LLP Act 2008 and

Companies Act 2013

Features of LLP

• LLP is a body corporate and a legal entity separate from its

partners. It has a perpetual existence like a Company.
• The liability of the partners is limited till the LLP firm and
not unlimited against the partners of the firm.
• It is kind of partnership where LLP firm is responsible for
the debts of the business and not the partners.
• Minimum number of partners are two. No limit on
maximum number of partners.
• Every firm registered under this Act is required to have
‘LLP’ as suffix after their name.
Role of Partners
• Partners are agents of the LLP firm and not of the other
partners as in regular partnership.
• LLP is liable if a partner is liable to any person as a result of
wrongful act or omission on the part of partner in the ordinary
course of partnership firm.
• Obligation of LLP shall be solely the obligation of the firm and
not of the partners.
• Partner is not personally liable for any obligation of the limited
liability partnership whether arising in contract or otherwise.
• However in case of fraud, the liability of the partners becomes
unlimited and partners can be held personally responsible for
their acts
Partners and Designated Partners
• An individual or a body corporate can be a partner in the LLP.
• Provided that an individual cannot become a partner in LLP if he
is incompetent to enter into a contract or declared to insolvent by
any Court of law or has applied for such insolvency.
• There must at least be 2 designated partners who are individuals
and at least one of them shall be resident of India. Resident of
India means that such an individual must have stayed in India
for not less that 182 days in the immediately preceding 1 year.
• Every such designated partner must register with the Central
Government (RoC) and must have his unique Designated Partner
Identity Number (DPIN).
Role of Designated Partner
• He is responsible for doing all acts, matters and things as
are required to be done by an LLP firm in compliance with
the law including filing of any document, return,
statement and reports pursuant to the provisions of the
law.
• He is liable for all penalties, if any, imposed upon a LLP
for violation of the LLP Act.
Partners and Their Relations
• Partners must subscribe to the incorporation agreement submitted to the RoC
and all those who have subscribed to the agreement become partners in the LLP
• Mutual rights and obligations of the partners and that of the LLP can be
governed by the LLP incorporation agreement
• In the absence of any such agreement as to any matter, the mutual rights and
obligations of the LLP and the partners shall be determined by the provisions of
as mentioned in the first schedule of the Act
• A partner may cease to be a partner in accordance with an agreement with
other partners
• A partner can also cease to be a partner if he dies or the firm is dissolved or he
is declared to be of unsound mind or if he is declared to be insolvent
• Cessation of partner will not discharge him from any obligations to the LLP or
other partners
• Every such change in the partners shall be informed to the RoC within
stipulated time
Difference
PARAMETERS LLP PARTNERSHIP COMPANY
Law LLP Act 2008 Partnership Act 1932 Companies Act 2013
Registration Compulsory Optional Compulsory
Foreign national status Can be a partner Cannot be a partner Can be a shareholder
Legal Entity Separate from its partner Not Separate from its Separate from its
partners shareholders
Perpetual succession It has perpetual Does not have It has perpetual
succession succession
Common seal Yes Optional Yes
Ownership of assets LLP has its ownership of No ownership in name of It has ownership of assets
assets firm. Partners have joint
ownership of assets
Liability of partners Limited upto their Unlimited Limited to the extent of
contribution in capital shares held by them
Difference
PARAMETERS LLP PARTNERSHIP COMPANY
Agency relationship Partners are agents of LLP Partners are agents of Directors can act as agent
and not of each other firm and also of each of company
other
Charter LLP Agreement Partnership deed (not MoA and AoA of company
mandatory)
Minimum capital No requirement No requirement Paid up cap. Of Rs. 1 lakh
for Pvt. Ltd.
Paid up cap. Of Rs. 5 lakhs
for Public Ltd.
Voting rights Each partner has only one No voting rights Voting rights in
voting right proportion to the share
held