akgoyal | Jun 9, 2018 |
FAQs On Nature Of Limited Liability Parterneship (LLP)
1Concept of “limited liability 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
4Other countries where this form is available
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.
5Difference between LLP & “traditional partnership firm”
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.
6Difference between LLP & a Company
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