LLP

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A Limited Liability Partnership (LLP) is an incorporated business form that combines the features of a partnership and the company form of businesses. The LLP form of organization was introduced in India by the Limited Liability Partnership Act, 2008.

LLP is a body corporate with all the features of a limited LLP. This is a new business organization in India with all the features of an LLC in the US and an LLP in the UK. This is an ideal organization for business as compared to an LLP. The law governing LLPs in India is contained in the Limited Liability Partnership Act, 2008.

An LLP combines the advantages of both—'LLP' and 'Partnership'—in a single business entity. In an LLP, a partner is not responsible or liable for another partner's misconduct or negligence. Instead, all partners have limited liability, limited to their own acts of commission or omission, similar to partners' liabilities in a limited LLP.

Foreign Direct Investment (FDI) is permitted in LLPs operating in sectors/activities where 100% FDI is allowed through the automatic route with the approval of Foreign Investment Promotion Board (FIPB). FDI in LLPs will not be allowed in sectors such as agricultural/plantation activity, print media or real estate business.

Unlike a company, an LLP or Limited Liability Partnership combines the features of a partnership and the company form of businesses. Introduced in India by the Limited Liability Partnership Act, 2008, it has a unique feature that offers reduced personal responsibility for business debts. In other words, a partner is not responsible or liable for another partner's misconduct or negligence. Instead, the liability is limited to only their acts of commission or omission. An LLP while its formation, should execute and maintain a "Deed of Partnership" which is a legally binding agreement between members. This deed lays out the rights and responsibilities of each party to the agreement.  The main steps or processes involved in forming an LLP are;

Ø  Choosing an LLP name

Ø  Name approval from the Registrar

Ø  Draft the “Deed of Partnership

Ø  Filing of documents with Registrar

Overview

A Limited Liability Partnership (LLP) shares many of the features of a normal partnership - but it also offers reduced personal responsibility for business debts. LLP must have at least 2 members. The rights and responsibilities of all members would usually be laid out in a "Deed of Partnership". An LLP should draw up a "Deed of Partnership" at the time of formation - a legally binding agreement between members which lays out the rights and responsibilities of each party to the agreement. Incorporation of LLP includes:

• Choosing an LLP name
• Name approval from the Registrar
• Draft the “Deed of Partnership
• Filing of documents with Registrar

FAQ

What is the difference between LLP and a Company
The main difference is that an LLP has the organizational flexibility of a partnership and is taxed as a partnership. In other respects it is very similar to a private company.