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8/7/2019 Utility of Limited Liability Partnership to the Corporate World With Changing Facet of Partnership Business

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‘‘Utility of Limited Liability

Partnership to the corporate

world with changing facet of

partnership business’’

Submitted by

Zubair Ahmed Khan

Lecturer, Lodhi Road Campus

IILM, New Delhi



CONTENTS-

1. Introduction

2. Limited Liability vs. Unlimited Liability

3. Limited liability partnership business in modern scenario

4. LLP vis-à-vis Indian Partnership Act: conflicting or

complimentary

5. LLP in relation to the domestic & international perspective

6. Conclusion

7. Suggestions



Chap.1- Introduction

Concept:-

A limited liability partnership is a partnership in which some or all the partners have

limited liability. It is a mixture of both- partnerships and corporations. Unlike a limited

partnership one partner is not responsible for the acts of other partners. The concept

of Limited liability partnership concept was introduced in order to adopt a corporateform, which combines the organizational flexibility and tax status of partnership with

advantage of limited liability for its partners. Thus this Act came into being. This Act

of parliament received Presidential assent on 7th January 2009 and was named as

the Limited Liability Partnership Act 2008 (Act no.6 of 2009). This is an Act to make

provisions for the formation and regulation of limited liability partnerships and for

matters in connection thereto and incidental therewith. It extends to the whole of

India.

On the recommendation of the various corporate law reforms committee (Abid

Hussain Committee, Naresh Chandra Committee 2003, JJ Irani Expert

Committee on Company Law 2005) the long and eagerly awaited Limited Liability

Partnership Bill 2006 was tabled in Rajya Sabha on 15th December 2006. It was

introduced by the Ministry of Corporate Affairs but lapsed.

J.J.Irani Committee-

“Limited liability partnership (LLP)

I) In view of the potential growth of the service sector, requirement and providing

facility to the small enterprises to participate in joint venture and agreements that

enable them to access technology and bring together business synergies and to

face the increasing global competition enabled through WTO, etc. ,the formation of

limited liability partnerships should be encouraged.

II) It would be a suitable vehicle for partnerships among professionals who arealready regulated such as company secretaries, chartered accountants, cost



manner, providing benefits of limited liability while allowing its members the flexibility

or organizing their internal structure as a partnership.

Need to have an LLP-

Being an alternative business structure, LLPs are expected to foster growth of the

service sector. The regime of the Limited Liability Partnership will provide a platform

to small and medium enterprises and professional firms of Companies Secretaries,

Chartered Accountants, Advocates, etc. to conduct the profession efficiently which

would in turn increase their global competitiveness.

The law of has many lacunae in it in their use today. A partnership is defined in the

law as the relation which subsists between persons carrying on a business with a

view of profit (s.1, Partnership Act, 1980). A very important feature of a partnership is

that they do not have ea legal personality of their own. Unlike in a company, where

the members (shareholders) of the company are to a large extent insulated from the

liabilities of a company, in a partnership, each partner is held responsible not just for

the liabilities caused by his own actions, but also for liabilities incurred by each and

every partner.

Moreover, the liability is not limited by his involvement in the business; his personal

assets are fully at risk against the partnership’s liabilities if such liabilities cannot be

covered by the assets held within the partnership, or where applicable, professional

indemnity insurance. The Indian Partnership Act, 1932 deals with the liability of

partners to persons dealing with them. A partner is the agent of the firm and of other

partners for the purpose of the business of the firm. Further, every partner is liable,

jointly and severally, with all other partners, for all the acts of the firm done while he

is a partner.

As an alternate corporate business vehicle, limited liability partnership goes some

way towards addressing these concerns. The LLP is a body corporate having

perpetual succession and a legal personality of its own. It shall have at least two

partners but there is no limit to the maximum number of partners. If at any time the

number of partners of an LLP falls below two and the business is carried on for more

than six months, a person who is a partner of the LLP during that time it so carries

on business after six months and it is cognizant of this fact shall be liable jointly and

severally with the LLP for the obligations of the LLP incurred during that period.



The Indian Partnership Act, 1932 lays down special rules concerning the liability of

partners to persons dealing with them. Every partner is liable jointly and severally for

any loss or damage arising from the wrongful acts or omissions of any of his partners(as well as his own) which were the authority of its partners. When the members are

liable jointly and severally for any loss or damage, a person dealing with the firm may

sue one or more of the members separately, or all of them together, at his option.

The LLP would enable entrepreneurs, professionals, and enterprises providing

services of any kind or engaged in scientific and technical disciplines, to form

commercially efficient vehicles suited to their requirements. Owing to the flexibility in

its structure and operations, the LLP would also be a suitable vehicle for small

enterprises and for investment by venture capital.

Characteristics of a LLP-

1. Status- The LLP is a body corporate and a legal entity separate from its

partners. It is an artificial person being invisible, intangible having no body,

no mind and no soul. Any two or more persons, associated for carrying on

a lawful business with a profit motive, may by subscribing their names to

an incorporation document and filing the same with the Registrar, form an

LLP. It has a perpetual succession.

2. Separate Legal Entity- It is a body corporate created by law having a

distinct name and a perpetual succession. Its rights and liabilities are

different from that of its partners and any change in it will not affect the

rights and liabilities.

3. Incorporation- LLPs are body corporate and must be registered with the

Registrar of Companies. The LLP cannot have the same name as of

another LLP.



4. Number of partners- An LLP must have at least two partners and also

two individuals as Designated Partners, of whom at least one shall be a

resident of India. There is no maximum limit on the number of partners.

5. Limited liability- Every partner of a LLP acts as an agent of LLP but not

of the other partners. A partner is not liable for the acts of other partners

(like in the case of the Indian Partnership Act). A partner would not be

liable for the wrongful acts or omission of other partners. The LLP may be

held liable but the partners in their individual capacity cannot be held

liable.

6. Structure- Unlike a company, an LLP does not have a capital, a

Memorandum of Association or an Articles of Association. It is free to

adopt the type of internal management it wishes to adopt. The rights and

duties of the members are mentioned in the LLP Agreement and are

confidential to the members.

7. Annual Accounts and Annual Return- The LLP is under an obligation to

maintain and file its annual accounts with the Registrar every year. The

accounts

of an LLP are to be duly audited. Any LLP which fails to comply with the

provisions of this section is punishable with fine which shall not be less

than 25 thousand rupees up to 5 lakh rupees.

8. Investigation- The Central Government has powers to investigate the

affairs of an LLP, if required, by the appointment of competent Inspector

for the purpose.

