What is LLP

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Limited Liability Partnerships (LLPs) are commercial vehicles which combine features of partnership and company form of business. 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.
Unlike in partnership, no partner is liable on account of the independent or un-authorized actions of other partners and accordingly individual partners are protected from joint liability created by another partner’s wrongful actions or misconduct.

 Mutual rights and duties of the partners within a LLP are governed by an agreement between the partners or between the partners and the LLP as the case may be. The LLP, however, is not relieved of the liability for its other obligations as a separate entity.

Limited Liability Partnership is managed as per the LLP Agreement, however in the absence of such agreement the LLP would be governed by the Schedule 1 of LLP Act 2008 which describe the matters relating to mutual rights and duties of partners of the LLP and of the limited liability partnership and its partners.

LLP has a separate legal entity, liable to the full extent of its assets, the liability of the partners would be limited to their agreed contribution in the LLP. Further, no partner would be liable on account of the independent or un-authorized actions of other partners, thus allowing individual partners to be shielded from joint liability created by another partner’s wrongful business decisions or misconduct.

Limited Liability Partnership is generally managed by Designated Partners, who are responsible for managing the day to day affairs and ensuring the compliances of all applicable laws.

Advantages
  • Personal Assets are protected and liability of partners are limited
  • Easy to form
  • More flexibility and easy to run
  • Low cost of Registration
  • No minimum capital contribution
  • No restrictions as to maximum number of partners
  • Partners are not liable for the act of another partner
  • Less compliance
  • No audit unless turnover is Rs.40 lakhs or more
  • Less Government Intervention
  • LLP & its partners are distinct from each other

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