BCOC-133 BUSINESS LAW CHAPTER-15 LIMITED LIABILITY PARTNERSHIP

 

BCOC-133 BUSINESS LAW CHAPTER-15 LIMITED LIABILITY PARTNERSHIP

1. Nature of Limited Liability Partnership - Definition and Features:

Definition and Features of LLP:

1. Body Corporate:
-Explanation: LLP is a separate legal entity distinct from its

partners.
- Main Point: LLP is treated as a body corporate.

2. Perpetual Succession:
Explanation: Changes in partners do not affect the existence

or liabilities of the LLP.
-Main Point: LLP has perpetual succession.

3.Mutual Rights and Duties:
-Explanation: Partner relationships and LLP-partner

relationships are governed by an agreement.
- Main Point: Agreements deBine mutual rights and duties.

4. Separate Legal Entity:
- Explanation: LLP has a distinct legal identity; partners'

liability is limited to their contributions.
- Main Point: LLP offers limited liability, safeguarding

personal assets.

5. