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A partnership in which some or all partners have limited liabilities is known as a Limited Liability Partnership (LLP). LLP possess characteristics of both partnerships and corporations. Partners of LLP are not responsible or liable for another partner's misconduct or negligence. In a LLP, partners have a form of limited liability just like that of the shareholders of a corporation. In certain countries, as per the rules, a LLP should also have at least one person known as a "general partner" who would have the unlimited liability of the company. The partners of LLP have the right to manage the business directly. However, this right is not available to corporate shareholders. On contrary, corporate shareholders have the right to elect a board of directors under the laws of various state charters. The board organizes itself and hires officers as corporate individuals and their legal responsibility is to manage the corporation in its best interest. A LLP also has a different structure of tax liability as compared to that of a corporation.
In certain countries, Limited liability partnership requires at least one unlimited partner and allows other partners to be in the role of a passive and limited liability investor. As a result, the LLP form of organization is more suitable for businesses in which all investors wish to take an active role in management.
On 9th January 2009, the Limited Liability Partnership Act, 2008 was published in the official Gazette of India and has been notified with effect from 31 March 2009. On 1 April 2009, the rules have been notified in the official gazette. The first Indian LLP was the legal consultants of Handoo and Handoo, which was incorporated on 2nd April 2009.
LLP i.e. Limited Liability Partnership is a Mix of both Private Limited Company and Partnership Firm. A Partner’s Liability is limited by the Amount of his Share into the LLP. A partner is not liable for another partner’s default.
Minimum of 2 Partners is required to incorporate an LLP in Pune.
No, LLP is not the right structure for raising funds from private investors. Investors prefer a stake via equity of a company rather than being a partner in an organisation.
DSC is considered as an identity of a partner. It’s an electronically encrypted signature unique to a particular person and has been made mandatory by MCA for the partners of an LLP.
Incorporation of LLP in Pune, does not have any requirement of minimum capital, an LLP can be incorporated with any amount of Capital as decided amongst the Partners.
A person should be 18 Years or above in age. No limitation on their residency and citizenship. Foreign Nationals and foreign Companies can also form a LLP in India provided there is at least one partner who is an Indian Resident.
Currently no, an LLP can’t be converted into a Pvt. Ltd. Company, as they are governed by 2 different Acts and both of them, are silent on this matter, but vice-versa is possible.
Q.8 Can a Partnership Firm be converted into a LLP?
Partnership Firm can be converted into an LLP and it’s very advantageous to do so, as the liability of the Partners become limited to their share amount.
It is mandatory to execute and file LLP Agreement in view of Section 2(o) & (q), 22 and 23 of the Act. As provided in the LLP Act, in the absence of agreement as to any matter, the mutual rights and liabilities shall be as provided under Schedule I to the Act.
Yes, any existing private company or existing unlisted public company can be converted into LLP by complying with the Provisions of clause 58 and Schedule III and IV of the LLP Act. Form 18 needs to be filed with the registrar along with Form 2 for such conversion.
No, only private/unlisted public company can be converted into a LLP registration in india .