LLP, governed by the Limited Liability Partnership Act 2008, came into effect from April 1, 2009
LLP combines the advantages of ease of running a Partnership and separate legal entity status and limited liability aspect of a Company. LLP is mid way between a firm’s flexibility with unlimited liability and a company’s rigidity and limited liability.
Some of the main features of a LLP are
1. LLP is a legal entity separate from its partners, can own assets in its name, sue and be sued.
2. Unlike corporate shareholders, the partners have the right to manage the business directly
3. One partner is not responsible or liable for another partner’s misconduct or negligence.
4. Minimum of 2 partners is needed to form a LLP and there is no maximum limit. LLP should also have 2 partners named as “Designated Partners” entrusted with the legal compliances of a LLP. But they need not be “managing partners”.
5. LLPs have perpetual succession. Death of a partner /partners does not mean the end of the LLP.
6. The rights and duties of partners in LLP, will be governed by the agreement between partners and the partners have the flexibility to devise the agreement as per their choice. The duties and obligations of Designated Partners shall be as provided in the law.
7. Liability of the partners is limited to the extent of his contribution in the LLP. There is no exposure of personal assets of the partner, except in cases of fraud.
8. LLP shall maintain annual accounts. However, audit of the accounts is required only if the capital contribution exceeds Rs. 25 lakhs or annual turnover exceeds Rs.40 lakhs.
To know more about the Limited Liability Partnership (LLP), please visit the below link:
limited Liability Partnership Details
