Chapter 4 LLP Act, 2008

04 Limited Liability
Partnership Act,
2008
(Chapter 12 of ICAI Module)

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Introduction

The Ministry of Law and Justice on 9th January 2007 notified the Limited Liability Partnership Act, 2008.
The Parliament passed the Limited Liability Partnership Bill on 12th December, 2008 and the President of
India has assented the Bill on 7th January, 2009 and called as the Limited Liability Partnership Act, 2008.
The LLP Act, 2008 is applicable to the whole of India.
This Act have been enacted to make provisions for the formation and regulation of Limited Liability
Partnerships and for matters connected there with or incidental thereto.
The LLP Act, 2008 has 81 sections and 4 schedules.
a) The First Schedule deals with mutual rights and duties of partners, as well limited liability partnership and
its partners where there is absence of a formal agreement with respect to them.
b) The Second Schedule deals with conversion of a firm into LLP.
c) The Third Schedule deals with conversion of a private company into LLP.
d) The Fourth Schedule deals with conversion of unlisted public company into LLP.
The Ministry of Corporate Affairs and the Registrar of Companies (ROC) are entrusted with the task of
administrating the LLP Act, 2008. The Central Government has the authority to frame the Rules with regard to
the LLP Act, 2008, and can amend them by notifications in the Official Gazette, from time to time.
It is also to be noted that the Indian Partnership Act, 1932 is not applicable to LLPs.

Need of new form of Limited Liability Partnership

The lawmakers envisaged the need for bringing out a new legislation for creation of the Limited Liability
Partnership to meet with the contemporary growth of the Indian economy.
A need has been felt for a new corporate form that would provide an alternative to the traditional partnership
with unlimited personal liability on the one hand and the statute-based governance structure of the limited
liability company on the other hand.
In order to enable professional expertise and entrepreneurial initiative and combine, organize and operate in
flexible, innovative and efficient manner, the LLP Act, 2008 was enacted.
Thus, LLP as a form of business organization is an alternative corporate business vehicle. It provides the
benefits of limited liability but allows its members the flexibility of organizing their internal structure as a
partnership based on a mutually arrived agreement.
The LLP form enables entrepreneurs, professionals and enterprises providing services of any kind or engaged
in scientific and technical disciplines, to form commercially efficient vehicles suited to their requirements.
Owing to flexibility in its structure and operation, the LLP is a suitable vehicle for small enterprises and for
investment by venture capital.

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Meaning and Concept

A LLP is a new form of legal business entity with limited liability. It is an alternative corporate business vehicle
that not only gives the benefits of limited liability at low compliance cost but allows its partners the flexibility of
organising their internal structure as a traditional partnership.
The LLP is a separate legal entity and, while the LLP itself will be liable for the full extent of its assets, the
liability of the partners will be limited.LLP as a separate legal entity and business organisation is an alternative
corporate business form that gives the benefits of limited liability of a company and the flexibility of a
partnership.
Since LLP contains elements of both 'a corporate structure' as well as 'a partnership firm structure' LLP is
called a hybrid between a company and a partnership

New form of legal

business entity with
limited liability Alternative
Liability of partners Corporate
will be limited to the business vehicle
extent of their capital
contribution
LLP
LLP itself will Allows the partners
be liable for the the flexibility of
full extent of organising their
its assets internal structure

Definition

Address [(Section 2(1)(a)]:

“Address” in relation to a partner of a limited liability partnership, means— (i) if an individual, his usual
residential address; and (ii) if a body corporate, the address of its registered office.

Body Corporate [(Section 2(1)(d)]:

It means a company as defined in clause (20) of section 2 of the Companies Act, 2013 and includes—
a) a LLP registered under this Act;
b) a LLP incorporated outside India; and
c) a company incorporated outside India, but does not include—
(i) a corporation sole;
(ii) a co-operative society registered under any law for the time being in force; and

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(iii) any other body corporate (not being a company as defined in clause (20) of section 2 of the
Companies Act, 2013 or a limited liability partnership as defined in this Act), which the Central
Government may, by notification in the Official Gazette, specify in this behalf.

Business [Section 2(1)(e)]“:

“Business” includes every trade, profession, service and occupation except any activity which the Central
Government may, by notification, exclude.

Chartered Accountant [Section 2(1)(f)]:

means a Chartered Accountant as defined in clause (b) of sub-section (1) of section 2 of the Chartered
Accountants Act, 1949 and who has obtained a certificate of practice under sub-section (1) of section 6 of
that Act.

Designated Partner [Section 2(1)(j)]:

“Designated partner” means any partner designated as such pursuant to section 7.

Entity [Section 2(1)(k)]:

''Entity” means any body corporate and includes, for the purposes of sections 18, 46, 47, 48, 49, 50, 52 and
53, a firm setup under the Indian Partnership Act, 1932.

Financial Year [Section 2(1)(l)]:

“Financial year”, in relation to a LLP, means the period from the 1st day of April of a year to the 31st day of
March of the following year.
However, in the case of a LLP incorporated after the 30th day of September of a year, the financial year may
end on the 31st day of March of the year next following that year.

Example :
If a LLP has been incorporated on 15th October, 2017, then its financial year may be from 15th October, 2017
to 31st March, 2019.
The Income Tax department has prescribed uniform financial year from 1st April to 31st March of next year. In
keeping with the Income tax law, the financial year for LLP should always be from 1st April to 31st March each
year.

Foreign LLP [section 2(1)(m)]:

It means a LLP formed, incorporated or registered outside India which establishes a place of business within
India.

Limited liability partnership [Section 2(1)(n)]:

Limited Liability Partnership means a partnership formed and registered under this Act.

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Limited Liability partnership agreement [Section 2(1)(o)]:

It means any written agreement between the partners of the LLP or between the LLP and its partners, which
determines the mutual rights and duties of the partners and their rights and duties in relation to that LLP.
The First Schedule shall be applicable for all matters not covered by the Agreement w.r.t the mutual rights and
duties of the partners and their rights and duties in relation to the LLP.

Name [Section 2(1)(p)]:

in relation to a partner of a limited liability partnership, means— (i) if an individual, his forename, middle
name and surname; and (ii) if a body corporate, its registered name;

Partner [Section 2(1)(q)]:

Partner, in relation to a LLP, means any person who becomes a partner in the LLP in accordance with the LLP
agreement.

Regional Director [Section 2(1)(ra)]:

means a person appointed as such by the Central Government for the purpose of this Act or the Companies Act
2013, as the case may be.

Registrar [Section 2(1)(s)]:

means a person appointed by Central Government as Registrar, an Additional Registrar, a Joint Registrar, a
Deputy Registrar or an Assistant Registrar, for the purpose of this Act or the Companies Act, 2013, as the case
may be.

