Limited Liability Partnership

Ø Limited Liability Partnership

The Limited Liability Partnership Act 2008 was published in the official Gazette of India on 9 January 2009 and has been in effect since 31 March 2009. However, only limited sections of the Act have been ratified. Rules of the Act were published in the official Gazette on 1 April 2009 and amended in 2017. The first LLP was incorporated on 2 April 2009.

In India as in many other jurisdictions, an LLP is different from a Limited Partnership. An LLP operates like a limited partnership, but in an LLP, each member is protected from personal liability, except to the extent of their capital contribution in the LLP. In India, for all purposes of service tax or any other stipulated tax payment, an LLP is treated like any other Partnership firm. Liability is limited to each partners agreed upon contribution to the LLP.

No partner is liable on account of the independent or unauthorized actions of other partners, thus allowing individual partners to be shielded from joint liability created by another partner's wrongful business decisions or misconduct.

An LLP shall be a body corporate and a legal entity separate from its partners. It will have perpetual succession. Indian Partnership Act, 1932 shall not be applicable to LLPs and there shall not be any upper limit on number of partners in an LLP unlike an ordinary partnership firm where the maximum number of partners cannot exceed 20.

The LLP Act has a mandatory requirement that one of the partners in the LLP must be an Indian. Provisions have been made for corporate actions like mergers and acquisitions. While enabling provisions in respect of winding up and dissolutions of LLPs have been made, detailed provisions in this regard would be provided by way of rules under the Act. The Act also provides rules for Limited Partnerships. The Registrar of Companies shall register and control LLPs too.

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