to permit
the organization to pay out finances it had taken in that really had a place with two new elements
framed by the
parties. Masson put together his contention with respect to the way that the association was a
LLP and the arrangement of theTexas Revised Partnership Act giving that accomplices in a LLP
are shielded from singular risk for
the obligations and commitments of the association brought about while the organization is a
LLP. The court expressed that
neither the association understanding nor the rule forestalled the preliminary court from
requesting commitments to the
organization during twisting up. As per the court, the installments the preliminary court
requested Henry and
Masson to make were capital commitments to release obligations of the organization during
twisting up, not an
arbitration of individual risk for the obligations or commitments as thought about by the
resolution. The court
depended upon the association understanding, which gave that if no accomplice consented to
loan finances expected to
release the organization's obligations, commitments, and liabilities as they came due, each
accomplice was required to
auspicious contribute the accomplice's proportionate portion of assets required. Masson
contended that this arrangement was
not expected to apply in the wrapping up process and that reference somewhere else in the
organization understanding
to installment of the association's obligations upon disintegration "to the degree reserves are
accessible" confirm the
accomplices' goal that they would not be required to make extra capital commitments during the
winding
up. The court expressed that the expression depended upon by Masson showed up in an area
alluding to steps to be
taken after the offer of organization property, and the assets referenced are reserves gotten from
the offer of
association property. The court didn't decipher the consent to imply that offer of organization
property was
the main wellspring of assets to pay obligations. The court likewise dismissed Masson's
contention that the reference in the
capital commitment arrangement to installment of obligations as they become "due and payable"
was proof that the
parties didn't expect to require capital commitments during twisting up. The court expressed that
"due and
payable" basically altered the kind of obligation to be paid and didn't constrain the arrangement
to "operational" status
of the association
• Through tax relief, offer possible pass
Under IRS rules associated with a corporation, double taxation is not allowed but it has limited
liability as in company. On individual federal tax returns, partners have to file their profits and
43
Share losses. As a separate business entity, LLP is not taxed under the federal tax law in case of
tax purposes.
• Paper work is less than corporation

To carry LLP as a business form, only few requirements are needed as two partners, few general
documents and the filing fee. No need of any extra documents as article or memorandum and
board of directors as in company.
• Good Motivator
It is so because partners can gain partial ownership which is motivating to other new partners.
• Name of LLP is renowned.

Limited liability partnership is known form of business in other countries but it is new in India.
• Compliances
Compliances are less other than forms of business or in comparison of private company.
• Audit Requirements is not mandatory
If the turnover exceeds 40 lakh and capital contribution exceed 25 lakh than LLP is require to
audit the account annually. It will provide a relaxation to small businesses men.
• Money rising
PE investors, financial institutions can be attracting finance as LLP is regulated entity.
• Taxation
While distributing the profits to the partners no tax is levied and also it is not the subject of
dividend distribution. The rate of tax is lesser than the company
The Naresh Chandra Committee Report has suggested a "go through status" for the LLP
in consonance with the law predominant in U.K. whereby segment 10 of the UK LLP Act
sets down that an exchange, calling or business carried on by a LLP, with the view to
benefit, will be dealt with as carried on in association by its individuals and not by the LLP
itself and in this manner, a LLP appreciates a go through status and isn't available in that
capacity; the tax collection obligation falls on the accomplices in their singular limit. In
advancement thereof, the draft bill on LLP, under Section 35, has adoptedan approach like
that of organization firms with the end goal of tax assessment. For annual duty purposes,
the status of a LLP as a body corporate must be overlooked and the accomplices are to be
exclusively made at risk for any assessment obligation on a lot of benefits. Additionally in
regard to an exchange or then again removal of any of the advantages of the LLP, it is to be
treated just as the benefits are held by the accomplices and the subsequent capital increases
assessment would be chargeable by virtue of the accomplices, in this manner the LLP
appreciates a go through status with the end goal of tax assessment. Such an arrangement
is fundamental to guarantee that the business decision between utilizing a LLP or an
association isn't twisted and useful components of associations are not completely disposed
of. Notwithstanding these there are arrangements concerning amalgamation and merger of
LLPs which must be administered by guidelines to be made by the Central Government.
Explicit offenses have been made for repudiation of different necessities under various
arrangements of the proposed model Act. Area 53 likewise accommodates the presentation
of Foreign LLPs in India which must be represented by guidelines to be made. Accordingly,
the proposed Bill all in all is a dynamic enactment which however has some hazy areas yet
it rises fruitful in formation of LLP as a different legitimate element inside the current
structure of law in India. The question whether a LLP is an organization or an association
is one of scholarly intrigue yet the nature of LLP must be comprehended to figure out
which law ought to apply to those issues which the Act, the Regulations and the gatherings
themselves neglect to decide. The overwhelming law to be applied in such cases will rely on
the issues associated with a specific case viz. in outer dealings a LLP must be viewed as
likened to a privately owned business while for inward guideline standards of Partnership
will apply
Accompliances and their relations in LLP
First Accomplice: Area 22 of the LLP Demonstration, 2008 gives that on the consolidation of a
LLP, the individual who bought in their names to the joining records will be its accomplices and
other individual may turn into an accomplice of the LLP by and as per the LLP understanding.
Relationship of accomplices: Segment 23 accommodates Relationship of accomplices, spare as

