WHAT IS A LIMITED LIABILITY PARTNERSHIP (LLP)
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.
The minimum number of partners to incorporate an LLP is 2. There is no upper limit on the maximum number of partners of LLP. Among the partners, there should be minimum two designated partners who shall be individuals, and at least
one of them should be resident in India. The rights and duties of designated partners are governed by the LLP agreement. They are directly responsible for the compliance of all the provisions of LLP Act 2008 and provisions specified
in LLP agreement.
If you want to start your business with Limited Liability Partnership, then you must get it registered under Limited liability Partnership Act, 2008.
FEATURES OF THE LLP
- It has a separate legal entity just like companies
- The liability of each partner is limited to the contribution made by partner
- The cost of forming an LLP is low
- Less compliance and regulations
- No requirement of minimum capital contribution
ADVANTAGES OF LLP FORM
LLP is a form of business model which :
- is organized and operates on the basis of an agreement.
- provides flexibility without imposing detailed legal and procedural requirements.
- enables professional/technical expertise and initiative to combine with financial risk-taking capacity in an innovative and efficient manner.
SECTIONS/REGULATIONS/RULESAPPLICABLE TO LLP
- Limited liability Partnership Act, 2008
- LLP Agreement