Small limited liability partnership [Section 2(1)(ta)]:

It means a limited liability partnership—
(i) the contribution of which, does not exceed Rs. 25 Lakh or such higher amount, not exceeding Rs. 5 Cr, as
may be prescribed; and
(ii) the turnover of which, as per the Statement of Accounts and Solvency for the immediately preceding
financial year, does not exceed Rs. 40 lakhs or such higher amount, not exceeding Rs. 50 Cr, as may be
prescribed; or
(iii) which meets such other requirements as may be prescribed, and fulfills such terms and conditions as
may be prescribed;

Tribunal [Section 2(1)(u)]:

means the National Company Law Tribunal constituted u/s 408 of Companies Act 2013.

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Applicability of the Companies Act, 2013 [Section 2(2)]

Words and expressions used and not defined in this Act but defined in the Companies Act, 2013 shall have the
meanings respectively assigned to them in that Act.

Non-applicability of the Indian Partnership Act, 1932 (Section 4)

Save as otherwise provided, the provisions of the Indian Partnership Act, 1932 shall not apply to a LLP.

Characteristic of LLP
Body Corporate
Perpetual Succession
Separate legal entity
Mutual Agency
LLP Agreement
Artificial Legal Person
Common Seal
Limited liability
Management of business
Minimum & maximum number of member
Business for profit only
Investigation
Compromise or Arrangement
Conversion into LLP
E-filing of documents
Foreign LLPs

1) LLP is a body corporate:

Section 2(1)(d) of the LLP Act, 2008 provides that a LLP is a body corporate formed and incorporated under
this Act.
Section 3 of the LLP Act provides that LLP is a legal entity separate from that of its partners and shall have
perpetual succession. Therefore, any change in the partners of a LLP shall not affect the existence, rights or
liabilities of the LLP.
2) Perpetual Succession:
The LLP can continue its existence irrespective of changes in partners. Death, insanity, retirement or
insolvency of partners has no impact on the existence of LLP. It is capable of entering into contracts and
holding property in its own name.

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3) Separate Legal Entity:

Section 3 of LLP Act provides that a LLP is a body corporate formed and incorporated under this Act and is a
legal entity separate from that of its partners. The LLP is liable to the full extent of its assets but liability of
the partners is limited to their agreed contribution in the LLP. In other words, creditors of LLP shall be the
creditors of LLP alone.
4) Mutual Agency:
No partner is liable on account of the independent or un-authorized actions of other partners, thus
individual partners are shielded from joint liability created by another partner's wrongful business
decisions or misconduct. In other words, all partners will be the agents of the LLP alone. No one partner can
bind the other partner by his acts.
5) LLP Agreement:
Mutual rights and duties of the partners within a LLP are governed by an agreement between the partners.
The LLP Act, 2008 provides flexibility to partner to devise the agreement as per their choice. In the absence
of any such agreement, the mutual rights and duties shall be governed by the provisions of the LLP Act,
2008.
6) Artificial Legal Person:
A LLP is an artificial legal person because it is created by a legal process and is clothed with all rights of an
individual. It can do everything which any natural person can do, except of course that, it cannot be sent to
jail, cannot take an oath, cannot marry or get divorce nor can it practice a learned profession like CA or
Medicine. A LLP is invisible, intangible, immortal (it can be dissolved by law alone) but not fictitious
because it really exists.
7) Common Seal:
A LLP being an artificial person can act through its partners and designated partners. LLP may have a
common seal, if it decides to have one [Section 14(c)]. Thus, it is not mandatory for a LLP to have a common
seal. It shall remain under the custody of some responsible official and it shall be affixed in the presence of at
least 2 designated partners of the LLP.
8) Limited Liability:
Every partner of a LLP is, for the purpose of the business of LLP, the agent of the LLP, but not of other
partners (Section 26). The liability of the partners will be limited to their agreed contribution in the LLP.
Such contribution may be of tangible or intangible nature or both.
Example :
The professionals like Engineering consultants, Legal Advisors and Accounting Professional are afraid of
entering into business due to unlimited liability. Hence the LLP partnership Act provides an avenue for
these professionals to Limited Liability Partnership firms which restricts their liability to the agreed amount.
This has encouraged Professionals to form LLP.
9) Management of Business:
The partners in the LLP are entitled to manage the business of LLP. But only the designated partners are
responsible for legal compliances.

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10) Minimum and Maximum number of Partners:

Every LLP shall have least two partners and shall also have at least 2 individuals as designated partners, of
whom at least one shall be resident in India. There is no maximum limit on the partners in LLP.
11) Business for Profit Only:
The essential requirement for forming LLP is carrying on a lawful business with a view to earn profit. Thus,
LLP cannot be formed for charitable or non-economic purpose.
12) Investigation:
The Central Government shall have powers to investigate the affairs of an LLP by appointment of
competence authority for the purpose.
13) Compromise or Arrangement:
Any compromise or agreements including merger and amalgamation of LLPs shall be in accordance with the
provisions of the LLP Act, 2008.
14) Conversion into LLP:
A firm, private company or an unlisted public company would be allowed to be converted into LLP in
accordance with the provisions of LLP Act, 2008.
15) E-Filling of Documents:
Every form or application of document required to be filed or delivered under the act and rules made
thereunder, shall be filed in computer readable electronic form on its website www.mca.gov.in and
authenticated by a partner or designated partner of LLP by the use of electronic or digital signature.
16) Foreign LLPs:
Section 2(1)(m) defines foreign limited liability partnership “as a limited liability partnership formed,
incorporated, or registered outside India which established as place of business within India”. Foreign LLP
can become a partner in an Indian LLP.

Advantages of LLP form-

LLP form is a form of business model which:
1) Is organised and operates on the basis of an agreement.
2) Provides flexibility without imposing detailed legal and procedural requirements.
3) Easy to form.
4) All partners enjoy limited liability.
5) Easy to dissolve.

Partners (Section 5)
Any individual or body corporate may be a partner in a LLP.
However, an individual shall not be capable of becoming a partner of a LLP, if—
a) he has been found to be of unsound mind by a Court of competent jurisdiction and the finding is in
force;

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b) he is an undischarged insolvent; or
c) he has applied to be adjudicated as an insolvent and his application is pending.The following persons can
become partner in LLP:
(i) Individuals (Resident Indians including Non Resident Indians & Overseas Citizen of India as well as
foreign nationals)*
(ii) Limited Liability Partnerships
(iii) Companies (including foreign companies)*
(iv) Foreign Limited Liability Partnerships*
(v) Limited Liability Partnerships incorporated outside India
(vi) Foreign Companies. Co-operative society and corporation sole cannot become partner in a LLP.
*In case of introduction of capital / acquisition of existing stake in LLP by Persons resident outside India (other
than NRIs & OCIs investing on a nonrepatriation basis), the Foreign Direct Investment (FDI) compliances shall
have to be undertaken by the LLP in which such investment is made

Minimum number of partners (Section 6):

1) Every LLP shall have at least two partners.
2) If at any time the number of partners of a LLP is reduced below 2 and the LLP carries on business for
more than 6 months while the number is so reduced,
a) the person, who is the only partner of the LLP during the time that it so carries on business after
those 6 months and
b) has the knowledge of the fact that it is carrying on business with him alone,
c) shall be liable personally for the obligations of the LLP incurred during that period.

