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The Limited Liability Partnership

Limited Liability Partnership- Meaning and Concept

After going through this lesson, you shall be able to understand the following concepts related to Limited Liability Partnership.

  • Meaning of Limited Liability Partnership (LLP)
  • Characteristics  of Limited Liability Partnership(LLP)
  • Advantages and disadvantages of Limited Liability Partnership (LLP)
  • Need of Limited Liability Partnership(LLP)
  • Process of incorporation of a LLP
  • Comparison of LLP with LLC and Partnership
After going through the detailed concepts of Partnership and Company in your previous studies, you must have understood the basic difference between a Partnership and a Company. The limited liability feature and the feel of a body corporate of a company somewhere is seen as an added advantage over the partnership form of business. On the other hand, we require a minimum amount to start a company but no such requirement is needed to start a partnership business. Hence, as a midway between a partnership and a limited liability company, comes another form of partnership which is called Limited Liability Partnership. This form of business comes with a limited liability feature and no minimum capital requirement.
The concept of Limited Liability Partnership was introduced by the central government of India in the year 2008 in the Parliament of India. The concept of LLP in the form of a Bill was passed on 12th December’ 2008 in the both houses of Parliament. The honourable President of India signed this Bill on 7th January’ 2009. This bill became an Act with 81 sections and 4 schedules on 7th January’ 2009. This Act was enforced in India w.e.f.31st March’ 2009. Different schedules of this Act have been discussed briefly as under:

Schedule 1Mutual Rights and Duties of Partners
                    Provisions of LLP in the absence of formal agreement in this respect 
Schedule 2Process of conversion of a Partnership Firm into LLP 
Schedule 3Process of conversion of a Private Company into LLP 
Schedule 4Process of conversion of  an Unlisted Company into LLP 
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