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Legal Aspects of Business

Assignment

Submitted on: 12-11-2012

Submitted by: ANI K

P2MBA11036

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Limited Liability Partnership

LLP Act, 2008 passed by Lok Sabha on 12th

of December 2008 and the

President gave assent to the Bill on 7th

January 2009.

It can be defined as

Hybrid of Corporate & Partnership business Form. Limits liability of partners to the extent of their contribution. provides flexibility without imposing detailed (and costly) legal

and procedural requirements.

The organization and operations are on the basis of an mutual agreement.

Features of LLP

Benefits as Compared to Partnership Firm

Unlimited No. of Partners Limited Liability of Partners LLP is liable to the extent of assets.

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No Liability of a partner for the wrongful act of other partner. No exposure to the personal assets of partners except in case of

fraud.

Partnership

Partnership is 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.

Essentials

Agreement Association of two / more persons Sharing of profits Business Relation between partners

Formation of Partnerships

May be formed by oral or written agreement All essential of valid contract be present Mutual rights and obligation to be in partnership deed The deed to be registered

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Difference between LLP and Normal Partnership

Category Partnership LLP

Registration Registration is optional Registration with Registrar of LLPrequired.

Common Seal There is no concept of common seal

in partnership

It denotes the signature and LLP may

have its own common seal,

dependant upon the terms of theAgreement

Legal Proceedings Only registered partnership can sue

third party

A LLP is a legal entity can sue and

be sued

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.

Liability of Partners/Members Unlimited. Partners are severally and

jointly liable for actions of other

partners and the firm and liabilityextend to their personal assets.

Limited, to the extent their

contribution towards LLP, except in

case of intentional fraud or wrongfulact of omission or commission by the

partner.

Voting Rights It depends upon the partnership

Agreement

Voting rights shall be as decided as

per the terms of LLP Agreement.