Designated partners (Section 7):

1) Every LLP shall have at least two designated partners who are individuals and at least one of them
shall be a resident in India.
Provided, if in LLP, all the partners are bodies corporate or in which one or more partners are
individuals and bodies corporate, at least two individuals who are partners of such LLP or nominees of
such bodies corporate shall act as designated partners.
2) (i) If the incorporation document
(a) specifies who are to be designated partners, such persons shall be designated partners on
incorporation; or
(b) states that each of the partners from time to time of LLP is to be designated partners, every
partner shall be a designated partners;
(ii) any partner may become a designated partner by and in accordance with the LLP Agreement and a
partner may cease to be a designated partners in accordance with LLP agreement.
3) An individual shall not become a designated partner in any LLP unless he has given his prior consent
to act as such to the LLP in such form and manner as may be prescribed.

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4) Every LLP shall file with the Registrar the particulars of every individual who has given his consent to act
as designated partners in such form and manner as may be prescribed within 30 days of his appointment.
5) An individual eligible to be a designated partner shall satisfy such conditions and requirements as may be
prescribed.
6) Every designated partner of the LLP shall obtain a Designated Partner Identification Number (DPIN)
from the Central Government and the provisions of sections 153 to 159 of the Companies Act, 2013 shall
apply mutatis mutandis for the said purpose.

Liabilities of Designated Partners (Section 8)

Unless expressly provided otherwise in this Act, a designated partner shall be—
1) responsible for the doing of all acts, matters and things as are required to be done by the limited liability
partnership in respect of compliance of the provisions of this Act including filing of any document, return,
statement and the like report pursuant to the provisions of this Act and as may be specified in the limited
liability partnership agreement; and
2) liable to all penalties imposed on the limited liability partnership for any contravention of those
provisions.

Changes in Designated Partners (Section 9)

A limited liability partnership may appoint a designated partner within 30 days of a vacancy arising for any
reason and provisions of sub-section (4) and sub-section (5) of section 7 shall apply in respect of such new
designated partner, provided that if no designated partner is appointed, or if at any time there is only one
designated partner, each partner shall be deemed to be a designated partner.

Punishment for contravention of sections 7 and 9 (Section 10)

1) If the LLP contravenes the provisions of sub-section (1) of section 7 (meaning that the number of
designated partners are less than 2 or none of the designated partner is a resident in India),
a) the LLP and its every partner shall be liable to a penalty of Rs. 10,000 and
b) in case of continuing contravention, with further penalty of Rs. 100 per day subject to maximum Rs.
1,00,000 for LLP and Rs. 50,000 for every partner of such LLP.
2) If the LLP contravenes the provisions of sub-section (4) of section 7 (failure to file the consent of
appointment of designated partner within 30 days of his appointment),
a) the LLP and its every designated partner shall be liable to a penalty of Rs. 5,000 and
b) in case of continuing contravention, with further penalty of Rs. 100 per day subject to maximum Rs.
50,000 for LLP and Rs. 25,000 for every designated partner.
3) If the LLP contravenes the provisions of sub-section (5) of section 7 or section 9,

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a) the LLP and its every partner shall be liable to a penalty of Rs. 10,000 and
b) in case of continuing contravention, with further penalty of Rs. 100 per day subject to maximum
Rs. 1,00,000 for LLP and Rs. 50,000 for every partner of such LLP.

Incorporation of LLP
Incorporation document (Section 11)

The most important document needed for registration is the incorporation document.
1) For a LLP to be incorporated:
a) 2 or more persons associated for carrying on a lawful business with a view to profit shall
subscribe their names to an incorporation document;
b) the incorporation document shall be filed in such manner and with such fees, as may be
prescribed with the Registrar of the State in which the registered office of the LLP is to be
situated (Incorporation documents are now processed electronically by Registrar, Central
Registration Centre since 2nd October 2018); and
c) Statement to be filed:
there shall be filed along with the incorporation document, a statement in the prescribed
form,
Ÿ made by either an advocate, or a Company Secretary or a Chartered Accountant or a
Cost Accountant, who is engaged in the formation of the LLP and
Ÿ by any one who subscribed his name to the incorporation document,

Ÿ that all the requirements of this Act and the rules made thereunder have been complied
with,
Ÿ in respect of incorporation and matters precedent and incidental thereto.

2) The incorporation document shall—

a) be in a form as may be prescribed;
b) state the name of the LLP;
c) state the proposed business of the LLP;
d) state the address of the registered office of the LLP;
e) state the name and address of each of the persons who are to be partners of the LLP on
incorporation;
f) state the name and address of the persons who are to be designated partners of the
LLP on incorporation;
g) contain such other information concerning the proposed LLP as may be prescribed

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3) If a person makes a statement as discussed above which he—

a) knows to be false; or
b) does not believe to be true,
shall be punishable (Penalty for false declaration)
Ÿ with imprisonment for a term which may extend to 2 years and

Ÿ with fine which shall not be less than Rs. 10,000 but which may extend to Rs. 5 Lakhs.

Incorporation by registration (Section 12):

1) When the requirements imposed by clauses (b) and (c) of sub-section (1) of section 11 have been
complied with, the Registrar shall retain the incorporation document and, unless the requirement
imposed by clause (a) of that sub-section has not been complied with, he shall, within a period of 14
days:
a) register the incorporation document; and
b) give a certificate that the LLP is incorporated by the name specified therein.
2) The Registrar may accept the statement delivered under clause (c) of sub-section (1) of section 11
as sufficient evidence that the requirement imposed by clause (a) of that sub-section has been
complied with.
3) The certificate issued under clause (b) of sub-section (1) shall be signed by the Registrar and
authenticated by his official seal.
4) The certificate shall be conclusive evidence that the LLP is incorporated by the name specified
therein.

Registered office of LLP and change therein (Section 13):

1) Every LLP shall have a registered office to which all communications and notices may be addressed
and where they shall be received.
2) A document may be served on a LLP or a partner or designated partner thereof by sending it by post
under a certificate of posting or by registered post or by any other manner, as may be prescribed, at
the registered office and any other address specifically declared by the LLP for the purpose in such
form and manner as may be prescribed.
3) A LLP may change the place of its registered office and file the notice of such change with the
Registrar in such form and manner and subject to such conditions as may be prescribed and any such
change shall take effect only upon such filing.
4) If the LLP contravenes any provisions of this section, the LLP and its every partner shall be
punishable with penalty of Rs. 500 per day subject to maximum Rs. 50,000.

