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What is LLP?

What is LLP?

 

A company is the most common form of business. This refers to incorporated entities. Though a company stands for an organisation which is incorporated under the provisions of the companies act 2013 or under any other companies act prior to enactment of the act of 2013. To be precise a company is a separate legal entity different from its owners, it has got perpetual succession, a common seal, capable of owning property, legally capable of sue others and to be sued in its own name.

An LLP is a significant advancement over the tradition form of business as partnership. to understand the meaning of LLP let us examine two aspects of Firm vis a vis an LLP, the partners in an partnership firm are exposed to the fraud committed by the other partners due to concept of mutual agency where as in case of LLP a designated partner enjoys limited liability for the conduct of other DP. The number of Partners is limited to 20 in case of normal partnership while there is no limit prescribed for the partners in LLP. Apart from these contrasting features an LLP is an incorporated entity and is creation of law and not merely out of an agreement, thus enjoys features of a company such as perpetual succession etc;

LLP in a Nutshell

·         Limited Liability Partnership

·         New Business Vehicle

·         Hybrid Form

·         LLP Introduced on 1st April 2009 by Limited Liability Partnership Act 2008

 
 

" Corporate business vehicle that enables professional expertise and entrepreneurial initiative to combine and operate in flexible, innovative and efficient manner, providing benefits of limited liability while allowing its members the flexibility for organizing their internal structure as a partnership."