in any case gave by this Demonstration, the shared rights and obligations of the accomplices of a
LLP, and the common rights and obligations of a LLP and its accomplices, or between the LLP
and its accomplices.
Discontinuance of Association Intrigue: Segment 24(1) of the LLP Demonstration, 2008 gives
that an individual may stop to be an accomplice of a LLP as per different accomplices or, without
concurrence with different accomplices as to end of being an accomplice, by giving a
notification recorded as a hard copy of at the very least thirty days to the next accomplice of his
expectation to leave as accomplice.
Conditions for programmed suspension of accomplice from LLP: An individual accomplice will
be stop to be an accomplice of a LLP (I) on his demise or disintegration of LLP, (ii) on the off
chance that he is proclaimed to be of unsound psyche by a skillful court, (iii) if has applied to be
pronounced as a wiped out or announced as a wiped out.
Obligation Of Partners
As indicated by the area 26 of the Limited Liability Partnership, each accomplice of a
constrained obligation organization is, with the end goal of the matter of the restricted risk
association, the operator of the constrained obligation organization yet not of different
accomplices.
Examination of Section 26
Segment 26 of the LLP Act gives that to the motivation behind the matter of LLP each
accomplice of the LLP is the specialist of the LLP and not of different accomplices. Risk of
accomplices will be constrained to with the exception of if there should arise an occurrence of
unapproved acts, extortion and carelessness. This is one of the significant highlights that are
probably going to cause arrangement of an enormous number of LLPs in India. One of the most
distinctive highlights of the LLP is that accomplice will not be by and by subject for the
illegitimate demonstrations or exclusion of some other accomplice of the LLP. This is on the
grounds that, in a LLP, an accomplice doesn't go about as an operator for different partner(s). In
contrast to customary association, an accomplice of LLP won't be viewed as the specialist of
different accomplices of the LLP. At the end of the day, if there is any off-base doing or gross
carelessness by any of the accomplices, the risk of such acts will not navigate to different
accomplices.
Area 211 of the Indian Contract Act, 1872 gives that an operator will undoubtedly lead the
business given by the standard, or without any such course as per the custom which wins in
doing a business of a similar kind at where the specialist directs such a business. At the point
when the operator demonstrations in any case, if insect misfortune is supported, he should make
it great to his head, and if benefit accumulates, he should represent it.
Segment 18 of the Indian Partnership Act, 1932 gives that, subject to the arrangement of this Act,
an accomplice is the operator of the firm with the end goal of the matter of the firm. Further, area
25 of the Indian Partnership Act 1932 gives that each accomplice is at risk together with the
various accomplices and furthermore severally for all demonstrations of the firm done while he
is an accomplice.
Each Partner is an Agent of LLP For The Purpose Of Business of LLP

