• 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 partners wrongful business decisions 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.
• Since LLP contains elements of both a corporate structure as well as a partnership firm structure LLP is called a hybrid between a company and a partnership.

LLP shall be abody corporateand alegal entityseparate from its partners. It will have perpetual succession.

LLP form is a form of business model which:

(i) is organized andoperates on the basis of an agreement.

(ii) providesflexibility without imposing detailed legal and procedural requirements

(iii) enables professional/technical expertise and initiative to combine with financial risk taking capacity in an innovative and efficient manner

The LLP structure is available in countries likeUnited Kingdom, United States of America, various Gulf countries, Australia and Singapore.On the advice of experts who have studied LLP legislations in various countries, theLLP Actis broadlybased on UK LLP Act 2000 and Singapore LLP Act 2005.Both these Acts allow creation of LLPs in a body corporate form i.e. as a separate legal entity, separate from its partners/members.

Under traditional partnership firm, every partner is liable, jointly with all the other partners and also severally for all acts of the firm done while he is a partner.

Under LLP structure, liability of the partner is limited to his agreed contribution. Further, no partner is liable on account of the independent or un-authorized acts of other partners, thus allowing individual partners to be shielded from joint liability created by another partners wrongful acts or misconduct.

• A basic difference between an LLP and a joint stock company lies in that theinternal governance structureof a company is regulated by statute (i.e. Companies Act, 1956) whereas for an LLP it would be by a contractual agreement between partners.
• Themanagement-ownership divideinherent in a company is not there in a limited liability partnership.
• LLP will havemore flexibilityas compared to a company.
• LLP will havelesser compliance requirementsas compared to a company.