9. Compromise or Arrangement- the compromise or arrangement including

merger and amalgamation of LLPs shall be in accordance with the

provisions of section 60-62 of the LLP Act.

A LLP can be easily formed because of lower cost of formation, lesser formalities,

easy to manage and run and also easy to wind-up and dissolve, no requirement of

minimum capital contributions, partners are not liable for the acts of the other



partners and most important no minimum tax. But, LLP cannot raise money from the

public.

Procedure for the incorporation:-

The process for incorporating a LLP is pretty simple. The Registrar of Companies

(ROC) is the authority having jurisdiction over the incorporation. The steps required

are:

1. To decide on the Partners and the Designated Partners

2. To obtain Designated Partner Identification Number (DPIN) and a digital

signature certificate.

3. To decide on the name of the LLP and check whether it is available.

4. To draft the LLP agreement

5. To file the LLP Agreement, incorporation documents and obtains the

Certificate of Incorporation.



Ch- 2 –Limited Liability vs. Unlimited Liability

What is Limited Liability?-

Limited liability is a concept whereby a person's financial liability is limited to a fixed

sum, most commonly the value of a person's investment in a company or partnership

with limited liability. In other words, if a company with limited liability is sued, then the

plaintiffs are suing the company, and not its owners or investors. A shareholder in a

limited company is not personally liable for any of the debts of the company, other

than for the value of his investment in that company. The same is true for the

members of a limited liability partnership and the limited partners in a limited

partnership.

Limited liability- definitions

Encyclopaedia Britannica

Condition under which the loss that an owner (shareholder) of a business firm may

incur is limited to the amount of capital invested by him in the business and does not

extend to his personal assets. Acceptance of this principle by business enterprises

and governments was a vital factor in the development of large-scale industry,

because it enabled business concerns to mobilize large amounts of capital from a

wide variety of investors who were understandably unwilling to risk their entire

personal fortunes in their investments.



Some other definitions-

the liability of a firm's owners for no more than the capital they have invested

in the firm

wordnet.princeton.edu/perl/webwn

Limited liability is a concept whereby a person's financial liability is limited to a

fixed sum, most commonly the value of a person's investment in a company

or partnership with limited liability. ...

en.wikipedia.org/wiki/Limited_liability

The liability of shareholders in a limited liability company, private or public is

limited to the face value of the shares held. If therefore, the shares are fully

paid, the shareholder has no liability for the debts of the company. ...

www.payontime.co.uk/collect/collect_glossary_l.html

Entities limiting liability If a taxpayer holds his working interest through any of

the following entities, the entity is considered to limit his liability, and the

taxpayer's interest in the activity will not be exempt from the passive loss

rules

www.oilandgasinvestingglossary.com/glossary.asp

A feature inherent in corporations; stockholder's responsibility for debts is

restricted to the amount of their investment in the corporation.

www.crfonline.org/orc/glossary/l.html

This limits the financial loss, which shareholders may bear in the event of the

winding up of a company, to the extent of their invested capital.

www.business2000.ie/resources/Glossary_L.html

http://www.google.co.in/url?&q=http://wordnet.princeton.edu/perl/webwn%3Fs%3Dlimited+liability&ei=_LsvSuO0NIjykAXb_ZCwCw&sa=X&oi=define&ct=&cd=1&usg=AFQjCNEnKTZiZApOepNTdAsABUjOj1SfHg

http://www.google.co.in/url?&q=http://en.wikipedia.org/wiki/Limited_liability&ei=_LsvSuO0NIjykAXb_ZCwCw&sa=X&oi=define&ct=&cd=1&usg=AFQjCNGphFj0-a2PyZ0m6yWlt4qTtYwHFQ

http://www.google.co.in/url?&q=http://www.payontime.co.uk/collect/collect_glossary_l.html&ei=_LsvSuO0NIjykAXb_ZCwCw&sa=X&oi=define&ct=&cd=1&usg=AFQjCNFubd6pmM3CO9aaNPylsSOiBW9r5Q

http://www.google.co.in/url?&q=http://www.oilandgasinvestingglossary.com/glossary.asp&ei=_LsvSuO0NIjykAXb_ZCwCw&sa=X&oi=define&ct=&cd=1&usg=AFQjCNFfRebG-U6-gaiEBmLvppbcLa23NA

http://www.google.co.in/url?&q=http://www.crfonline.org/orc/glossary/l.html&ei=_LsvSuO0NIjykAXb_ZCwCw&sa=X&oi=define&ct=&cd=1&usg=AFQjCNGtBdftwLeArYaOL7oqZaPO860uSw

http://www.google.co.in/url?&q=http://www.business2000.ie/resources/Glossary_L.html&ei=_LsvSuO0NIjykAXb_ZCwCw&sa=X&oi=define&ct=&cd=1&usg=AFQjCNGtrAXh-0FBvObtg2RqxYWhZMv3Uw

http://www.google.co.in/url?&q=http://wordnet.princeton.edu/perl/webwn%3Fs%3Dlimited+liability&ei=_LsvSuO0NIjykAXb_ZCwCw&sa=X&oi=define&ct=&cd=1&usg=AFQjCNEnKTZiZApOepNTdAsABUjOj1SfHg

http://www.google.co.in/url?&q=http://en.wikipedia.org/wiki/Limited_liability&ei=_LsvSuO0NIjykAXb_ZCwCw&sa=X&oi=define&ct=&cd=1&usg=AFQjCNGphFj0-a2PyZ0m6yWlt4qTtYwHFQ

http://www.google.co.in/url?&q=http://www.payontime.co.uk/collect/collect_glossary_l.html&ei=_LsvSuO0NIjykAXb_ZCwCw&sa=X&oi=define&ct=&cd=1&usg=AFQjCNFubd6pmM3CO9aaNPylsSOiBW9r5Q

http://www.google.co.in/url?&q=http://www.oilandgasinvestingglossary.com/glossary.asp&ei=_LsvSuO0NIjykAXb_ZCwCw&sa=X&oi=define&ct=&cd=1&usg=AFQjCNFfRebG-U6-gaiEBmLvppbcLa23NA

http://www.google.co.in/url?&q=http://www.crfonline.org/orc/glossary/l.html&ei=_LsvSuO0NIjykAXb_ZCwCw&sa=X&oi=define&ct=&cd=1&usg=AFQjCNGtBdftwLeArYaOL7oqZaPO860uSw

http://www.google.co.in/url?&q=http://www.business2000.ie/resources/Glossary_L.html&ei=_LsvSuO0NIjykAXb_ZCwCw&sa=X&oi=define&ct=&cd=1&usg=AFQjCNGtrAXh-0FBvObtg2RqxYWhZMv3Uw



What is unlimited liability?-

A type of investment in which a partner or investor can lose an unlimited amount of

money opposite of limited liability.