A specialist is an individual who has ability to tie his head by his demonstrations done inside the
power allowed by the head. In the event that a specialist past his position and the outsider
managing the operators realizes that the operator is acting past his power or his individual to
accept that he is acting along these lines, and still arrangements with such operator, he can't tie
the guideline for the demonstrations of such operator. This is the wide guideline of office
articulated under the Indian Contract Act 1872.
In the ordinary course of business, an accomplice has the ability to speak to association and
embrace business exchanges for its benefit. Subsequently, the LLP Act completely expresses that
an accomplice is an operator of LLP; nonetheless, this office is limited with the end goal of
business of LLP as it were. In like manner if an accomplice embraces common business
exchanges or go into contracts for business of LLP, outsider would have the option to tie LLP for
his demonstrations, in any case, in the event that he attempts an exchange which isn't in the
typical course of business, state an accomplice of an exchanging association executes an
agreement to purchase lodging property ( such exchange apparently mirrors that it may not be
identified with the matter of LLP,) the related outsider will be unable to tie the LLP for the
demonstrations of the accomplice in such manner.
A Partner Is Not an Agent of the Other Partners

In a general organization, each accomplice is a specialist of different accomplices and common
office between the accomplices is a basic trial of association. Because of this, each accomplice is
mutually and severally answerable for the liabilities of the general association firm and the
degree of danger of an accomplice for the demonstrations of the firm (as additionally of different
accomplices) is high. This component turns into a reason for worry for enormous organization
especially those of experts and it got more diligently for some to accommodate their
organizations' expanding size and specialization with the conventional association structure.
Many felt that to gain each accomplice in a huge, exceptionally particular firm to acknowledge
boundless budgetary duties fro the activities of their accomplice had become an unreasonable
recommendation. The idea of LLP type of association developed in this background where it was
recommended that an accomplice ought not be subject for the illegitimate demonstrations or
exclusion of different accomplices in a LLP. In this manner, this component of LLP completely
gives that the accomplice don't have any common organization relationship between se in a LLP
Expansion Of Partner's Liability
Segment 28(1) gives that an accomplice isn't by and by at risk, legitimately or by implication for
an association refereed to in sub area (3)[9] of segment exclusively by reason of being an of
restricted obligation organization.
Anyway the individual risk of accomplice will be for his improper demonstration or exclusion,
however an accomplice will not be by and by obligated for the unjust demonstration or oversight
of some other accomplice of the LLP. As LLP is another kind of substance, the points of
reference have not yet been set. In an expert firm situation, if an accomplice of a LLP were to
offer awful guidance or in any case demonstration carelessly towards a customer and the
customer endured a misfortune accordingly, the customer might have the option to indict the
LLP/Tribunal and be granted fitting remuneration either from the accomplice who offered the
guidance or the association in general. It is impossible that different accomplices who were not
legitimately associated with the guidance will have any close to home obligation, dissimilar to a
conventional organization where they would have had joint and a few risk for these activities. It
is fundamental to take note of that this idea has not yet been tried in an official courtroom and it
ought not block anybody in this sort of circumstance from having the suitable protection
reimbursement spread. It ought to likewise be noticed that where the association gets wiped out
yet keeps on exchanging, the accomplices can be arraigned for this offense and precluded
similarly as an executive of a restricted organization.
Money related risk of accomplices
The money related risk of the accomplices of a LLP, in case of twisting up, ought to envelops
any present or past accomplice, who is being subject to contribute monetarily to the degree that
they have concurred with the LLP or with different accomplices. Be that as it may, an individual
who has stopped to be accomplice won't be at risk if the LLP understanding among them and the
firm excludes them from proceeding with obligation.
For example, if the understanding between the accomplices requires each to pay Rs. 100 on the
wrapping up, this is the sum which the law expects them to pay to the vendor. To this degree, the
situation of the accomplice as respects individual obligation and is practically identical to that of
the accomplice of an organization constrained by ensure. It will be up to each LLP, when
drafting its own understanding, to choose how it wishes to manage this perspective.
Risk of Partner falling beneath two

