Limited Liability Partnership (LLP) | Business Laws for CA Foundation PDF Download

 Page 1


BRIEF BACKGROUND
?
In India, businesses mainly operate as companies, sole 
proprietorships and partnerships.
?
Each of these is subject to different regulatory and tax 
regimes.
?
At present, being a partner of a firm is a risky affair as 
the liability is unlimited.
?
LLP is a new form of business structure.
?
It provides an alternative to the traditional partnership 
where partners are exposed to unlimited liability and 
the statute based governance structure of limited 
liability companies.
Page 2


BRIEF BACKGROUND
?
In India, businesses mainly operate as companies, sole 
proprietorships and partnerships.
?
Each of these is subject to different regulatory and tax 
regimes.
?
At present, being a partner of a firm is a risky affair as 
the liability is unlimited.
?
LLP is a new form of business structure.
?
It provides an alternative to the traditional partnership 
where partners are exposed to unlimited liability and 
the statute based governance structure of limited 
liability companies.
                                                                                  
                                                                    
INDIAN LEGISLATIVE HISTORY
1997
?
A. Hussain Committee on Small Scale Industries 
recommended introduction of LLPs in India;
2003
?
Naresh Chandra Committee Report highlighted 
the grave need to introduce LLPs in India & 
suggested application of LLPs to service industry;
2006
?
LLP Bill, 2006 introduced in parliament;
2007
?
Parliamentary Standing Committee submitted a 
Report to the parliament with their 
recommendations;
2009
?
President’s assent to the LLP Bill, 2008 given on 
January 7 and LLP Act, 2008 published in Official 
Gazette on January 9.
Page 3


BRIEF BACKGROUND
?
In India, businesses mainly operate as companies, sole 
proprietorships and partnerships.
?
Each of these is subject to different regulatory and tax 
regimes.
?
At present, being a partner of a firm is a risky affair as 
the liability is unlimited.
?
LLP is a new form of business structure.
?
It provides an alternative to the traditional partnership 
where partners are exposed to unlimited liability and 
the statute based governance structure of limited 
liability companies.
                                                                                  
                                                                    
INDIAN LEGISLATIVE HISTORY
1997
?
A. Hussain Committee on Small Scale Industries 
recommended introduction of LLPs in India;
2003
?
Naresh Chandra Committee Report highlighted 
the grave need to introduce LLPs in India & 
suggested application of LLPs to service industry;
2006
?
LLP Bill, 2006 introduced in parliament;
2007
?
Parliamentary Standing Committee submitted a 
Report to the parliament with their 
recommendations;
2009
?
President’s assent to the LLP Bill, 2008 given on 
January 7 and LLP Act, 2008 published in Official 
Gazette on January 9.
LLP ACT, 08
CHAPTERS
14
SECTIONS
81
SCHEDULES
4
RULES & FORMS
      
16  Chapters
40  Rules
29  Forms
03  Annexures 
THE ACT – OUTLINE
Page 4


BRIEF BACKGROUND
?
In India, businesses mainly operate as companies, sole 
proprietorships and partnerships.
?
Each of these is subject to different regulatory and tax 
regimes.
?
At present, being a partner of a firm is a risky affair as 
the liability is unlimited.
?
LLP is a new form of business structure.
?
It provides an alternative to the traditional partnership 
where partners are exposed to unlimited liability and 
the statute based governance structure of limited 
liability companies.
                                                                                  
                                                                    
INDIAN LEGISLATIVE HISTORY
1997
?
A. Hussain Committee on Small Scale Industries 
recommended introduction of LLPs in India;
2003
?
Naresh Chandra Committee Report highlighted 
the grave need to introduce LLPs in India & 
suggested application of LLPs to service industry;
2006
?
LLP Bill, 2006 introduced in parliament;
2007
?
Parliamentary Standing Committee submitted a 
Report to the parliament with their 
recommendations;
2009
?
President’s assent to the LLP Bill, 2008 given on 
January 7 and LLP Act, 2008 published in Official 
Gazette on January 9.
LLP ACT, 08
CHAPTERS
14
SECTIONS
81
SCHEDULES
4
RULES & FORMS
      
16  Chapters
40  Rules
29  Forms
03  Annexures 
THE ACT – OUTLINE
THE ACT – SALIENT FEATURES
Page 5


BRIEF BACKGROUND
?
In India, businesses mainly operate as companies, sole 
proprietorships and partnerships.
?
Each of these is subject to different regulatory and tax 
regimes.
?
At present, being a partner of a firm is a risky affair as 
the liability is unlimited.
?
LLP is a new form of business structure.
?
It provides an alternative to the traditional partnership 
where partners are exposed to unlimited liability and 
the statute based governance structure of limited 
liability companies.
                                                                                  
                                                                    
INDIAN LEGISLATIVE HISTORY
1997
?
A. Hussain Committee on Small Scale Industries 
recommended introduction of LLPs in India;
2003
?
Naresh Chandra Committee Report highlighted 
the grave need to introduce LLPs in India & 
suggested application of LLPs to service industry;
2006
?
LLP Bill, 2006 introduced in parliament;
2007
?
Parliamentary Standing Committee submitted a 
Report to the parliament with their 
recommendations;
2009
?
President’s assent to the LLP Bill, 2008 given on 
January 7 and LLP Act, 2008 published in Official 
Gazette on January 9.
LLP ACT, 08
CHAPTERS
14
SECTIONS
81
SCHEDULES
4
RULES & FORMS
      
16  Chapters
40  Rules
29  Forms
03  Annexures 
THE ACT – OUTLINE
THE ACT – SALIENT FEATURES
CONCEPT
?
LLP IS A NEW FORM OF BUSINESS STRUCTURE =
       BODY CORPORATE WITH DISTINCT LEGAL IDENTITY
        (thus can also have transactions with its partners)
+
      PERPETUAL SUCCESSION…COMMON SEAL…SUE/BE SUED.
+
                 ORGANIZATIONAL FLEXIBILITY OF PARTNERSHIP
+ 
                 ADVANTAGE OF LTD. LIABILITY FOR ITS PARTNERS
            (liability will be met out of LLP property)
?
Is an alternative to the traditional partnership (where 
partners are exposed to unlimited personal liability)