The document discusses the Limited Liability Partnership (LLP) Act introduced in India in 2008. It provides 3 key points: 1) The LLP Act was introduced to fill the gap between traditional partnerships and companies by allowing businesses to benefit from limited liability like companies but maintain tax benefits of partnerships. 2) An LLP must have a minimum of 2 partners and liability is limited to the amount invested by each partner. It provides greater flexibility than traditional partnerships or private companies. 3) While the LLP structure provides benefits, some tax and regulatory issues still need clarification like how LLPs will be taxed and if rules for private companies also apply to LLPs. The LLP Act

1. LIMITED LIABILITY
PARTNERSHIP
PREPARED BY:
AMITANSHU SRIVASTAVA

2. Contents LIMITED LIABILITY PARTNERSHIP
INTRODUCTION
1
RATIONALE OF LLP
2
HIGHLIGHTS
3
KEY ISSUES AND ANALYSIS
4
COMPARISON
5
CONCLUSION
6

3. INTRODUCTION
LIMITED LIABILITY PARTNERSHIP
 Idea emerged out of the report of the Naresh
Chandra Committee and Dr. J.J. Irani Committee.
 Tabled in Rajya Sabha on 15th December 2006.
 Introduced in order to adopt a corporate form.
 It has perpetual succession.

4. RATIONALE OF LLP
LIMITED LIABILITY PARTNERSHIP
 Fill the gap between business firms.
 Foster the growth of the services sector.
 Viewed as a path-breaking reform initiative.
 Provides an effective alternate corporate
business vehicle.

5. HIGHLIGHTS
LIMITED LIABILITY PARTNERSHIP
 The LLP shall be a body corporate and a legal entity
separate from its partners.
 A minimum of two partners will be required for the
formation of an LLP with no limit on the maximum
number of partners
 Liability of the partners of an LLP will be limited to
the extent of investment made by them in the LLP.
 The concept of whistleblower has been introduced.

6. HIGHLIGHTS LIMITED LIABILITY PARTNERSHIP
 Partnerships, private limited companies and
unlisted public limited companies may convert
into LLPs.
 Any change in the partners will not affect the
existence, rights or liabilities of the LLP.
 The Central Government shall have powers to
investigate the affairs of an LLP, if required.

7. KEY ISSUES AND LIMITED LIABILITY PARTNERSHIP
ANALYSIS
 It is not specified how LLPs will be taxed.
 It is unclear if limit of 20 will also apply to
LLPs.
 The Bill does not specify whether capital
gains tax or stamp duty will be payable when
a partnership or a company converts into an
LLP.

8. KEY ISSUES AND LIMITED LIABILITY PARTNERSHIP
ANALYSIS
 Even after this Bill there is no legislation
under which a single-member entity can
function with limited liability in India.

9. COMPARISON LIMITED LIABILITY PARTNERSHIP
PARTNERSHIPS LLP PRIVATE LIMITED
COMPANIES
Number of 2 to 20. Minimum 2 2 to 50
Members partners. shareholders.
Liability Unlimited. Limited Limited
Registration Registration with Registration with Registration with
RoC optional. RoC required. RoC required.
Dissolution By agreement, By agreement or by By court order once
mutual consent, order of National the affairs of the
insolvency, certain Company Law company have been
wound up or court’s
contingencies, and Tribunal.
by court order. discretion.
Transfer / Not transferable. Transferable Transferable
Inheritance of
share

10. COMPARISON LIMITED LIABILITY PARTNERSHIP
PARTNERSHIPS LLP PRIVATE LIMITED
COMPANIES
Documents to be None required, Designated Annual statement
Filed unless registered. partners have to of accounts,
If registered, file annual minutes of Board
annual accounts accounts, and meetings, share
mandatory. submit an annual register, register of
statement on charges.
solvency.
Taxation Income of partners Unspecified. Income of
taxed, not of company is taxed,
partnership. income distributed
to shareholders is
also taxed.

11. CONCLUSION LIMITED LIABILITY PARTNERSHIP
 In trend in various other countries.
 Allows individual partners to be
restricted from joint liability of partners.
 A great relief to the partners, particularly
professionals like Company Secretaries,
CAs, Advocates and other professionals.
 A good beginning towards a long journey.