Download - LLP vs Partnership
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Legal Aspects of Business
Assignment
Date: 12-11-2012
Submitted by: Ani K
AM.BU.P2MBA11006
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Partnership
A partnership is an association of two at more persons to carry on as co owners of a business and to
share its profits and losses. Section 4 of the Partnership Act defines partnership as the relation
between persons who have agreed to share the profits of a business carried on by all or any one of
them acting for all. Persons who have entered into partnership with one another are called
individual partners and collectively a firm and the name under which their business is carried on is
called the firm name.
Limited Liability Partnership
The Limited Liability Partnership (LLP) is essentially a general partnership in form, with one
important difference. Unlike a general partnership, in which individual partners are liable for the
partnership's debts and obligations, an LLP provides each of its individual partners protection against
personal liability for certain partnership liabilities.
Difference between Limited Liability Partnership and Partnership
Category Partnership LLP
Prevailing Law Partnership is prevailed by The
Indian Partnership Act, 1932
and various Rules made there
under
Limited Liability Partnershipare prevailed by The Limited
Liability Partnership Act, 2008
and various Rules made there
under
Registration Registration is optional Registration with Registrar of
LLP required.
Creation Created by Contract Created by Law
Distinct entity Not a separate legal entity Is a separate legal entity under
the Limited Liability
Partnership Act, 2008.
Name of Entity Any name as per choice Name to contain 'Limited
Liability Partnership' or 'LLP' assuffix.
Cost of Formation The Cost of Formation is
negligible
Minimum cost of Formation of
LLP is Rs. 800 only,
comparatively much lesser than
the cost of formation of
Company
Perpetual Succession It does not have perpetual
succession as this depends upon
the will of partners
It has perpetual succession and
partners may come and go
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Charter Document Partnership Deed is a charter of
the firm which denotes its scope
of operation and rights and
duties of the partners
LLP Agreement is a charter of
the LLP which denotes its scope
of operation and rights and
duties of the partners vis--vis
LLP.
Common Seal There is no concept of common
seal in partnership
It denotes the signature and LLP
may have its own common seal,
dependent upon the terms of the
Agreement
Formalities of Incorporation In case of registration,
Partnership Deed along with
form / affidavit required to be
filled with Registrar of firms
along with requisite filing fee
Various eForms and the LLP
Agreement are filed with the
Registrar of LLP along with the
prescribed Fee.
Time line It will take 7 days (approx.) to
incorporate
It will take 10 days (approx.) to
incorporate (inclusive of time
taken to obtain DPN)
Legal Proceedings Only registered partnership can
sue third party
A LLP is a legal entity can sue
and be sued
Foreign Participation Foreign Nationals cannot form
Partnership Firm in India
Foreign Nationals can be a
Partner in a LLP.
Number of Members Minimum 2 and Maximum 20 Minimum 2 partners and their is
no limitation of maximum
number of partners.
Ownership of Assets Partners have joint ownership of
all the assets belonging to
partnership firm
The LLP independent of the
partners has ownership of assets
Rights / Duties / obligation of
the Partners / Managing
Partners / Directors
Rights / Duties / obligation of
the partners are governed by
Partnership Deed.
Rights / Duties / obligation of
the partners are governed by
LLP Agreement.