The Act accommodates the base of two accomplices to carry on LLP. On the off chance that
whenever the quantity of accomplices of a constrained risk organization is diminished beneath
two and the restricted obligation association carries on business for over a half year while the
number is so decreased, the individual, who is the main accomplice of the constrained risk
organization during the time that it so carries on business after those a half year and has the
information on the way that it is carrying on business with only him, will be subject by and by
for the commitments of the constrained risk organization caused during that period.
Risk for checks, and so forth.
In the event that an accomplice signs or approves the mark of checks, request, and so forth on
which the LLP's name is inaccurately introduced is at risk to the holder of the instrument except
if the sum is paid by the LLP.
Risk in tort or agreement
Keeping an eye over risk in tort or agreement, the accomplice of LLPs ought to guarantee that, in
all managing the customers or clients and people in general, they don't offer reason to accept that
the movement being attempted is embraced by some other means than its specialist in the interest
of the LLP. The insurance which the corporate structure of the LLP offers to people, accomplices
ought not, anyway be underestimated completely. The accomplices of a LLP owe an individual
obligation of care; there must be not just a unique connection between an accomplice and a
customer or client, however an away from of duty.
Restriction of accomplices obligation
The obligation of accomplices of a LLP, on the off chance that it is twisted up, is constrained.
Risk of accomplices under LLP is limited to the degree of the cash added to the firm by such
accomplices. LLP gives every one of its individual accomplice's assurance against individual risk
for certain association risk dissimilar to organization firm where they are actually at risk for the
commitments of the whole organization.
Vicarious risk of accomplices
Specifically, honest accomplices of a LLP are not dependent upon individual "vicarious risk" for
misbehaviors liabilities of the LLP simply in light of the fact that they are its accomplices. On
account of Megadyne Information System v. Rosner, Owens and Nunziato, No[10] the court
established that there was realities issue identifying with the individual obligation of the
accomplices. The court refered to the California LLP arrangements for the recommendation that
accomplices in a LLP don't have vicarious risk for the torts of another accomplice, and the court
expressed that the offended party could just hold an accomplice subject who was "engaged with
the treatment of the issue".
Special case to the constrained obligation