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Effect of registration (Section 14):

On Registration, LLP shall by its name, be capable of –

a) Suing and being sued;
b) Acquiring, owning, holding and developing or disposing of property, whether movable or immovable,
tangible or intangible;
c) Having a common seal, if it decides to have one; and
d) Doing and suffering other acts and things as bodies corporate may lawfully do and suffer.

Name (Section 15):

1) Every limited liability partnership shall have either the words limited liability partnership or the
acronym LLP as the last words of its name.
2) No limited liability partnership shall be registered by a name which, in the opinion of the Central
Government is
(a) undesirable; or
(b) identical or too nearly resembles to that of any other limited liability partnership or a company or
a registered trade mark of any other person under the Trade Marks Act, 1999.

Reservation of name (Section 16):

1) A person may apply in such form and manner and accompanied by such fee as may be prescribed to
the Registrar for the reservation of a name set out in the application as—
a) the name of a proposed LLP; or
b) the name to which a LLP proposes to change its name.
2) Upon receipt of an application under sub-section (1) and on payment of the prescribed fee, the
Registrar may, if he is satisfied, subject to the rules prescribed by the Central Government in the
matter, that the name to be reserved is not one which may be rejected on any ground referred to in
sub-section (2) of section 15, reserve the name for a period of 3 months from the date of intimation
by the Registrar.

Rectification of name of LLP (Section 17):

1) Notwithstanding anything contained in sections 15 and 16, if through inadvertence or otherwise, a

limited liability partnership, on its first registration or on its registration by a new body corporate, its
registered name;">name, is registered by a name which is identical with or too nearly resembles
to—
(a) that of any other limited liability partnership or a company; or
(b) a registered trade mark of a proprietor under the Trade Marks Act, 1999,

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as is likely to be mistaken for it, then on an application of such limited liability partnership or proprietor
referred to in clauses (a) and (b) respectively or a company, the CG may direct that such limited liability
partnership to change its name or new name within a period of 3 months from the date of issue of such
direction:
Provided that an application of the proprietor of the registered trade marks shall be maintainable within
a period of three years from the date of incorporation or registration or change of name of the limited
liability partnership under this Act.
2) Where a LLP changes its name or obtains a new name under sub-section (1), it shall within a period of
15 days from the date of such change, give notice of the change to Registrar along with the order of the
CG, who shall carry out necessary changes in the certificate of incorporation and within 30 days of such
change in the certificate of incorporation, such LLP shall change its name in the LLP agreement.
3) If the LLP is in default in complying with any direction given under sub-section (1), the CG shall allot a
new name to the LLP in such manner as may be prescribed and the Registrar shall enter the new name in
the register of LLP in place of the old name and issue a fresh certificate of incorporation with new name,
which the LLP shall use thereafter
Provided that nothing contained in this sub-section shall prevent a LLP from subsequently changing its
name in accordance with the provisions of section 16.

Steps to incorporate LLP

Partners and their Relations

Eligibility to be partners (Section 22)

On the incorporation of a LLP, the persons who subscribed their names to the incorporation document shall be
its partners and any other person may become a partner of the LLP by and in accordance with the LLP
agreement.

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Relationship of partners (Section 23)

1) Save as otherwise provided by this Act, the mutual rights and duties of the partners of a LLP, and the
mutual rights and duties of a LLP and its partners, shall be governed by the LLP agreement between the
partners, or between the LLP and its partners.
2) The LLP agreement and any changes, if any, made therein shall be filed with the Registrar in such form,
manner and accompanied by such fees as may be prescribed.
3) An agreement in writing made before the incorporation of a LLP between the persons who subscribe
their names to the incorporation document may impose obligations on the LLP, provided such
agreement is ratified by all the partners after the incorporation of the LLP.
4) In the absence of agreement as to any matter, the mutual rights and duties of the partners and the
mutual rights and duties of the LLP and the partners shall be determined by the provisions relating to
that matter as are set-out in the First Schedule.

Cessation of partnership interest (Section 24)

1) A person may cease to be a partner of a LLP in accordance with an agreement with the other partners or,
in the absence of agreement with the other partners as to cessation of being a partner, by giving a notice
in writing of not less than 30 days to the other partners of his intention to resign as partner.
2) A person shall cease to be a partner of a LLP—
a) on his death or dissolution of the LLP; or
b) if he is declared to be of unsound mind by a competent court; or
c) if he has applied to be adjudged as an insolvent or declared as an insolvent.
3) Where a person has ceased to be a partner of a LLP (hereinafter referred to as “former partner”), the
former partner is to be regarded (in relation to any person dealing with the LLP) as still being a partner of
the LLP unless—
a) the person has notice that the former partner has ceased to be a partner of the LLP; or
b) notice that the former partner has ceased to be a partner of the LLP has been delivered to the
Registrar.
4) The cessation of a partner from the LLP does not by itself discharge the partner from any obligation to
the LLP or to the other partners or to any other person which he incurred while being a partner.
5) Where a partner of a LLP ceases to be a partner, unless otherwise provided in the LLP agreement, the
former partner or a person entitled to his share in consequence of the death or insolvency of the former
partner, shall be entitled to receive from the LLP—
a) an amount equal to the capital contribution of the former partner actually made to the LLP; and
b) his right to share in the accumulated profits of the LLP, after the deduction of accumulated losses of
the LLP, determined as at the date the former partner ceased to be a partner.
6) A former partner or a person entitled to his share in consequence of the death or insolvency of the former
partner shall not have any right to interfere in the management of the LLP.

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Registration of changes in partners (Section 25)

1) Every partner shall inform the LLP of any change in his name or address within a period of 15 days of such
change.
2) A LLP shall
(a) where a person becomes or ceases to be a partner, file a notice with the Registrar within 30 days from
the date he becomes or ceases to be a partner; and
(b) where there is any change in the name or address of a partner, file a notice with the Registrar within 30
days of such change.
3) A notice filed with the Registrar under sub-section
(a) shall be in such form and accompanied by such fees as may be prescribed;
(b) shall be signed by the designated partner of the LLP and authenticated in a manner as may be
prescribed; and
(c) if it relates to an incoming partner, shall contain a statement by such partner that he consents to
becoming a partner, signed by him and authenticated in the manner as may be prescribed.
4) If the LLP contravenes the provisions of sub-section (2), the LLP and its every designated partner shall
be liable to a penalty of Rs. 10000.
5) If the contravention referred to in sub-section (1) is made by any partner of the LLP, such partner shall be
liable to a penalty of Rs. 10000.
6) Any person who ceases to be a partner of a LLP may himself file with the Registrar the notice referred to in
sub-section (3) if he has reasonable cause to believe that the limited liability partnership may not file the
notice with the Registrar and in case of any such notice filed by a partner, the Registrar shall obtain a
confirmation to this effect from the LLP unless the LLP has also filed such notice:
Provided that where no confirmation is given by the LLP within 15 days, the Registrar shall register
the notice made by a person ceasing to be a partner under this section.

Extent and Limitation of Liability of LLP and Partner

Partner as agent (Section 26)

Every partner of a LLP is, for the purpose of the business of the LLP, the agent of the LLP, but not of other
partners.

Extent of liability of LLP (Section 27)

1) A LLP is not bound by anything done by a partner in dealing with a person if—
a) the partner in fact has no authority to act for the LLP in doing a particular act; and
b) the person knows that he has no authority or does not know or believe him to be a partner of the LLP.

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2) The LLP is liable if a partner of a LLP is liable to any person as a result of a wrongful act or omission on his
part in the course of the business of the LLP or with its authority.
3) An obligation of the LLP whether arising in contract or otherwise, shall be solely the obligation of the LLP.
4) The liabilities of the LLP shall be met out of the property of the LLP.

Extent of liability of partner (Section 28)

1) A partner is not personally liable, directly or indirectly for an obligation referred to in sub-
section (3) of section 27 solely by reason of being a partner of the LLP.
2) The provisions of sub-section (3) of section 27 and sub-section (1) of this section shall not
affect the personal liability of a partner for his own wrongful act or omission, but a partner
shall not be personally liable for the wrongful act or omission of any other partner of the LLP.

Holding out (Section 29)

1) Any person,
Ÿ who by words spoken or written or by conduct,
Ÿ represents himself, or knowingly permits himself to be represented to be a partner in a LLP
Ÿ is liable to any person
Ÿ who has on the faith of any such representation
Ÿ given credit to the LLP, whether the person representing himself or represented to be a
partner does or does not know that the representation has reached the person so giving
credit.
However,
Ÿ where any credit is received by the LLP as a result of such representation,
Ÿ the LLP shall,
Ÿ without prejudice to the liability of the person so representing himself or represented to be
a partner,
Ÿ be liable to the extent of credit received by it or any financial benefit derived thereon.
2) Where after a partner's death the business is continued in the same LLP name, the continued
use of that name or of the deceased partner's name as a part thereof shall not of itself make
his legal representative or his estate liable for any act of the LLP done after his death.

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Unlimited liability in case of fraud (Section 30)

1) In the event of an act carried out by a LLP, or any of its partners, with intent to defraud creditors of the
LLP or any other person, or for any fraudulent purpose, the liability of the LLP and partners who acted
with intent to defraud creditors or for any fraudulent purpose shall be unlimited for all or any of the debts
or other liabilities of the LLP:
Provided that in case any such act is carried out by a partner, the LLP is liable to the same extent as the
partner unless it is established by the LLP that such act was without the knowledge or the authority of the
LLP.
2) Where any business is carried on with such intent or for such purpose as mentioned in sub-section (1),
every person who was knowingly a party to the carrying on of the business in the manner aforesaid shall
be punishable with imprisonment for a term which may extend to 5 years and with fine which shall not be
less than Rs. 50000 but which may extend to Rs. 5 lakhs.
3) Where a LLP or any partner or designated partner or employee of such limited liability partnership has
conducted the affairs of the LLP in a fraudulent manner, then without prejudice to any criminal
proceedings which may arise under any law for the time being in force, the LLP and any such partner or
designated partner or employee shall be liable to pay compensation to any person who has suffered any
loss or damage by reason of such conduct
Provided that such LLP shall not be liable if any such partner or designated partner or employee has
acted fraudulently without knowledge of the LLP.

Whistle blowing (Section 31)

1) The Court or Tribunal may reduce or waive any penalty leviable against any partner or employee of a LLP,
if it is satisfied that—
a) such partner or employee of a LLP has provided useful information during investigation of such LLP;
or
b) when any information given by any partner or employee (whether or not during investigation) leads
to LLP or any partner or employee of such LLP being convicted under this Act or any other Act.
2) No partner or employee of any LLP may be discharged, demoted, suspended, threatened, harassed
or in any other manner discriminated against the terms and conditions of his LLP or employment merely
because of his providing information or causing information to be provided pursuant to sub-section (1).

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Contributions
Form of contribution (Section 32)

1) A contribution of a partner may consist of tangible, movable or immovable or intangible

property or other benefit to the limited liability partnership, including money, promissory notes,
other agreements to contribute cash or property, and contracts for services performed or to be
performed.
2) The monetary value of contribution of each partner shall be accounted for and disclosed in
the accounts of the limited liability partnership in the manner as may be prescribed.

Obligation to contribute (Section 33)

1) The obligation of a partner to contribute money or other property or other benefit or to perform
services for a limited liability partnership shall be as per the limited liability partnership
agreement.
2) A creditor of a limited liability partnership, which extends credit or otherwise acts in reliance on
an obligation described in that agreement, without notice of any compromise between partners,
may enforce the original obligation against such partner.

Financial Disclosures

Maintenance of books of account, other records and audit, etc. (Section 34):

1) Proper Books of account:

Ÿ The LLP shall maintain such proper books of account as may be prescribed
Ÿ relating to its affairs for each year of its existence
Ÿ on cash basis or accrual basis and
Ÿ according to double entry system of accounting and
Ÿ shall maintain the same at its registered office
Ÿ for such period as may be prescribed.
2) Statement of Account and Solvency:
Ÿ Every LLP shall,
Ÿ within a period of 6 months from the end of each financial year,
Ÿ prepare a Statement of Account and Solvency
Ÿ for the said financial year as at the last day of the said financial year

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Ÿ in such form as may be prescribed, and

Ÿ such statement shall be signed by the designated partners of the LLP.
3) Every LLP shall file within the prescribed time, the Statement of Account and Solvency prepared
pursuant to sub-section (2) with the Registrar every year in such form and manner and
accompanied by such fees as may be prescribed.
4) The accounts of LLP shall be audited in accordance with such rules as may be prescribed.
However, the Central Government may, by notification in the Official Gazette, exempt any class
or classes of LLP from the requirements of this sub-section.
5) Penalty for non-compliance of provisions of sub-section 3- LLP – `100 per day subject to
maximum `1,00,000 Every Designated Partners - `100 per day subject to maximum `50,000.
6) Penalty for non-compliance of provisions of sub-section 1, 2 & 4 - LLP – not less than `25,000
which may extend to ` 5 Lakhs. Every designated partner –not less than `10,000 which may
extend to `1 Lakh.