The liability of the owner of a business for all the obligations of the business. An

owner's personal assets can be seized if the business's assets are insufficient to

satisfy claims against it. The placement of personal assets at risk is a great

disadvantage of proprietorships and general partnerships. The ability to limit the

amount of liability to which an owner is subject is a major reason for the formation of

corporations and limited partnerships.

Some definitions-

Full liability for the debt and other obligations of a legal entity. The general

partners of a partnership have unlimited liability.

www.advfn.com

Private firm (such as a sole proprietorship or general partnership) whoseowner(s),partners, or stockholders accept personal and unlimited liability for

its debts and obligations in return for avoiding double taxation of a limited

company. Unlimited liability firms are exempt from filing their annual accounts

with a public authority (such as Registrar of Companies) unless they are

subsidiaries of limited liability holding companies. Also called unlimited

company.

Business dictionary.com

Liability of general partners and sole proprietor owners of a company

extending to their entire assets, including personal property. This contrasts

with the limited liability of stockholders in a corporation, or the liability of

limited partners in a joint venture, whose potential losses are limited to the

extent of their investment.

Answers.com

http://www.advfn.com/

http://www.advfn.com/



In case of a partnership, limited means that the liability of a person or a partner is

limited. It is limited to a certain amount or certain extent. He cannot be made liable

for anything beyond that.

Now the LLPs have come into existence. The LLP concept is prevalent in India nowand is in practice. After the enforcement of the Limited Liability Partnership Act,

2008, the firms have started registering themselves under the Limited Liability

Partnership Act, 2008. Till now 10 firms have registered them under this Act.

Unlike Indian Partnership Act, 1932, the liability of the partners is limited only their

acts or share in the firm and nothing beyond that. One partner is not liable or

responsible for the acts of other partners. The person liable would be LLP and not

the partner. The liability of the partner is limited only to the amount of capital

contributed by him. Acts of one partner will not be binding on other partner. They will

be binding on LLP instead. The liability of LLP must be met out of property of LLP.

Thus no partner would be liable on account of independent or unauthorized action, of

other partners, thus allowing individual partners to be shielded from joint liability

created by other partners. The liability of partners and the LLP who are found to

have acted with the intent to defraud creditors or for any fraudulent purpose is

unlimited for all or any of the debts or other liabilities of LLP.



Ch-3 Limited liability partnership business in modern scenario

The existing partnership firm model was appropriate when all partnerships were

small and partners were of the same profession working closely with one another.

However, unlimited liability for partners became an increasing cause of concern dueto various reasons like-

(i) A general increase in the incidence of litigation for professional negligence

and the size of claims;

(ii) The growth in the size of partnerships (in large firm not all partners will be

personally known to one another);

(iii) The increase in the specialization among partners and coming together of

different professions within a partnership;

(iv)The risk of a partner’s personal assets when a claim exceeds the sum of the

assets and the insurance cover of the firm.

Thus, a need was felt for a type of partnership entity in which each partner is

responsible only for his or her own liabilities. It would make partners more

accountable to their clients or customers and ensures that all the partners canengage in their business without the concern of having their personal assets at risk,

unless there is specific case of negligence or wrongdoing.

The limited liability partnership is a separate legal entity without unlimited capacity so

that an LLP can do anything that a natural person could do. It has the ability to enter

into contracts and hold property, and all will continue in existence inspite of any

change n membership. The LLPs existence as a separate legal entity makes it more

closely akin to the company than to partnership. Unlike sole traders and partners of



ordinary partnerships, the LLP itself, and not the individual members , is responsible

for any debts that it runs up, unless individual members have personally guaranteed

a loan to the business. LLPs are required to produce and publish financial accounts

similar to those of a similar sized limited company and must submit accounts and an

annual return to the Registrar of Companies each year. This requirement is so far

more demanding than that for normal partnerships and specific accounting rules may

lead to profits different from those of a normal partnership.

The LLP structure would appeal to some, most notably the professions, in that it

meets their need for limited liability while offering the possibility of retaining internally

the ethos of partnerships.

The LLP structure is also attractive for some venture capitalists because of the ability

of members to participate in management without the risk of losing limited liability,

the absence of capital maintenance rules.

The Government of India should create a facilitating environment for entrepreneurs,

service providers and professionals to meet the global competition. The introduction

of LLPs in India is a good beginning towards a long journey. The hybrid structure of

LLPs will facilitate entrepreneurs, service providers and professionals to organizeand operate in an innovative and efficient manner for effectively competing in global

market.

One of the major constrains for professionals in setting up multidisciplinary

partnership is business structure. They are prohibited from using certain legal forms.

The permitted forms of legal entities are subject to restrictions like number of

partners, unlimited liability, ownership, taxation, merger and acquisitions. The

concept of LLP can eliminate and reduce these constraints to a great extent. In fact,

the hybrid structure of LLP enables Indian and foreign professionals to set up and

operate LLPs in India much more easily under GATS Agreement.



Ch-4-LLP vis-à-vis Indian Partnership Act: conflicting or

complimentary

Comparison between traditional partnership and Limited Liability

Partnership-

Distinctions-

Traditional partnership-

1. Unlimited personal liability of each partner for dues of the partnership firm.

Personal property of each partner also liable.

2. Written agreement not essential.

3. Partnership can be registered under Partnership Act. Registration is not

mandatory.

4. Not a legal entity separate from its partners.

5. Property cannot be held in name of partnership firm.

6. Partnership deed/agreement is executed. Even verbal agreement is valid.

7. Documents are required to be filed with the Registrar of Firms (of

respective state).

8. Death of a partner dissolves a firm, in absence of agreement.

9. Minimum two and maximum twenty partners.

10.Each partner can take place in business of firm.

11.All partners are liable for statutory compliances under the Partnership Act.



12.Partner cannot enter into business of the firm, though he can give a loan to

the business of the firm

13.Every partner of the firm is an agent of the firm and also of other partners

he can bind the partnership firm as well as other partner by his acts.

14.Filing of accounts, statement of solvency and annual return not required.

15.Partnership can be ‘at will’ i.e. any partner can resign or dissolve firm.

16.Death of a partner dissolves the partnership unless there is contract to

contrary.

17.Public notice is required for retirement of a partner.

18.Partnership firm can be dissolved.

19.No specific provision to enter into compromise, amalgamation,

reconstruction, etc. this can be done only under civil laws.

20.Minor can be admitted to benefit of partnership.

Limited Liability Partnership-

1. No personal liability of partner, except in case of fraud.

2. Incorporation document essential.

3. LLP is incorporated under LLP Act. Incorporation is mandatory.

4. It is a legal entity separate from its partners, having a perpetual succession.

5. Property can be held in name of LLP.

6. ‘Incorporation Document” is required to be executed. In addition, LLP

Agreement is required in almost all cases, though such LLP agreement is not

mandatory.

7. Registrar of Companies (ROC) is the administrating authority.

8. Death of a partner does not dissolve LLP.

9. Minimum two partners. No limit on maximum number of partners.



10.Each partner can take part in business of the firm, but LLP Agreement can

provide to the contrary.

11.Only designated partners are liable for statutory compliances as are required

under LLP Act (not necessarily in respect of other Acts).

12.Partner of a LLP can enter into business with LLP. He can also give loans to

LLP.

13.Every partner of an LLP is an agent of LLP but not of other partners. Thus, he

can bind LLP by his acts but not other partners. However, LLP Agreement can

restrict powers of individual partner.

14.Filing of accounts, statement of solvency and annual return not required.

15.Individual partner can resign but cannot dissolve the LLP.

16.Death of a partner does not dissolve a LLP.

17.Filing of return of retirement of partner with ROC is required, but no provision

for public notice of retirement of a partner.

18.LLP can be wound up.

19.LLP can enter into compromise, arrangement, amalgamation, reconstruction

etc.

20.There is no specific provision to admit minor to benefit of partnership. It is

doubtful if this can be done.

Similarities-

Traditional partnership-

1. Partner is not employee of firm.

2. Liability of a person for ‘holding out’ i.e. represents himself as partner, though

he is not.



3. Partner of the firm entitled to remuneration only if partnership agreement so

provides.

4. New partner can be introduced only with the consent of all existing partners.

5. Insolvent person cannot continue as a partner of the firm.

6. Rights of partnership can be assigned.

7. Partner liable to firm for any personal profits made by him by use of property,

name of business connection of firm.

8. Partner cannot undertake competing business without consent of other

partners.

9. Partner liable to firm if he commits fraud.

Limited Liability Partnership-

1. Partner is not employee of LLP.

2. Liability of a partner for ‘holding out’, i.e. representing himself as a partner

though he is not [clause 29 of LLP Bill, 2008].

3. Partner of LLP is entitled to remuneration only if LLP agreement so provides.

4. New partner can be introduced only with consent of all existing partners,

unless LLP Agreement provides otherwise.

5. Insolvent person cannot continue as partner of LLP.

6. Rights of partnership can be assigned.

7. Partner liable to LLP for any personal profits made by him by use of property,

name or business connection of LLP.

8. Partner cannot undertake competing business without consent of LLP.

Otherwise, liable to account for and pay profits to LLP.

9. Partner liable to LLP if he commits fraud.



Chapter-5 LLP in relation to the domestic & international

perspective

The LLP concept emerged in USA in the early nineties when only two states in 1992

allowed LLP kind of formation. Over forty states adopted LLP legislation by the time

LLP’s were added to the unified Partnership Act in 1996. Each individual state in

USA now has its own LLP. The LLP’s have been admired amongst professionals

especially advocates, architects and accountants. In UK, there are three forms of partnership n practice. The first and the oldest form called as ordinary partnership,

governed by the partnership Act, 1890. There is also limited partnership, which is

governed and registered under the Limited Partnership Act of 1907. In this type of

partnership, one or more parties may limit their liability to the amount of capital he

has contributed. But, even in such a partnership, at-least one partner’s liability is

unlimited. The third category is a Limited Liability Partnership (LLP), which is a body

corporate having perpetual succession and limited liability. Such kind of formation isgoverned by Limited Liability Partnership Act, 2000, the Limited Liability Partnerships

Regulations, 2001, and the Limited Liability Partnerships (Scotland) Regulations,

2001.

LLP kind of formation has also gained popularity in countries like, Australia,

Singapore, Japan, and China. It has recently been used in India by the Limited

Liability Partnership Act of 2008.

LLP in USA, UK, Singapore, Japan, and India: A Comparative study:

LLP combines of organizational flexibility of a traditional partnership with the benefit

of limited liability of a company which remains its broad feature in countries having



LLPs. However, there are some variations in its provisions relating to requirements,

for incorporation, management, decision making, insurance policy, taxation,

conversion of other type of entities into LLP, etc.

LLP in USA

1. Legislation - Originated in state of Texas in 1991 and then incorporated into

commercial law in most states by the Uniform Partnership Act of 1996 (UPA).

2. Name of LLP- Must carry the words ‘RLLP’ i.e. registered Limited Liability

Partnership or ‘LLP’ i.e. limited liability partnership in the end.

3. Body corporate & separate legal entity- No, it’s only a form of general

partnership to protect partners from unlimited liability.

4. Minimum and maximum partners/members- Minimum 2 and there can be

unlimited number of partners.

5. Number of designated partners/member if fall to 1 or 0 - No such concept of designated partner/member exists.

6. Number of partners/members if fall below statutory minimum limit of 2- The

UPA is silent in this respect.

7. Minimum Designated partner/member- The UPA does not provide for any

such designated partner, member or manager. It only provides that in case

partnership does not have an office in the state of incorporation, partners

need to appoint an agent who is individual and a resident of the state for

service of the process of formation of LLP.

8. Responsibility of designated partner/agent- Agent is responsible for

complying with the requirements of formation of the LLP in case partnership

does not have an office in the state of incorporation.

9. Liability of partners/members- Liability of partners is limited up to the

agreed contribution except in case of deliberate fraud, misconduct and or negligence.



10.Whether bankruptcy disqualifies a partner/designated partner/manager- Yes

11.Whether designated partner/member needs to be a partner- Agent need not

be partner of the LLP.

12.Partner/member to obtain designated partner identification number (DPIN)-

No such requirement.

13. Registration - A partnership can become an LLP by filing a statement of

qualification in the office of secretary of state (along with registration fee) who

will approve it and register the LLP.

14. Partnership agreement- Can be expressed or implied.

15. Contents of Incorporation document- (i) Name of the partnershipagreement, (ii) Street address of the partnership’s chief executive office, (iii) If

partnership does not have an office in this state, the name and the street

address of the partnership’s agent for service of process, (iv) A statement

that partnership elects to be a LLP. Hence UPA does not require the partners

to state objects of LLP.

16. Other requirements for Incorporation- Apart from the statement of

qualification, the conver4sion into LLP needs to be approved by the vote

necessary to amend the partnership agreement.

17. Appeal in case of refusal to register- The secretary of the state may refuse

to register or revoke the registration later and in that case UPA does not

provide for any higher appeal.