The LLP's presence as a corporate element implies that the impact of the general law is diverse
in correlation with an association. For instance, it is foreseen that an outsider will normally
contract with the LLP while, as a rule, an accomplice contracts as guideline for the benefit of
different accomplices. Accomplices of LLP are managed the assurance of constrained. The
striking special cases to this security are as per the following:
(a) Personal Negligence: if an individual accomplice is implied to have been careless, it might
be conceivable to bring a common carelessness activity against that person. Anyway the
court/council has shown that they would have respect to whether the supposedly careless
guidance was given in an individual limit or whether the LLP accepted accountability for the
counsel.
Accomplices Obligation:
All accomplices, not simply the assigned accomplices, are operators of the LLP, and as such owe
the obligations of a specialist to the LLP, in spite of the fact that the exact substance of those
obligations should be created by the court/council. The run of the mill commitments of
specialists remember commitments to represent the enthusiasm of the head (for example the
LLP), to maintain a strategic distance from irreconcilable situation and a denial on the creation
of mystery benefits, and a few components of these prerequisites are reflected in the default
arrangements. While accomplices are specialist of the LLP, they are not operators of each other
and the enactment doesn't control the connection between the accomplices. The purpose behind
the oversight was the potential clash between the obligation, which the accomplice owe to the
LLP (as specialists) and any obligation, which they each other. The arrangement received was to
force the previous obligation as an issue of legal commitments and to leave it to the accomplices
to address their inner relationship in a different LLP understanding.
Risk of the Ceased Partner Shall Continue Against Third Party in Specific Circumstances
At the point when an individual has stopped to be an accomplice of a LLP( thus refereed to as
"previous accomplice"), the previous accomplice is to be respected( according to any individual
managing the LLP) as yet being an accomplice of the LLP except if-
(a) the individual has seen that the previous accomplice has stopped to be an accomplice of the
LLP; or
(b) Noticed that the previous accomplice has stopped to be an accomplice of the LLP has been
conveyed to the Registrar.
Accomplice Shall Not Be Discharged From the Obligation for the Period of His Being a Partner
of LLP
The discontinuance of an accomplice from the LLP doesn't without anyone else release the
accomplice from any commitment to the LLP or to different accomplices or to whatever other
individual, which he caused while being an accomplice.
Accomplice Is Entitled To His Share and Accumulated Profit/Losses after Cessation from LLP
Where an accomplice of a LLP stops to be an accomplice, except if in any case gave in the LLP
understanding, the previous accomplice or an individual qualified for his offer in results of the
passing or bankruptcy of the previous accomplice, will be qualified for get from the LLP:-
(an) a sum equivalent to the capital commitment of the previous accomplices really made to the
LLP; and
(b) His entitlement to partake in the gathered benefits of the LLP, after the finding of collected
misfortunes of the LLP, decided as at the date the previous accomplices stopped to be an
accomplice. conversion
Sky light hospitality (SH) limited liability partnership had acquired the rights and liabilities of
sky light hospitality private limited (SHPL) upon the conversion under LLP act 2008. The return
for the non subjected to scrutiny assessment. However,upon further receipt of a tax evasion
report a reassessment notice has been issued under sec148.the petitioner-LLP has fuled a writ
petition to quash the notice and the reassessment proceedings
1.https://youtu.be/eFQgdFRKUlg
2.https://www.google.com/url?sa=t&source=web&rct=j&url=http://docs.manupatra.in/newsline/articles/Upload/C94
62F39-4FE8
-4F63-9DA6-
2BF65EA63632.pdf&ved=2ahUKEwjY7M2IhKfpAhW0wzgGHYogBBUQFjABegQIDBAH&usg=AOvVaw3gpd
3-CvtSKHv8oDZhAVnQ
3.
https://www.google.com/url?sa=t&source=web&rct=j&url=https://www.nolo.com/legal-encyclopedia/why-choose-
limited-liabili ty-partnership-
llp.html&ved=2ahUKEwi3ibKWhqfpAhXryDgGHaQLAv4QFjAAegQIBxAB&usg=AOvVaw3e_NdVFGB1d7L
WP9TDkr-x
4. https://www.taxreturnwala.com/limited-liability-partnerships-better-from-other-business/
5. https://www.google.com/url?sa=t&source=web&rct=j&url=http://www.legalservicesindia.com/article/470/Analys
is-of-Limited-L iability-Partnership-
Act.html&ved=2ahUKEwjrga6yhqfpAhXBzDgGHWC1ByIQFjACegQIBBAB&usg=AOvVaw33RB27VOL7C1jw-
yE2jIBT
6 http://www.legalserviceindia.com/articles/eocindia.htm
https://www.researchgate.net/publication/228226311_Limited_Liability_Partnerships_in_India
45
CHAPTER-V
CONCLUSION AND SUGGESSTIONS
CONCLUSION
The need of Limited liability partnership Act 2008 is recognized by the upcoming changes in
Today’s scenario. It provides better opportunity to the professionals to limit their liability and
work in flexible mode. A great step has been taken by the ministry of corporate affairs by
establishing an alternative business vehicle to the industry. LLP is to be considered a better
option for the professional, entrepreneur as it can provide services related to technical, scientific
fields. Limited liability partnership provides all benefits of partnership. Introduction of LLP
provides advantages to the Indian professionals and helped to enhance the competition globally.
Possibilities of malpractices are minimized carried in the business context terms. When any
negligence occurs every person is responsible for his own deeds. LLP is called as alternative
business vehicle because it functions same as general partnership but a new provision was added
as limited liability. Limited liability partnership is new corporate firm which empowers
entrepreneurial activity to join, arrangement of work to be done in a creative and productive way.
In certain scholastic circles concerns have been voiced that the restricted risk idea if there should
be an occurrence of
lawful experts is in opposition to their moral obligations towards the customers as it limits their
risk towards customers ahead of time and works upon the dread of malpractice.22 Such unclear
moral
contemplations, be that as it may, must be kept under control with changing occasions and
requirement for worldwide
intensity now and again when the Central Government is intending to open up the lawful area
for outside firms and legal advisors under the GATTs system. Coming decisively to the
requirement for
LLPs, the equivalent has been featured by two notable advisory groups. Likewise, it has been
mooted that LLP will be a decent and ideal vehicle for Small Scale Industries which are
obliged by deficient funds, particularly accessibility of working capital, from banks. The
topic of deficient financing of SSIs has been lashed to such a degree, that affliction in the SSI
division and underfunding have gotten equal in the view of a few people and
proposals have been made by numerous councils for improving the progression of credit to the
segment. The LLP framework joins the benefit of the customary corporate structure and the
business person driven exclusive/association structure and will help more "relationships between
cerebrums and bank adjusts" occur inside the little endeavor/business division, similarly with no
guarantees
expected to happen each time an organization in the sorted out corporate segment issues funding
to the
open as value shares or debentures.23 The LLP will tap reserves not from general society
be that as it may, from a segment of idle co-accomplices of an endeavor whose obligation to