Accounting and auditing standards. (Section 34A):

The Central Government may, in consultation with the National Financial Reporting Authority
constituted under section 132 of the Companies Act, 2013,—
(a) prescribe the standards of accounting; and
(b) prescribe the standards of auditing, as recommended by the ICAI

Annual return (Section 35):

1) Every LLP shall file an annual return duly authenticated with the Registrar within 60 days of
closure of its financial year in such form and manner and accompanied by such fee as may be
prescribed.
Note
The LLP contra-distinct from Partnership Act, 1932 has prescribed the filing of Annual Return
in accordance with Companies Act, 2013. This is a new feature of the LLPs.
2) Penalty for non-filing of annual return:
a) LLP :Rs.100 per day subject to maximum Rs.1,00,000

b) Every Designated Partners – Rs.100 per day subject to maximum Rs.50,000

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Inspection of documents kept by registrar [section 36]

The incorporation document, name of partners and changes, if any, made therein, Statement of Account and
Solvency and annual return filed by each LLP with the Registrar shall be available for inspection by any person
in such manner and on payment of such fee as may be prescribed.

Penalty for false statement [section 37]

If in any return, statement or other document required by or for the purposes of any of the provisions of this Act,
any person makes a statement—
(a) which is false in any material particular, knowing it to be false; or
(b) which omits any material fact knowing it to be material,
he shall, save as otherwise expressly provided in this Act, be punishable with imprisonment for a term
which may extend to 2 years, and shall also be liable to fine which may extend to 5 lakh rupees but which
shall not be less than 1 lakh rupees.

Power of registrar to obtain information [section 38]

1) In order to obtain such information as the Registrar may consider necessary for the purposes of carrying
out the provisions of this Act, the Registrar may require any person including any present or former
partner or designated partner or employee of a limited liability partnership to answer any question or
make any declaration or supply any details or particulars in writing to him within a reasonable period.
2) In case any person referred to in sub-section (1) does not answer such question or make such
declaration or supply such details or particulars asked for by the Registrar within a reasonable time or
time given by the Registrar or when the Registrar is not satisfied with the reply or declaration or details or
particulars provided by such person, the Registrar shall have power to summon that person to appear
before him or an inspector or any other public officer whom the Registrar may designate, to answer any
such question or make such declaration or supply such details, as the case may be.
3) Any person who, without lawful excuse, fails to comply with any summons or requisition of the Registrar
under this section shall be punishable with fine which shall not be less than two thousand rupees but
which may extend to twenty-five thousand rupees.

Compounding of offences [section 39]

1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973, the Regional Director or
any other officer not below the rank of Regional Director authorised by the Central Government may
compound any offence under this Act which is punishable with fine only, by collecting from a person
reasonably suspected of having committed the offence, a sum which may extend to the amount of the
maximum fine provided for the offence but shall not be lower than the minimum amount provided for the
offence.

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2) Nothing contained in sub-section (1) shall apply to an offence committed by a limited liability
partnership or its partner or its designated partner within a period of three years from the date on which
similar offence committed by it or him was compounded under this section. Explanation.—For the
removal of doubts, it is hereby clarified that any second or subsequent offence committed after the
expiry of the period of three years from the date on which the offence was previously compounded, shall
be deemed to be the first offence.
3) Every application for the compounding of an offence shall be made to the Registrar who shall forward the
same, together with his comments thereon, to the Regional Director or any other officer not below the
rank of Regional Director authorised by the Central Government, as the case may be.
4) Where any offence is compounded under this section, whether before or after the institution of any
prosecution, intimation thereof shall be given to the Registrar within a period of seven days from the
date on which the offence is so compounded.
5) Where any offence is compounded before the institution of any prosecution, no prosecution shall be
instituted in relation to such offence.
6) Where the compounding of any offence is made after the institution of any prosecution, such
compounding shall be brought by the Registrar in writing, to the notice of the court in which prosecution
is pending and on such notice of the compounding of the offence being given, the offender in relation to
which the offence is so compounded shall be discharged.
7) The Regional Director or any other officer not below the rank of Regional Director authorised by the
Central Government, while dealing with the proposal for compounding of an offence may, by an order,
direct any partner, designated partner or other employee of the LLP to file or register, or on payment of
fee or additional fee as required to be paid under this Act, such return, account or other document within
such time as may be specified in the order.
8) Notwithstanding anything contained in this section, if any partner or designated partner or other
employee of the LLP who fails to comply with any order made by the Regional Director or any other
officer not below the rank of Regional Director authorised by the Central Government, under
subsection (7), the maximum amount of fine for the offence, which was under consideration Regional
Director or such authorised officer for compounding under this section shall be twice the amount
provided in the corresponding section in which punishment for such offence is provided.

Assignment and Transfer of Partnership Rights

Partner's transferable interest [section 42]

1) The rights of a partner to a share of the profits and losses of the limited liability partnership and to receive
distributions in accordance with the limited liability partnership agreement are transferable either
wholly or in part.
2) The transfer of any right by any partner pursuant to sub-section (1) does not by itself cause the
disassociation of the partner or a dissolution and winding up of the limited liability partnership.

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3) The transfer of right pursuant to this section does not, by itself, entitle the transferee or assignee to
participate in the management or conduct of the activities of the limited liability partnership, or access
information concerning the transactions of the limited liability partnership.

Conversion into LLP

Conversion from firm into LLP (Section 55)

firm may convert into a LLP in accordance with the provisions of this Chapter and the Second
Schedule.sactions of the limited liability partnership.

Conversion from private company into LLP (Section 56)

A private company may convert into a LLP in accordance with the provisions of this Chapter and the Third
Schedule.

Conversion from unlisted public company into LLP (Section 57)

An unlisted public company may convert into an LLP in accordance with the provisions of this Chapter and the
Fourth Schedule.

Registration and effect of conversion [Section 58]

1) The Registrar, on satisfying that a firm, private company or an unlisted public company, as the case may
be, has complied with the respective Schedules, provisions of this Act and the rules made thereunder,
register the documents submitted under such schedules and issue a certificate of registration in such
form as the Registrar may determine stating that the LLP is, on and from the date specified in the
certificate, registered under this Act.
2) (ii) The LLP shall, within 15 days of the date of registration, inform the concerned Registrar of Firms or
Registrar of Companies, as the case may be, with which it was registered under the provisions of the
Indian Partnership Act, 1932 or the Companies Act, 1956 (Now Companies Act, 2013) as the case may
be, about the conversion and of the particulars of the LLP in such form and manner as may be prescribed.
3) Upon such conversion, the partners of the firm, the shareholders of private company or unlisted public
company, as the case may be, the LLP to which such firm or such company has converted, and the
partners of the LLP shall be bound by the respective Schedules, as the case may be, applicable to them.
4) Upon such conversion, on and from the date of certificate of registration, the effects of the conversion
shall be such as specified in the respective schedules, as the case may be.
Effect of Registration:
Notwithstanding anything contained in any other law for the time being in force, on and from the date of

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registration specified in the certificate of registration issued under the respective Schedule, as the case may
be,—
a) there shall be a LLP by the name specified in the certificate of registration registered under this Act;
b) all tangible (movable or immovable) and intangible property vested in the firm or the company, as the
case may be, all assets, interests, rights, privileges, liabilities, obligations relating to the firm or the
company, as the case may be, and the whole of the undertaking of the firm or the company, as the case
may be, shall be transferred to and shall vest in the limited liability partnership without further
assurance, act or deed; and
c) the firm or the company, as the case may be, shall be deemed to be dissolved and removed from the
records of the Registrar of Firms or Registrar of Companies, as the case may be.

Foreign LLP
Foreign limited liability partnerships (Section 59

The Central Government may make rules for provisions in relation to establishment of place of business by
foreign LLP within India and carrying on their business therein by applying or incorporating, with such
modifications, as appear appropriate, the provisions of the Companies Act, 1956 or such regulatory
mechanism with such composition as may be prescribed.

Compromise, arrangement or reconstruction of limited liability partnerships

Compromise or arrangement of limited liability partnerships [Section 60]

1) Where a compromise or arrangement is proposed— (a) between a limited liability partnership and its
creditors; or (b) between a limited liability partnership and its partners, the Tribunal may, on the
application of the limited liability partnership or of any creditor or partner of the limited liability
partnership, or, in the case of a limited liability partnership which is being wound up, of the liquidator,
order a meeting of the creditors or of the partners, as the case may be, to be called, held and conducted in
such manner as may be prescribed or as the Tribunal directs.
2) If a majority representing three-fourths in value of the creditors, or partners, as the case may be, at the
meeting, agree to any compromise or arrangement, the compromise or arrangement shall, if sanctioned
by the Tribunal, by order be binding on all the creditors or all the partners, as the case may be, and also on
the limited liability partnership, or in the case of a limited liability partnership which is being wound up,
on the liquidator and contributories of the limited liability partnership: Provided that no order
sanctioning any compromise or arrangement shall be made by the Tribunal unless the Tribunal is satisfied
that the limited liability partnership or any other person by whom an application has been made under
sub-section (1) has disclosed to the Tribunal, by affidavit or otherwise, all material facts relating to the
limited liability partnership, including the latest financial position of the limited liability partnership and
the pendency of any investigation proceedings in relation to the limited liability partnership.

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3) An order made by the Tribunal under sub-section (2) shall be filed by the limited liability partnership with
the Registrar within thirty days after making such an order and shall have effect only after it is so filed.
4) If default is made in complying with the provisions of sub-section (3), the LLP and its every designated
partner shall be 'liable to a penalty of `10,000 and in case of continuing default, with further penalty of
`100 for each day after the first during which such default continues, subject to maximum `1,00,000 for
LLP and `50,000 for every designated partner'.
5) The Tribunal may, at any time after an application has been made to it under this section, stay the
commencement or continuation of any suit or proceeding against the limited liability partnership on such
terms as the Tribunal thinks fit, until the application is finally disposed of.

Power of Tribunal to enforce compromise or arrangement (Section 61)

1) Where the Tribunal makes an order under section 60 sanctioning a compromise or an arrangement in
respect of a limited liability partnership, it— (a) shall have power to supervise the carrying out of the
compromise or an arrangement; and (b) may, at the time of making such order or at any time thereafter,
give such directions in regard to any matter or make such modifications in the compromise or
arrangement as it may consider necessary for the proper working of the compromise or arrangement.
2) If the Tribunal aforesaid is satisfied that a compromise or an arrangement sanctioned under section 60
cannot be worked satisfactorily with or without modifications, it may, either on its own motion or on the
application of any person interested in the affairs of the limited liability partnership, make an order for
winding up the limited liability partnership, and such an order shall be deemed to be an order made under
section 64 of this Act.

Provisions for facilitating reconstruction or amalgamation of

limited liability partnerships [Section 62]

1) Where an application is made to the Tribunal under section 60 for sanctioning of a compromise or
arrangement proposed between a limited liability partnership and any such persons as are mentioned in
that section, and it is shown to the Tribunal that—
a) compromise or arrangement has been proposed for the purposes of, or in connection with, a scheme
for the reconstruction of any limited liability partnership or limited liability partnerships, or the
amalgamation of any two or more limited liability partnerships; and
b) under the scheme the whole or any part of the undertaking, property or liabilities of any limited
liability partnership concerned in the scheme (in this section referred to as a "transferor limited
liability partnership") is to be transferred to another limited liability partnership (in this section
referred to as the "transferee limited liability partnership"), the Tribunal may, either by the order
sanctioning the compromise or arrangement or by a subsequent order, make provisions for all or any
of the following matters, namely:—
(i) the transfer to the transferee limited liability partnership of the whole or any part of the

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undertaking, property or liabilities of any transferor limited liability partnership;

(ii) the continuation by or against the transferee limited liability partnership of any legal
proceedings pending by or against any transferor limited liability partnership;
(iii) the dissolution, without winding up, of any transferor limited liability partnership;
(iv) the provision to be made for any person who, within such time and in such manner as the
Tribunal directs, dissent from the compromise or arrangement; and
(v) such incidental, consequential and supplemental matters as are necessary to secure that the
reconstruction or amalgamation shall be fully and effectively carried out:
Provided that no compromise or arrangement proposed for the purposes of, or in connection with, a
scheme for the amalgamation of a limited liability partnership, which is being wound up, with any
other limited liability partnership or limited liability partnerships, shall be sanctioned by the Tribunal
unless the Tribunal has received a report from the Registrar that the affairs of the limited liability
partnership have not been conducted in a manner prejudicial to the interests of its partners or to
public interest:
Provided further that no order for the dissolution of any transferor limited liability partnership under
clause (iii) shall be made by the Tribunal unless the Official Liquidator has, on scrutiny of the books
and papers of the limited liability partnership, made a report to the Tribunal that the affairs of the
limited liability partnership have not been conducted in a manner prejudicial to the interests of its
partners or to public interest.
2) Where an order under this section provides for the transfer of any property or liabilities, then, by virtue of
the order, that property shall be transferred to and vest in, and those liabilities shall be transferred to and
become the liabilities of, the transferee limited liability partnership; and in the case of any property, if
the order so directs, freed from any charge which is, by virtue of the compromise or arrangement, to
cease to have effect.
3) Within thirty days after the making of an order under this section, every limited liability partnership in
relation to which the order is made shall cause a certified copy thereof to be filed with the Registrar for
registration.
4) If default is made in complying with the provisions of sub-section (3), the LLP and its every designated
partner shall be 'liable to a penalty of `10,000 and in case of continuing contravention, with further
penalty of `100 for each day after the first during which such default continues, subject to maximum
`1,00,000 for LLP and `50,000 for every designated partner'.
Explanation:
(i) In this section "property" includes property, rights and powers of every description; and "liabilities"
includes duties of every description.
(ii) a LLP shall not be amalgamated with a company.

