Limited Liability Partnership



Limited Liability Partnership (LLP)

The concept of LLP was introduced when the Limited Liability Partnership Act, 2008 came into force. LLP is an alternative corporate business form that gives the benefits of limited liability of a company and the flexibility of a partnership. The LLP can continue its existence irrespective of changes in partners. It is capable of entering into contracts and holding property in its own name. The LLP is a separate legal entity, is liable to the full extent of its assets but liability of the partners is limited to their agreed contribution in the LLP. Further, no partner is liable on account of the independent or un-authorized actions of other partners, thus individual partners are shielded from joint liability created by another partner’s wrongful business decisions or misconduct.

F.A.Q

No, the provisions of Indian Partnership Act, 1932 would not be applicable to LLPs.
Currently there is no regulation prohibiting LLP from carrying on activities related to NBFC but as a matter of precaution before initiating any such activity, it is advisable to contact Reserve Bank of India.
In reference to LLP, contribution can be termed as, what a partner is contributing towards the Limited Liability Partnership for running of his business. Contribution in case of LLP is alike Share Capital in case of Company.
A contribution of a partner may consist of tangible, movable or immovable or intangible property or other benefit to the limited liability partnership, including money, promissory notes, other agreements to contribute cash or property, and contracts for services performed or to be performed.
A minimum of two partners will be required for formation of an LLP. There is no limit on the maximum number of partners.
A limited liability partnership has the following benefits:
     * The nature of a limited liability partnership firm is that of a body corporate
     * It has a legal entity separate from its partners.
     * It has perpetual succession.
     *Any change in the partners of a limited liability partnership shall not affect the existence, rights or liabilities of the limited liability partnership.
Thus, forming a limited liability partnership firm is more favourable.
A Limited Liability Partnership is a legal entity separate from its partners and therefore, offers limited liability to its partners whereby any debts and obligations of the LLP will be borne by the assets of the LLP. In the case of a conventional partnership, the partners are jointly and severally liable for each debt and obligation of the partnership firm.
A “partner”, in relation to a limited liability partnership, means any person who becomes a partner in the limited liability partnership in accordance with the limited liability partnership agreement. Any individual or body corporate can be a partner in a limited liability partnership.
However, that individual shall not be capable of becoming a partner of a limited liability partnership, if –
     (a) he has been found to be of unsound mind by a Court of competent jurisdiction and the finding is in force;
     (b) he is an undischarged insolvent; or
     (c) he has applied to be adjudicated as an insolvent and his application is pending.
Yes, a body corporate can be a partner to a limited liability partnership firm.
“Body Corporate” includes the following-
     (i) a limited liability partnership registered under this Act;
     (ii) a limited liability partnership incorporated outside India; and
     (iii) a company incorporated outside India,

but does not include –
     (i) a corporation sole;
     (ii) a co-operative society registered under any law for the time being in force; and
     (iii) any other body corporate or a limited liability partnership, which the Central Government may, by notification in the Official Gazette, specify in this behalf.
Audit of LLP is mandatory when the turnover exceeds Rs. 40 Lakhs and Capital Contribution exceeds Rs. 25 Lakhs.
No, the whole process is online. Therefore, one need not be physically present to incorporate an LLP.
Yes, it is mandatory to register the LLP Agreement as per the LLP Act, 2008.
Yes, an existing partnership firm can be converted into LLP by complying with the provisions of LLP Act, 2008.
No, LLP cannot be converted into Private Limited Company as both the Companies Act, 2013 and LLP Act, 2008 are silent on these matters.