18. Admission of new partner/member- Admission can be done by taking

consent of the required number of partners as per the voting requirement to

amend partnership agreement. Hence consent of all partners is not required.

19. Filing requirements- LLP shall file an annual report containing the

prescribed details in the office of the secretary of state.

20.Appointment of Inspectors for investigation- UPA is silent in this respect.

21. Compulsory insurance policy- UPA provides for compulsory insurance and

different state legislations have provided for different minimum insurance



policy to cover liability of LLP like in Texas it’s $100,000 and in Delaware $

1,000,000.

22. Tax status of LLP- LLP will have a pass through status i.e. it pays no tax but

its partners do in relation to the income or gains they receive through theLLP.

23. Consent Required for conversion of firm or company into LLP- UPA

does not require unanimous consent of all partners for conversion into LLP.

24. Winding up and Dissolution- UPA provides for both voluntary as well as

compulsory winding up by the Secretary of State.

25. Default provisions- UPA does not provide for any default rules in case of

absence of a partnership agreement.

LLP in UK-

11 Legislation - Formed under the LLP Act 2000 and LLP Regulations

2001.

11

Name of LLP- Must carry words ‘LLP’ or ‘llp’ in the end and in caseincorporated in Wales then can have the word ‘LLP’ or ‘llp’ or ‘PAC’ or ‘pac’

i.e. ‘partneriaeth atebolrwydd cyfyngedig’.

11 Body corporate & separate legal entity- Yes

11 Minimum and maximum partners/members- Minimum 2 and there

can be unlimited number of partners.

11 Number of designated partners/member if fall to 1 or 0 - Then all

members automatically become designated members.

11 Number of partners/members if fall below statutory minimum limit

of 2- If LLP carries on business for a period of more than 6 months with such

reduced number of members. The members shall be personally liable for the

obligations of LLP after such said period of 6 months.



11 Minimum Designated partner/member- At least 2 designated

members, they can be company, corporation or (as well as) individual and

need not be resident of UK.

11 Responsibility of designated partner/agent- Designated member is

responsible for doing all such acts, matters, and things required to be done

by LLP i.e. compliance of provisions of the Act including filing of any

document, return statement, liability to all penalties imposed on LLP for any

contravention of those provision.

11 Liability of partners/members- Liability of members is limited up to

the agreed contribution except in case of deliberate fraud, misconduct and or

negligence.

111 Whether bankruptcy disqualifies a partner/designated

partner/manager- Yes.

111 Whether designated partner/member needs to be a partner-

Designated member must be a member also; if he ceases to be a member

then he automatically ceases to be a designated member.

111 Partner/member to obtain designated partner identification number

(DPIN) - Designated members must obtain registration number.

111 Registration - Registration is by submission of incorporation document

in form LLP2, along with registration fee to the registrar of companies.

111 Partnership agreement- Can be express or implied; in the absence of

agreement the default rules in Schedule I of the LLP Act 2000 shall apply.

111 Contents of Incorporation document- (i) Name of LLP, (ii) Address

of the registered office of the LLP, (iii) Names and address of the members

and designated members, LLP Act 2000 does not require members to state

the objects of LLP.

111 Other requirements for Incorporation- In addition to the

incorporation document, members need to deliver a compliance statement

made either by a solicitor engaged in the formation of LLP or by any one of



the subscribers to the incorporation document, that the requirements of the

incorporation have been complied with.

111 Appeal in case of refusal to register- If the registrar of companies is

not satisfied with the particulars of any other information, he may refuse to

register the LLP and there is no provision for higher appeal in the Act.

111 Admission of a new partner/member- Admission is as per the

partnership agreement, in the absence of which the default rule will apply

which states the consent of all partners is required to admit a new partner.

111

Filing requirements- LLP needs to file annually its annual accountsi.e. balance sheet, profit and loss account, auditors report (subject to certain

exemptions for small and medium LLPs) with the ROC.

111 Appointment of Inspectors for investigation- Secretary of the state

has the power to appoint inspectors to investigate affairs of LLP.

111 Compulsory insurance policy- LLP Act, 2000 has made provision for

a compulsory insurance policy for LLP to cover negligence, omission,

wrongful acts etc.

111 Tax status of LLP- LLP will have a pass through status i.e. it pays no

tax but its partners do in relation to the income or gains they receive through

the LLP.

111 Consent Required for conversion of firm or company into LLP-

Consent of all partners in case of a firm and consent of all shareholders in

case of a company is required for conversion into an LLP.

111 Winding up and Dissolution- LLP Act, 2000, provides for both

voluntary as well as compulsory winding up by the High Court.

111 Default provisions- In the absence of partnership agreement, partners

need to follow the default provisions stated in schedule I of the Act.

LLP in Singapore-

1. Legislation - Formed under LLP Act, 2005



2. Name of LLP- Must carry the words ‘Limited Liability Partnership’ or the

acronym ‘LLP’ as part of its name.

3. Body corporate & separate legal entity- Yes



5. Number of designated partners/member if fall to 1 or 0 - Then all the partners

do not become local managers.

6. Number of partners/members if fall below statutory minimum limit of 2- If

LLP carries on business for a period of more than 2 years with such reduced

number of

partners, the partner shall be personally liable for the obligations of LLP after

such said period of 2 years.

7. Minimum Designated partner/member- Must appoint at least 1 local

manager (whether or not a partner) who is Singapore citizen, permanent

resident. However there is lack of clarity in the Act whether such a manager

can be a body corporate or not.

8. Responsibility of designated partner/agent- Local manager is responsible

for doing all such acts, matters, and thins required to be done by LLP i.e.

compliance of provisions of the Act including filing of any document, return

statement, liability to all penalties imposed on LLP for any such contravention

of those provision.

9. Liability of partners/members- Liability of members is limited up to the

agreed contribution except in case of deliberate fraud, misconduct and or

negligence.

10. Whether bankruptcy disqualifies a partner/designated partner/manager-

Partner is not disqualified if he is bankrupt but the manager is disqualified in

case he is bankrupt.

11.Whether designated partner/member needs to be a partner- Local manager

need not be a partner to LLP.



12.Partner/member to obtain designated partner identification number (DPIN) -

No such requirement.

13. Registration - Registration is by submission of the incorporation document

along with the registration fee to the registrar of LLP and all LLPs must beregistered with the accounting and corporate regulatory authority (ACRA) of

Singapore.

14. Partnership agreement- Can be express or implied; in the absence of the

agreement the default rules in the Schedule I of the LLP Act 2005 shall apply.