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Winding up and Dissolution

Winding up and dissolution (Section 63)

The winding up of a LLP may be either voluntary or by the Tribunal a and LLP, so wound up may be dissolved.

Circumstances in which LLP may be wound up by Tribunal (Section 64)

A LLP may be wound up by the Tribunal:

a) if the LLP decides that LLP be wound up by the Tribunal;
b) if, for a period of more than six months, the number of partners of the LLP is reduced below two;
c) if the LLP is unable to pay its debts;
d) if the LLP has acted against the interests of the sovereignty and integrity of India, the security of the
State or public order;
e) if the LLP has made a default in filing with the Registrar the Statement of Account and Solvency or annual
return for any five consecutive financial years; or
f) if Tribunal is of the opinion that it is just and equitable that the LLP be wound up.

Rules for winding up and dissolution (Section 65)

The Central Government may make rules for the provisions in relation to winding up and dissolution of LLP.

Miscellaneous
Business transactions of partner with LLP (Section 66)

A partner may lend money to and transact other business with the LLP and has the same rights and obligations
with respect to the loan or other transactions as a person who is not a partner.

Application of the provisions of the Companies Act (Section 67)

1) The Central Government may, by notification in the Official Gazette, direct that any of the provisions of the
Companies Act, 1956 specified in the notification—
a) shall apply to any LLP; or
b) shall apply to any LLP with such exception, modification and adaptation, as may be specified, in the
notification.
2) A copy of every notification proposed to be issued under sub-section (1)
a) shall be laid in draft before each House of Parliament, while it is in session,
b) for a total period of 30 days which may be comprised in one session or in two or more successive
sessions, and

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c) if, before the expiry of the session immediately following the session or the successive sessions
aforesaid, both Houses agree in disapproving the issue of the notification or both Houses agree in
making any modification in the notification,
d) the notification shall not be issued or, as the case may be,
e) shall be issued only in such modified form as may be agreed upon by both the Houses.

Payment of additional fee (Section 69)

Any document or return required to be registered or filed under this Act with Registrar, if, is not registered or
filed in time provided therein, may be registered or filed after that time, on payment of such additional fee as
may be prescribed in addition to any fee as is payable for filing of such document or return
Provided that such document or return shall be filed after the due date of filing, without prejudice to any other
action or liability under this Act
Provided further that a different fee or additional fee may be prescribed for different classes of limited liability
partnerships or for different documents or returns required to be filed under this Act or rules made thereunder.

Enhanced Punishment (Section 70)

In case a limited liability partnership or any partner or designated partner of suchlimited liability partnership
commits any offence, the limited liability partnershipor any partner or designated partner shall, for the second
or subsequent offence,be punishable with imprisonment as provided, but in case of offences for whichfine is
prescribed either along with or exclusive of imprisonment, with fine whichshall be twice the amount of fine for
such offence.

Differences with other Forms of Organisation

Difference between LLP and Partnership Firm

Basis LLP Partnership Firm

Regulating Act The Limited Liability Partnership Act, The Indian Partnership Act, 1932.
2008.
Body Corporate It is a body corporate. It is not a body corporate,
Separate legal entity It is a legal entity separate from its It is a group of persons with no separate
members. legal entity.
Creation It is created by a legal process called It is created by an agreement between
registration under the LLP Act, 2008. the partners.
Registration Registration is mandatory. LLP can sue Registration is voluntary. Only the
and be sued in its own name. registered partnership firm can sue the
third parties.

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Perpetual succession The death, insanity, retirement or The death, insanity, retirement or
insolvency of the partner(s) does not insolvency of the partner(s) may affect
affect its existence of LLP. Members its existence. It has no perpetual
may join or leave but its existence succession.
continues forever.
Name Name of the LLP to contain the word No guidelines. The partners can have
Limited liability partners (LLP) as suffix. any name as per their choice.Liability of
Liability Liability of each partner limited to the each partner is unlimited. It can be
extent to agreed contribution except in extended up to the personal assets of
case of willful fraud. the partners.
Mutual agency Each partner can bind the LLP by his Each partner can bind the firm as well as
own acts but not the other partners. other partners by his own acts.
Designated partners At least two designated partners and at There is no provision for such partners
least one of them shall be resident in under the Partnership Act, 1932.
India.
Common seal It may have its common seal as its official There is no such concept in partnership
signatures.
Legal compliances Only designated partners are All partners are responsible for all the
responsible for all the compliances and compliances and penalties under the
penalties under this Act. Act.
Annual filing of LLP is required to file: Partnership firm is not required to file
documents (i) Annual statement of accounts any annual document with the registrar
(ii) Statement of solvency of firms.
Annual return with the registration of
LLP every year.
Foreign partnership Foreign nationals can become a partner Foreign nationals cannot become a
in a LLP. partner in a partnership firm.

Minor as partner Minor cannot be admitted to the benefits Minor can be admitted to the benefits of
of LLP. the partnership with the prior consent of
the existing partners.

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Difference between LLP and Limited Liability Company

Basis LLP Partnership Firm

Regulating Act The Limited Liability Partnership Act, The Companies Act, 2013.
2008.
Members/Partners The persons who contribute to LLP are The persons who invest the money in the
known as partners of the LLP. shares are known as members of the
company.
Internal governance The internal governance structure of The internal governance structure of
structure a LLP is governed by contract agreement a company is regulated by statute (i.e.,
between the partners.. Companies Act, 2013).
Name Name of the LLP to contain the word Name of the public company to contain
“Limited Liability partnership” or “LLP” the word “limited” and Pvt.
as suffix. Co. to contain the word “Private limited”
as suffix.
No. of Minimum – 2 members Private company: Minimum – 2 members
members/partners Maximum – No such limit on the Maximum 200 members Public company:
members in the Act. The members of the Minimum – 7 members
LLP can be individuals/or body corporate Maximum – No such limit on the
through the nominees members.
Members can be organizations, trusts,
another business form or
Individuals.
Liability of Liability of a partners is limited to the Liability of a member is limited to the
members/partners extent of agreed contribution in case of amount unpaid on the shares held by
intention is fraud.. them.
Management The business of the company managed The affairs of the company are managed
by the partners including the designated by board of directors elected by the
partners authorized in shareholders
the agreement.
Minimum number of Minimum 2 designated partners. Pvt. Co. – 2 directors Public co. – 3
directors/designated directors.
partners

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