reimburse obligations of the
business will be constrained to their venture and who will be qualified for an offer in the benefits
of
the business. While the constrained association business will give a more noteworthy degree of
solace to banksand different loan specialists to independent companies, it simultaneously will
dodge the tremendous measure of
documentation and severe methodology that corporate substances need to watch. There has been
a
battle of sorts to convince SSIs to change over themselves into organizations (under the
Companies
Act), with the goal that their ventures/field-tested strategies could turn out to be progressively
"bankable" and their parity
sheets could pick up acknowledgment and validity with banks and monetary foundations. This
crusade
has clearly not succeeded and maybe, the constrained association framework is a progressively
reasonable and
alluring alternative that would energize business visionaries, needing assets for modernisation
and
extension, to receive from their current situation of either exclusive endeavors or
organizations.
24 The K.B. Chandrasekhar Committee on Venture Capital has encouraged in its
report for presentation of LLPs for advancement of funding industry in India as they give
the vital adaptability in hazard sharing, remuneration courses of action among financial
specialists and duty
go through. Funding movement through such structures is required so as to advance
advancement, venture and change of logical innovation and information based thoughts. The
Panel has opined that the prospering investment industry in India will fill the hole
between the capital prerequisites of innovation and information based startup ventures and
financing accessible from customary institutional loan specialists, for example, banks. Adaptable
structures like
LLPs are for sure crucial for such development of funding industry.
With the flow of the idea paper, the Ministry of Company Affairs has put forth attempts to
get rid of the lacunae in the lawful arrangement of our nation concerning LLPs, however it is yet
in an
undeveloped stage. While a lot of thought at this point should be placed into specific parts of the
law,
a few highlights can be received from the laws of different nations. In any case, even a law that is
attempted and tried in some other nation must be formed to suit Indian conditions
andcircumstances. LLP is, all things considered, another idea and will require a great deal of
thought. The Center
must attempt to include an ever increasing number of individuals in the law-production process.
The substance of the law and
its way of execution must guarantee most extreme favorable position to everybody included, and
endeavors
must be made to make the LLP type of corporate administration generally acknowledged and
famous. The
LLP vehicle has been fruitful in U.S.A and there is no proof of its disappointment in U.K. where
a few hundred enlistments for this status have taken place.25 Some measure of pessimism still
stays about the working of the LLP framework and certain researchers have energetically
censured
their financial suitability and the presented structure dependent on the low take up rates for LLPs
in
UK.26 Going by the way that even insightful sentiment to the opposite has been expressed,27
there is
a need to make a cautious start as opposed to racing through the presentation of the Act. All the
perspectives must be all around considered and guidelines must be made for various viewpoints
previously so as to evaluate their importance in making LLP a compelling business substance. In
spot of creating a befuddling admixture of organization and association law standards, an