15. Contents of Incorporation document- (i) Name of the LLP, (ii) Address of

the registered office of the LLP,(iii) Names and addresses of partners and

local managers, (iv) General nature of the proposed business.

16. Other requirements for Incorporation- A statement by every person who is

to be a partner of the LLP is lodged with the registrar in the form the registrar

may determine stating all the formalities of the incorporation are complied

with.

17. Appeal in case of refusal to register- If the registrar of the LLP refuses to

register ten higher appeal can be made to minister of ACRA within 30 days of such refusal.

18. Admission of new partner/member- As per the partnership agreement, in

absence of which the default rule will apply which states consent of all

partners is required to admit a new partner.

19. Filing requirements- LLP needs to file an annual declaration of solvency

with the registrar of LLP, not the books of accounts. However it needs to

maintain proper books of accounts and produce them when required by the

registrar of LLP.

20. Appointment of Inspectors for investigation- The registrar of the LLP has

the power to appoint inspectors to investigate affairs of LLP.

21.Compulsory insurance policy- No such insurance clause.

22. Tax status of LLP- Not specified in the LLP Act, 2005.



23. Consent Required for conversion of firm or company into LLP- Consent

of all partners in case of a firm and consent of all shareholders in case of a

company is required for conversion into an LLP.

24. Winding up and Dissolution- LLP Act, 2005 provides for both voluntary aswell as compulsory winding up by the High Court.

25.Default provisions- Same as UK.

LLP in Japan-

11 Legislation - LLP Act 2005 enacted on 6 th May 2005 (enforced on 1st

August, 2005). LLP in Japanese language is known as ‘Yugen Sekinin Jigyo

Kumial.’

11 Name of LLP- Shall include in its name the phrase “Limited Liability

Partnership.”

11 Body corporate & separate legal entity- No, it s merely a contract

among partners.

11 Minimum and maximum partners/members- Minimum 2 and there

can be unlimited number of partners.

11 Number of designated partners/member if fall to 1 or 0- No such

concept of designated partner/member exists.

11 Number of partners/members if fall below statutory minimum limit of 2-

The LLP Act is silent in this respect.

11 Minimum Designated partner/member-No such provisions of the

designated partners exist in the Japanese LLP statute. It merely requires that

one of the partners must be an individual resident in Japan (resided in Japan

for 1 year or more) or a Japanese company (Domestic Corporation).

11 Responsibility of designated partner/agent- No such provision exists.



11 Liability of partners/members- Liability of members is limited up to

the agreed contribution except in case of deliberate fraud, misconduct and or

negligence.

111 Whether bankruptcy disqualifies a partner/designated

partner/manager- Yes

111 Whether designated partner/member needs to be a partner- No such

provision exists.

111 Partner/member to obtain designated partner identification number

(DPIN) - No such provision exists.

111Registration - Persons who intend to become partners in an LLP shall

file a contract i.e. a written partnership agreement to the Legal Affairs Bureau

or District Legal Affairs Bureau.

111 Partnership agreement- It is compulsory to have a written partnership

agreement.

111 Contents of Incorporation document- (i)Business of LLP, (ii) Name

of the LLP, (iii) District in which the office of LLP is located, (iv) Names, or

corporate names, and the addresses of partners,(v) Date on which LLP

Agreement takes effect, (vi) Duration of the LLP, (vii) Amount of the partner’s

capital contributions, (viii) Business year of the LLP.

111 Other requirements for Incorporation- The partners need to file an

application enclosing the written partnership agreement and a written

document evidencing payment and delivery of the capital contribution.

111Appeal in case of refusal to register- No such provisions for higher

appeal exists.

111 Admission of new partner/member- Consent of all partners required

to admit a new partner.

111 Filing requirements- The partners shall, within two months from the

end of each business year, prepare balance sheet, profit and loss statement

of LLP which shall be open for inspection by creditors.

111 Appointment of Inspectors for investigation- No such provision exists.



111 Compulsory insurance policy- No such insurance clause.

111 Tax status of LLP- LLP has a pass through status i.e. it pays no tax

but its partners do in relation to the income or gains they receive through the

LLP.

111 Consent Required for conversion of firm or company into LLP-

Consent of all partners required and they must sign their names on or affix

their names and seals to the written LLP Agreement.

111 Winding up and Dissolution- The LLP statute in Japan provides that

an LLP shall be dissolved, if the achievements of its business purposes

becomes impossible, if there being only one remaining partner; expiration of

the duration of Partnership; with consent of all partners; on or happening of an

event which has been stipulated as the event of dissolution in the LLP

Agreement.

111 Default provisions- Since it is mandatory to have a written partnership

agreement, the question of default provision doesn’t arise.

LLP in India-

1. Legislation- Formed under the LLP Act 2008.

2. Name of LLP- Must carry the words ‘Limited Liability Partnership’ or the

acronym ‘LLP’ as part of its name.

3. Body corporate & separate legal entity- yes.



5. Number of designated partners/member if fall to 1 or 0- Then all partners

automatically become designated partners.

6. Number of partners/members if fall below statutory minimum limit of 2- If

LLP carries on business for a period of more than 6 months with such



reduced number of members. The members shall be personally liable for the

obligations of LLP after such said period of 6 months.

7. Minimum Designated partner/member- At least 2 designated partners who

shall be individuals and at least one of them shall be a resident of India.

8. Responsibility of designated partner/agent- Designated partner is

responsible for doing all such acts, matters, and things required to be done by

LLP i.e. compliance of provisions of the Act including filing of any document,

return statement, liability to all penalties imposed on LLP for any

contravention of those provision.

9. Liability of partners/members- Liability of partners is limited up to the

agreed contribution except in case of deliberate fraud, misconduct and or

negligence.

10. Whether bankruptcy disqualifies a partner/designated partner/manager-

Yes partner is disqualified whether he is an undercharged insolvent or applied

to be adjudicated insolvent.

11. Whether designated partner/member needs to be partner-Designated

partners must be a partner also; if he ceases to be a partner he automaticallyceases to be a designated member.

12. Partner/member to obtain designated partner identification number

(DPIN) - Designated partners must obtain DPIN under section 266A-266G of

the Companies Act, 1956.

13. Registration- By submission of the incorporation document, along with

registration fee to the registrar of companies.

14. Partnership agreement- Can be express or implied; in the absence of the

agreement the default rules in the Schedule I of the LLP Act 2008 shall apply.

15. Contents of Incorporation document- (i) Name of the LLP, (ii) Address of

the Registered office of the LLP,(iii) Names and addresses of partners and

designated partners, (iv) Proposed business of LLP.

