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LLP India
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What is LLP?  
LLP is an alternative corporate business form that offers 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.  
Why LLP ?  
Because LLP contains elements of both ‘a corporate structure’ as well as ‘a partnership firm structure’ LLP is a hybrid between a company and a partnership which is more convenient business structure.  
Is LLP totally new in the world?  
No. such structure is already prevailing in other developed countries like USA, U.K., Australia, Singapore and also Gulf countries.  
How LLP differs from traditional Partnership Firms?  
Under traditional partnership firm all the partners are jointly and severally responsible for all claims against firm and such claim can be enforced against personal assets of the partner. However under LLP, liability of the partner is limited to his agreed contribution only and no partner is liable on account of the independent or un-authorized acts of other partners.  
How LLP differs from a Private / Public Limited Company?  

The Memorandum of Association is the charter of the company and the Articles of Association are the internal regulations. Further the management of a company rests with the Board of Directors who are trustees of the Shareholders. Companies are regulated under the Companies Act, 1956.

The mutual rights and duties of the partners and that of a LLP and its partners is governed by the LLP Agreement between the partners or between the LLP and its partners. In the absence of any such agreement, the same are regulated by the First Schedule to the LLP Act.

For detailed comparison refer to comparison table (drop down for comparison table)

Which Business can be done by LLP structure?  
Any type of business sector whether manufacturing, trading, commercial or professional services can form LLP with a minimum of TWO partners. Hence LLP may attract the following persons more so for its ‘limited liability feature’:-  
  • Small Sector Enterprises (including Micro, Small and Medium Enterprises)
  • Producer Companies in Handloom, Handicrafts sector.
  • Professionals such as Chartered Accountants (CAs), Cost and Works Accountants (CWAs), Company Secretaries (CSs), Advocates, etc.
  • Venture capital funds where risk capital combines with knowledge and expertise.
  • Persons providing services of any kind.
  • Enterprises in new knowledge and technology based fields where the corporate form is not suitable.
  • Professionals and enterprises engaged in any scientific, technical or artistic discipline, for any activity relating to research, production, design and provision of related services. 
Can LLP be formed for Charitable / non-for-profit organizations?  
No, LLP is only for business-with-profit objectives.  
Which law is applicable to LLP?  
LLP Act, 2008 and LLP Rules, 2009.  
Whether Indian Partnership Act, 1932 also would be applicable to LLPs?  
How many persons can form LLP?  
Minimum TWO and no limit for maximum numbers of partners for LLP.  
Can body corporate may be a partner of an LLP?  
Who can be a Partner?  
Any individual or body corporate may be a partner in a LLP. However an individual can not become a partner of a LLP, if—  
  • he has been found to be of unsound mind by a Court of competent jurisdiction and the finding is in force;
  • he is an undischarged insolvent; or
  • he has applied to be adjudicated as an insolvent and his application is pending.
What are the requirements in respect of “Designated Partners”?  
Appointment of at least two “Designated Partners” is mandatory for all LLPs. “Designated Partners” shall be responsible for regulatory and legal compliances, besides their liability as ‘partners, per-se”.  
What is the requirement of a “Designated Partner”?  
Every LLP shall be required to have atleast two Designated Partners who shall be individuals and at least one of the Designated Partner shall be a resident of India.  
What is LLP Agreement requirements?  
The mutual rights and duties of partners inter se and those of the LLP and its partners shall be governed by the agreement between partners or between the LLP and the partners. This Agreement would be known as “LLP Agreement”.  
Whether LLP Agreement is mandatory?  
No, it is not mandatory and in the absence of LLP Agreement the provisions for mutual rights and liabilities of Partners shall be as provided for under Schedule I to the LLP Act. .  
Is change in Partners allowed after incorporation of LLP?  
Persons, who subscribed to the “Incorporation Document” at the time of incorporation of LLP, shall be partners of LLP. Subsequent to incorporation, new partners can be admitted in the LLP as per conditions and requirements of LLP Agreement.  
How a partner can resign from LLP?  
As per LLP Agreement or if not provided for, by giving 30 days advance notice.  
What is the tax provisions in India for LLP ?  
The Ministry of Finance is yet to clarify / notify rules for Taxation of LLPs under the Income Tax Act, 1961.  
Whether existing partnership Firm or Company can convert into LLP?  
Yes, existing Partnership Firm as well as Private Companies and Closely held Public Companies can convert itself into LLP.  
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