appropriate
approach would be change and if vital fundamentally modify those arrangements. After the Irani
Board Report it has become obvious that the prolix strategies recommended for the
administration of organizations under the Companies Act, 1956 and the divided principles made
by the
Focal Government and SEBI have made disarray and brought the consistence costs up in the
corporate segment. In this manner an alert must be taken that such principles and arrangements
ought not be
aimlessly adjusted for LLPs without making them sufficiently disentangled to bring the
consistence coststo a sensible level. Higher consistence costs will make such substances
profoundly ugly and
SSIs will avoid from entering the field inside and out. With respect to now, as the expression
goes, a venture well
started is half done. The Ministry has made an extraordinary start, and there is trust that in future
itculminates in the start of another law in the nation.
SUGGESSTIONS
• Compulsory insurance policy provision should be incorporated in India for protecting

person’s interest who claimed against LLP.
• Amendment in Foreign exchange management act and Foreign direct investment Act of
LLP and Income tax act is needed to provide waive off which is necessary in capital
gains tax and stamp duty for model of LLP.
• As we know there is provision for conversion into LLP but there is no provision for
converting back from LLP to other form, so this provision must be taken in view.
• Relief in stamp duty is attached to the transferred property on conversion of its first year
in UK. In India, a relaxation in stamp duty must be made available during conversion of
other forms of businesses into LLP.
• For including foreign LLP, In exchange controlling regulations certain changes should be
made an organization as eligible structure.
• Substitution of consent of majority into 2/3rd and 3/4th rather than unanimous decision,
while introducing new members.
47
TABLE OF CASES
1Hosking v Marathon Asset Management LLP [2016] EWHC 2418 (Ch.)
2Ederer v. Gursky - 2007 NY Slip Op 9960, 9 N.Y.3d 514, 851 N.Y.S.2d 108, 881 N.E.2d 204
3Henry v. Masson, __ S.W.3d __, 2010 WL 5395640 (Tex. Application. 2010)
4In Flanagan v Lion trust Investment Partners LLP & Ors [2015] EWHC 2171(ch)
5 Sky Light Hospitality llp v commissioner of Assistant commissioner of Income(2

February 2018)(HC)
BIBLIOGRAPHY
PRIMARY SOURCES
Company Law N.V. Paranjape
Partnership Act S.A NAIK
Limited Liability Partnership Act
WEBSITES:
1.http://www.legalserviceindia.com/articles/eocindia.htm
2.https://www.lawyersclubindia.com/articles/NATURE-OF-LIMITED-LIABILITY-PARTNERS
HIP-LLP--999.asp
3.https://www.indialawjournal.org/archives/volume2/issue_2/article_by_bhavesh_sukhada.html
4.https://taxguru.in/corporate-law/limited-liability-partnership-llp-2.html?amp#referrer=https://w
ww.google.com
5http://www.mca.gov.in/MinistryV2/natureoflimitedliabilityparterneshipllp.html
6https://www.scconline.com/blog/post/2018/09/07/limited-liability-partnership-in-the-wake-of-st
art-up-era/ 7https://www.businessmanagementideas.com/organisation/types/company-meaning-
characteristi cs-and-kinds-business-management/8932
8https://youtu.be/AdDQ05rP7jE
9https://youtu.be/oV2v9h5bzIc
10https://youtu.be/3eNCO4E2uYw
11https://youtu.be/DitdTFT4ET0
12https://youtu.be/Vu5EmMaj1bw
13https://www.lawteach /free-law-dissertations/limited-liability- partnership.php
14.https://brandongaille.com/16-limited-liability-partnership-advantages-and-disadvantages/
15http://www.legalservicesindia.com/article/470/Analysis-of-Limited-Liability-Partnership-Act.
html
16https://www.toppr.com/guides/business-laws/limited-liability-partnership-act/meaning-and-co
ncept-of-llp/
17https://youtu.be/eFQgdFRKUlg
18https://taxguru.in/corporate-law/india-llp-act-2008-llp-india.html6/Other%20Laws/limited_lia
bility_partnership.htm
19https://www.google.com/url?sa=t&source=web&rct=j&url=https://www.nolo.com/legal-encyc
lopedia/why-choose-limited-liability-partnership-llp.html&ved=2ahUKEwi3ibKWhqfpAhXryD
gGHaQLAv4QFjAAegQIBxAB&usg=AOvVaw3e_NdVFGB1d7LWP9TDkr-x
20https://www.taxreturnwala.com/limited-liability-partnerships-better-from-other-business/
21https://www.google.com/url?sa=t&source=web&rct=j&url=http://www.legalservicesindia.co
m
/article/470/Analysis-of-Limited-Liability-Partnership-
22.https://www.google.com/url?sa=t&source=web&rct=j&url=http://docs.manupatra.in/newsline
/articles/Upload/C9462F39-4FE8-4F63-9DA6-2BF65EA63632.pdf&ved=2ahUKEwjY7M2IhKf
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https://www.researchgate.net/publication/228226311_Limited_Liability_Partnerships_in_India