16. Other requirements for Incorporation- A statement in the prescribed form,

made either by an advocate, a company secretary, a chartered accountantstating that all the formalities of the incorporation have been complied with.



17. Appeal in case of refusal to register- If the registrar of companies is not

satisfied with particulars or any other information, he may refuse to register

the LLP and then there is no provision for higher appeal in the Act.

18. Admission of a new partner/member- As per the partnership agreement, inabsence of which the default rule will apply which states consent of all

partners is required to admit a new partner.

19. Filing requirements- LLP needs to file annually its accounts i.e. balance

sheet, profit and loss account, auditors report along with statement of

solvency with ROC.

20. Appointment of inspectors for Investigation- The registrar of the

companies has the power to appoint inspectors to investigate affairs of LLP.

21. Compulsory insurance policy- No provision in the LLP Act, 2008.

22. Tax status of LLP- Not specified in the LLP Act, 2008, will be dealt with by

making amendments to the Income Tax Act, 1961.

23. Consent Required for conversion of firm or company into LLP- Consent

of all partners in case of a firm and consent of all shareholders in case of a

company is required for conversion into an LLP.

24. Winding up and dissolution- The winding up of an LLP may be either

voluntary or by the Tribunal to be established under the Companies Act, 1956

and LLP, so wound up may be dissolved. Till the Tribunal is established, the

powers in this regard have been given to the High Court. The Ministry of Corporate Affairs has placed on its website draft winding up rules for LLP’s

that have yet to be finalized.

25. Default provisions- Same as LLP but UK but LLP Act, 2008 goes to a step

further and provides that in case of a dispute between two parties which can’t

be resolved shall be referred for arbitration under Arbitration and Concilation

Act, 1996.



Indian LLP Act is nothing but a reproduction of mainly the UK LLP law with some

features of Singapore LLP law. The Indian model of LLP resembles with the LLP of

UK in the following ways:

(a) It is a body corporate with distinct legal entity and perpetual succession;

(b) It is created by registration of an incorporated document with the Registrar of

Companies;

(c) It can be set up for any type of trade or business;

(d) It shall have a registered office;

(e) Minimum two partners/members are required for its formation and there is nolimit on maximum number of partners/members;

(f) Any person may become partner/member of LLP either by subscribing to the

Incorporation Document or by the agreement with the existing

partners/member;

(g) Mutual rights and duties of the partners/members are governed by the

agreement between the partner/members between the LLP and its

partners/members;

(h) The contents of LLP agreement, as may be prescribed, are to be filed with the

ROC;

(i) Each partner/member of LLP is an agent of LLP and therefore can act on its

behalf in all its business;.

Even though the original intention of UK Legislation was to restrict the use of LLPs toprofessionals only like it was recommended by the second Naresh Chandra

Committee in India, but the LLP Act, 2000 of UK, as per section 1(3) makes them

available to every trade, or business like it is in India. LLP of UK may carry out

whatever trade or business it wishes, while USA limits it to professional services

only. Section 10 of the UK LLP Act lays down that a trade, profession or business

carried on by an LLP, with the view to profit, shall be treated as carried on in

partnership by its members and not by LLP itself.



Thus, any asset held by an LLP, or any tax chargeable on gains made shall be

treated as held by members/partners, or gains made by the members/partners, and

not by LLP itself. In other words, an LLP enjoys a pass-through status and is not

taxable as such; the taxation liability falls on the partners in their individual capacity.

In the USA, too, LPs enjoy a pass through status for the purpose of taxation. The

profits or losses of the LLP pass through the business and are reported on each

partner’s personal returns. The Singapore LLP Act, 2005 and the Indian LLP Act,

2008, are silent in this count. In USA, it differs from state to state in the degree of

liability protection.

Generally, LLP partners in USA do not bear personal liability for any partnership

obligations or liabilities of other partner’s misdeeds. The Texas LLP Statute does not

relieve a general partner from liability for partnership’s malpractice, contractual and

tort liabilities; the partners are insulated only from the vicarious responsibility for the

partnership’s malpractice-type liability. The Texas LLP Statute has served as a

model for many other LLP Statutes in the USA. In some states of USA, the LLP

regime is more liberal. Interestingly, the Delaware Law of USA provides for, and

permits, foreign limited liability partnerships. But, the LLP Statutes enacted in New

York, Colorado, etc, provide LLP partners full protection from vicarious liability.



CH 6- Conclusion

The aspect of tax treatment of LLPs remains an area of uncertainty, since LLP will

be treated as a firm as defined under the Income Tax Act 1961 for the purpose of

taxation. This show the way one to the following two implications:

1. That on the same basis as an ordinary partnership firm, the LLP will pay tax on its

profits after deduction of business expenditure, salaries and interest paid to the

partners. Partners will be liable to pay tax on salary and interest receipts, whereas

the share in profits is exempt; same as the current provisions of the income tax Act

1961related with Firm.

2. Another way that only the profits in the hands of the LLP partners will be taxed. A

L.L.P. will have Pass through Status (proposed by the Naresh Chandra Committee),

the partners will be liable to pay tax on share of LLP's profits received in their hands.

This also known as tax transparency.

Of the above two options the second option appears to be logical and acceptable.

In the UK and most European nations, the tax liability falls on individual partners. In

the US, a flexible system exists where partners decide whether they or the firm be

taxed. Flexibility needs to be built into LLPs taxation structures.



“Any income earned by LLPs must be accorded a pass-through status, that is,

partners must be directly taxed on any income distributed by the LLPs. This will be in

conjunction with the taxation laws for LLPs in UK,”

“A pass-through status will make taxation system easier and avoid the kind of

complications that exists currently in the partnership firms, where partners

remunerations are tax free up to a certain limit but the firms profits are taxed. Since

LLP is a new concept, the taxation structure should be such that more flexibility is

provided to partners in paying their taxes so that more people are encouraged to opt

for LLP.”

All over the world, Micro, Small and Medium Enterprises (MSMEs) and service

providers play an important role in trade, commerce, industry and services.

Considering their important role in economic development, governments, as a matter

of policy, nurture and develop these enterprises by suitable legal and regulatory

framework and financial assistance. There are micro f9inance and venture capital

funds with established record of success. In addition, there are stock markets like

NASDAQ, which perform a number of economic functions to promote and reward

entrepreneurship.

Indian entrepreneurs and service providers have been making significant

contribution in rapid growth of the economy. They can match the best in terms of

competence, talent and skills. However, there is lack of institutional support and

timely availability of finance. They find the rules and regulations of the Companies

Act, 1956, and the Securities and Exchange Board of India (Venture Capital Funds)

Regulations, 1996, too rigid, cumbersome and difficult to comply. Moreover, the OTC

Exchange of India could not succeed in listing and marketing securities of the small

and medium enterprises.

