What are the Key Highlights of Limited Liability Partnership?
The limited liability partnership is a certain body that has its own separate entity from its partners and perpetual succession. The limited liability partnership in our country is governed by the limited liability partnership act 2008 and hence the provisions of Indian partnership act 1932 are not applicable to it. Each of the limited liability partnership is supposed to use the words “limited liability partnership” or it’s short form “LLP” as the last words of its name. A limited liability partnership is basically a result of an agreement between certain partners with mutual rights and certain duties of the limited liability partnership and that is determined by the agreement subject to by provisions of limited liability partnership act 2008. In this article, we will discuss Key Highlights of Limited Liability Partnership?
- Because limited liability partnership is a separate legal entity, it is liable for it’s all the assets, with the partners limited to only the amount of contribution by them. Just like a company. There shall be no partner individually liable for any of the wrongdoings of other partners. But however if a limited liability partnership was formed for the mare purpose of defrauding the ones to credit for or in the matter of any fraudulent purposes, then here liability of partners with their knowledge shall have unlimited liability.
- There have to be at least two of the designated partners in each limited liability partnership that are residents of India.
- Each limited liability partnership must maintain accounts annually showing it’s true states of affairs. It must also prepare a statement of accounts and periodically it has to be every year and has to be filed with the registrar.
- The central government, investigate, whenever they feel it’s fit to do so of the limited liability partnership by appointing a good and competent inspector.
- A private company, firm or any unlisted public company has the option of converting itself into a limited liability partnership as per the provisions of the 2008 act. On such conversion, the registrar shall issue a certificate to that effect. After issuing that certificate of the Registration, all of the property of firm or the supposed company shall stand dissolved. The company name is then removed from the registrar of the firms or the registrar of the companies, whichever shall be the case.
- Just like any company, a limited liability partnership may wind up, either voluntarily or by the Tribunal that is established under the companies act.
- The limited liability partnership act 2008 will enable the central government for applying the provisions of the companies act, whenever it shall think it’s appreciated and must then issue the notification to that effect provided. Such a notification has to be laid down before each of the houses of the parliament for a time period of 30 days and then it shall subject to any of the modifications as they may be approved by both house.
From where did a Limited Liability Partnership in India come from?
Recommendations that came from J.J Irani committee and the Naresh Chandra committee -2 had led to the formation of a draft bill that produced the limited liability partnership in India. The cabinet had approved their bill on 7th of December, 2006. This was then tabled in Rajya sabha on the 15th December 2006. The final report to the ministry for corporate affairs by submitted by the committee. In the bill limited liability partnership got approved by the cabinet on 1st May 2008, making the provisions for the formation and regulations. Both the houses in parliament passed the supposed bill without any recommended changes. This bill later got the assent of the president on 7th of January 2009. This bill in the form of limited liability partnership act 2008 was published in official Gazette of India on the date of 9th of January 2009. The limited liability partnership act 2008 hereby provides the formation and the regulation of limited liability partnerships and all the matters that are connected to it.
Also, Read: LLP Registration Checklist in 2018.