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Limited Liability Partnership – Critical Analysis

1.2 HISTORY OF COMPANY

1.3 TYPES OF COMPANY

1.3.2 ON THE BASIS OF LIABILITY

1.4 CHARACTERISTICS OF COMPANY

• CORPORATE PERSONALITY: It means that company is individual personality and

● LIMITED LIABILITY: Company having limited liability is great advantage in ease of

• PERPETUAL SUCCESSION: In Section 9 of companies act it is given that

• TRANSFERABILITY OF SHARES: In Section 56 it was provided that as

• CENTRALISED MANAGEMENT: For attracting professional persons, independent

• ARTIFICIAL LEGAL PERSON

1.2 INTRODUCTION OF PARTNERSHIP

1.2.1 FEATURES OF PARTNERSHIP

● Head Agent Relationship: Every accomplice is a specialist when he is following up in

Intentional Registration: Registration of association isn't obligatory. Be that as it may, since

.Points of interest of Partnership Firm

Brake on Hasty/quick Decisions: As obligation of accomplices is boundless, the accomplices,

Inconveniences of Partnership Firm

Loss of Business Opportunities: if there should be an occurrence of contrasts among the

1.2.2 TYPES OF PARTNERSHIP

 PARTNERSHIP FOR A FIXED PERIOD

 SLEEPING OR DORMANT PARTNERS

NOMINAL PARTNER BY HOLDING OUT

1.3 LIMITED LIABILITY PARTNERSHIP ACT

13.https://www.lawteach /free-law-dissertations/limited-liability- partnership.php

NATURE AND SCOPE OF LIMITED LIABILITY PARTNERSHIP

Partners and Designated partners

PUNISHMENT FOR CONTRAVENING

Extent of Liability Of LLP

2.2 FEATURES OF LIMITED LIABILITY PARTNERSHIP

 Registrar of company administered the LLP.

 No maximum limit of partners is prescribed in LLP.

Money related Disclosures

 In LLP, A body corporate and an individual may become a partner.

 Any Information, changes and changes in particulars of designated partners of LLP is

 Partner’s rights to share losses and profits are transferable.

 A Person who is representing him to be a partner or get the permission to be represented

 ‘Whistle blower’ concept is incorporated in the LLP Act.

 In case of non-compliance, heavy penalties have been provided in LLP Act.

 LLP system is integrated with MCA-21.

2.3ADVANTAGES OF LIMITED LIABILITY PARTNERSHIP

▪ Separate legal entity

LLPs offer an extraordinary expense advantage for accomplices.

obligation organization cost is exceptionally serious.

DISADVANTAGES OF LIMITED LIABILITY PARTNERSHIP

▪ Inability to raise VC funding

▪ LLP structures do not protect against employee negligence.

● Partners are not under in an obligation to consult each other.

▪ Public disclosure is required in LLP.

● Profits cannot be retained in LLP.

▪ Single-member entity is not permitted in LLP.

3.1COMPARISON OF LIMITED LIABILITY PARTNERSHIP WITH COMPANY

In case of Private company, Name to be contain ‘ Private Limited’ or in company

It has perpetual succession

Company can sue or can be sued

Minimum two partners and maximum are not limited

Article of association and memorandum of association

Henry v. Masson, S.W.3d , 2010 WL 5395640 (Tex. Application. 2010)