The Government of India should create a facilitating environment for entrepreneurs,

service providers and professionals to meet the global competition. The introduction

of LLPs in India is a good beginning toward a long journey. The hybrid structure of

the LLPs would face entrepreneurs, service providers and professionals to organize

and operate in an innovative and efficient manner for effectively competing in theglobal market.



The potency of the fast growing Indian economy rests of the pillar of liberalization,

wherein the government enables the corporations with greater flexibility to do

business with less interference. The invention of the LLP is also aligned with the

principle of providing ample flexibility for efficient performance- endowing the

corporate with the power to retain the partnership structure while reducing the

personal liability. However, evolution of LLP in US itself has been criticized for

permitting member to take up risky ventures without bearing all the liabilities as

happened in the Arthur Anderson LLP juggernaut.

Therefore, it is suggested that the proposed legislation which draws immense

inspiration from UK and Singapore statutes, should address the protracted concern

of extent of liability and that of third party claims being covered under clause 28, 29for ascertaining and exempting liability of partners shall be mitigated. Besides, the

Bill shall enlist remedy such as ‘minimum insurance clause’ where the third party

claims are higher than the assets of the firm and also making it mandatory for LLPs

to carry insurance, maintain a capital base or provide for security.

Creation of two-tier system in financial disclosure or for minimum insurance clause

can be extremely efficacious in making the vehicle of LLP instrumental in growth of

the economy. Allowing a two-tier system extends adequate elasticity to the LLPwithout causing any detriment to the third parties. Nevertheless, incorporating waiver

clause and supple approach for entities wanting to convert to a LLP on the lines of

US and UK model shall prove the effectiveness of LLP. At the same time, the default

provision should not be left open for confusion for the courts to rely either on

company law or partnership jurisprudence; rather the legislation may envisage a

model LLP agreement as MOA/AOA in Schedule I of the Companies Act, 1956.



CH-7- Suggestions

The LLP has its own weak and strong points. Some of the infirmities and measures

are enlisted hereunder-

1) First of all the burden on regulation of LLPs should not have been

dropped on the shoulders of the Registrar of Companies (ROCs) since

LLP is a different entity as compared to companies and requires a

different focus. There would be a large number of LLPs getting

registered and the sheer volume of regulation of these LLPs along with

the already heavy burden of regulating companies would be an

injustice to the enforcement of both the statutes. With the introduction

of electronic records and e-filling requirements the entire focus of

ROCs would be to supervise the implementation by conducting

inspections etc; and this can be done effectively if the functions of

regulating the LLPs and companies are separate.

2) Secondly the LLP Act only undermines the importance of substantive

law which cannot be delegated to the government. For e.g.

amalgamations, reconstructions, winding up of LLPs. This is also the

position under the Companies Act, 1956 with respect to companies;

3) Thirdly the aspect of criminal liability for violations of the provisions of

the LLP Act is also unclear. Under the LLP designated partners are

appointed who are answerable and liable for ensuring compliance with

the provisions of the Act. However, all the penal provisions of the LLP



Act contain the words “ the LLP and every partner shall be punishable

……….If every partner is to be held liable for violations than what is the

objective behind the appointment of designated partners?;

4) Fourthly though the LLP Act recognizes the LLP as a separate entity(on the same basis of a company) it shifts the burden of bearing the

penalties on the designated partners. Clause 9(2)(b) stipulates that “a

designated partner shall be liable to all the penalties imposed on the

LLP for any contravention.” Under the Companies Act, 1956 the

company being a separate legal entity is liable to pay the fine (apart

from the officers in default) from its own account. This logic needs to be

applied to LLPs also.

5) Fifthly, the recommendations of the Naresh Chandra Committee should

be followed. The committee recommended that the LLP Act should not

have covered the small business enterprises like traders and small

manufacturers but instead should have confined its domain to only

professionals firms of Lawyers, Chartered Accountants, and Company

Secretaries etc. This recommendation is justified by two reasons.

(i) The entire Companies Act is due for reform and this reform process

will include the implementation of the Naresh Chandra Committees

recommendations to the effect that the provisions governing Private

companies shall be further liberalized. This will certainly prove to be

a boon for the small enterprises, traders, etc. now since the LLP Act

is passed before the reform of the Companies Act, 1956, such small

enterprises will certainly want to convert into the LLP form.

Subsequently when the provisions relating to Pvt companies are

liberalized they would be in a state of avoidable confusion since

they would again prefer to opt for the Pvt company mode which

offers total exemption from any personal liability to the

shareholders. There would be a scurry of LLPs wanting to convert

themselves into pvt companies and this might send avoidable

alarming signals to the customers, creditors and other parties

dealing with LLPs;



(ii) The recommendations regarding mandatory insurance for LLPs

should have been applied. This is necessary to protect the interest

of persons who might have claims against an LLP. This is

necessary as such persons might not get any real relief, since there

will be no access to the assets of partners of the LLP except to the

extent of his/her liability in the LLP. This would deter the creation of

shell LLPs or asset-thin LLPs.

References:-

1. Textbook on Indian Partnership Act With Limited Liability Partnership Act by

Dr. Madhusudan Saharay , Universal Law Publishing Co. Pvt. Ltd. (2010)

2. Limited Liability Parnership law and Practice by Dr.Sanjiv Agarwal,RohiniAggarawal, Lexis Nexis Publication, 1st edition,2009.

3. Law relating to limited liability partnership, by D S R Krishnamurti, Taxmann

Publication.

4. Law Relating To Limited Liability Partnership in India by Sa Naik , LexisNexis ButterWorths 2010

5. http://www.icai.org/resource_file/9996417-421.pdf

6.http://www.articlesbase.com/regulatory-compliance-articles/limited-liability-

partnership-act-in-india-1726643.html

http://www.flipkart.com/author/dr-madhusudan-saharay/

http://www.infibeam.com/Books/lexisnexis-butterworths-publisher/


http://www.icai.org/resource_file/9996417-421.pdf

http://www.articlesbase.com/regulatory-compliance-articles/limited-liability-partnership-act-in-india-1726643.html


http://www.flipkart.com/author/dr-madhusudan-saharay/



http://www.icai.org/resource_file/9996417-421.pdf





7.http://www.llp.gov.in/aboutllp.htm

8. http://business.gov.in/starting_business/limited_liability.php

http://www.llp.gov.in/aboutllp.htm

http://business.gov.in/starting_business/limited_liability.php

http://www.llp.gov.in/aboutllp.htm

http://business.gov.in/starting_business/limited_liability.php