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Limited Liability Partnership Act 2008

Autor:   •  August 30, 2015  •  Presentation or Speech  •  693 Words (3 Pages)  •  1,046 Views

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Limited Liability Partnership Act, 2008

  • Official Gazette of India on January 9, 2009

  • First LLP - First week of April 2009

  • Extends to the whole of India

  • LLP -  Partnership formed & registered under this Act                        [Sec 2(1) (n)]

  • Features:

  • Body Corporate

  • Separate Legal Entity

  • Perpetual Succession

  • Non-Applicability

Comparison between Partnership and LLP

Basis of distinction

Partnership

LLP

Regulating Law

It is governed by ‘The Indian Partnership Act, 1932’

It is governed by ‘The Limited Liability Partnership Act, 2008’

Registration

Registration is optional

Registration is compulsory

Creation

It is created by agreement.

It is created by Law.

Separate Legal Entity

It has no separate legal entity.

It has separate legal entity.

Name of Entity

It can have any name as per choice.

Its name to contain “Limited Liability Partnership” or “LLP” as suffix.

Perpetual Succession

It does not have perpetual succession. The death, insolvency or unsoundness of its members may affect its existence.

It has perpetual succession. The death, insolvency or unsoundness of its members does not affect its existence. Members may come and go but the LLP continues it existence.

Charter Document

Partnership Deed is a charter of the firm which denotes its scope of operation and rights and duties of the partners.

LLP  Agreement is a charter of the LLP which denotes its scope of operation and rights and duties of the partners vis-à-vis LLP.

Common Seal

There is no concept of common seal in partnership

It may have its own common seal (i.e. Official Signature ) as per its Agreement

Incorporation Formalities

  1. Partnership Deed
  2. Form / Affidavit
  3. Prescribed Fee

Required to be filled with Registrar of Firms

  1. LLP Agreement
  2. Various e Forms
  3. Prescribed Fee

Required to be filled with Registrar of LLP

Time taken to incorporate

It takes 7 days (approx.) to incorporate

It takes 10 days (approx.) to incorporate (inclusive of time taken to obtain DPIN)

Can it sue third party?

Only registered partnership can sue third party.

A LLP being a legal entity can sue third party

Can Foreign National become partner?

Foreign National can not become a partner in a Partnership Firm in India

Foreign National can become Partner in a LLP

Number of Members

Minimum 2 and Maximum 10

Minimum 2 but there is no limit on maximum

Ownership of assets

Joint Ownership

Has ownership of assets

Rights / Duties / Obligation of the Partners / Managing Partners

Governed by partnership Deed

Governed by LLP Agreement

Liability of Partners

Unlimited

Limited

Mutual Agency

Agents of the firm and other partners.

Agents of LLP and not of other partners.

Designated Partner

It need not have Designated Partners

It must have at least 2 individuals as Designated Partners, of whom at lease one must be resident in India. Each Designated Partner is required to have a DPIN before appointment

Digital Signature

There is no requirement of obtaining Digital Signature

At least one Designated Partner must have Digital Signature since e-forms are filled electronically

Dissolution

Its Dissolution may take place by mutual agreement, insolvency, certain contingencies, and by court order

Its Dissolution may take place voluntarily or by order of National Company Law Tribunal

Maintenance of Minutes

There is no concept of any minutes

A LLP by agreement may decide to record the proceedings of meetings of the Partners / Designated Partners

Annual Filing with Registrar

No return is required to be filed with Registrar of Firms

  1. Annual Statement of Accounts
  2. Statement of Solvency
  3. Annual Returns

required to be filed with Registrar of LLP every year

Audit of Accounts

Partnership Firms are only required to have Tax Audit of their accounts as per the provisions of the Income Tax Act

An LLP is required to get their accounts audited annually as per the provisions of LLP Act 2008 if its turnover exceeds Rs.40 Lacs or its capital contribution exceeds Rs.25 Lacs in any financial year.

Compromise / Arrangements / Merger / Amalgamation

Partnership cannot merge with other firm or enter into Compromise or Arrangement with creditors or partners

LLP’s can enter into Compromise/Arrangements/Merger/Amalgamation

Whistle Blowing

No such provision is provided under The Indian Partnership Act, 1932

Provision has been made to provide protection to employees & partners, providing useful information during an investigation or convicting any partner or firm.

Admission of Minor

Minor can be admitted to the benefits of Partnership as per its Agreement.

Minor can not be admitted to the benefits of LLP.

Liability of Partners for Legal Compliance

All Partners are liable for Legal Compliance

Only Designated Partners are liable for Legal Compliance.

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