Daily Current Affairs 03.10.2018: Limited Liability Partnership (LLP)
Limited Liability Partnership (LLP)
Overview: Ministry of Corporate Affairs has launched a process re-engineering by making incorporation of Limited Liability Partnership (LLP) through a complete online system- titled “RUN-LLP (Reserve Unique Name – Limited Liability Partnership)”.
What is LLP?
LLP is an alternative corporate business form that gives the benefits of limited liability of a company and the flexibility of a partnership. The LLP can continue its existence irrespective of changes in partners. It is capable of entering into contracts and holding property in its own name.
- The LLP is a separate legal entity, is liable to the full extent of its assets but liability of the partners is limited to their agreed contribution in the LLP. Further, no partner is liable on account of the independent or un-authorized actions of other partners, thus individual partners are shielded from joint liability created by another partner’s wrongful business decisions or misconduct.
- Mutual rights and duties of the partners within a LLP are governed by an agreement between the partners or between the partners and the LLP as the case may be. The LLP, however, is not relieved of the liability for its other obligations as a separate entity. Since LLP contains elements of both ‘a corporate structure’ as well as ‘a partnership firm structure’ LLP is called a hybrid between a company and a partnership.
LLP form is a form of business model which:
- Is organized and operates on the basis of an agreement.
- Provides flexibility without imposing detailed legal and procedural requirements.
- Enables professional/technical expertise and initiative to combine with financial risk taking capacity in an innovative and efficient manner.
1 comment:
An LLP stands for a Limited Liability Partnership, which differs from a Private Limited Company and a General Partnership in terms of liability, protection, and cost.
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