THE LIMITED LIABILITY PARTNERSHIP ACT, 2008

After studying this chapter, you would be able to understand-

1. Understand the meaning of the term ‘Limited Liability Partnership’, its need, scope and advantages

2. Incorporation of LLP, Partners and their relations, financial disclosures, conversions, winding up and dissolution

3. Differentiate between ‘Limited Liability Partnership’ and other forms of organisation

SUMMARY

A LLP is a special type of partnership that can be used as business organizations owned by certain type of professionals such as Company Secretaries, Chartered Accountants, Cost Accountants, Lawyers, Engineers, Doctors, and Consultants etc., who are not allowed to use corporation form of entity to limit their liability. LLP is generally set up for carrying on a partnership consisting of partners carrying on practice in one or more eligible professions, etc.

Since India has witnessed considerable growth in services sector and the quality of our professionals have been acknowledged internationally. It was necessary that entrepreneurship knowledge and risk capital combine to provide a further momentum to our impressive economic growth. It is likely that in the years to come Indian professionals would be providing accountancy, legal and various other professional/technical services to a large number of entities across the globe. Such services would require multidisciplinary combinations that would offer a menu of solutions to international clients. In view of all this, the concept of LLP came into existence. LLP framework could be used for many enterprises, such as:-

1. Persons providing services of any kind

2. Enterprises in new knowledge and technology based fields where the corporate form is not suited.

3. For professionals such as Chartered Accountants (CA), Cost and Management Accountants (CMA), Company Secretaries (CS) and Advocates, etc.

4. Venture capital funds where risk capital combines with knowledge and expertise.

5. Professionals and enterprises engaged in any scientific, technical or artistic discipline, for any activity relating to research production, design and provision of services.

6. Small Sector Enterprises

7. Producer Companies in Handloom, Handicrafts sector. LLP has partners but no directors or shareholders. The major constituents of a LLP are its partners who are the ultimate owners.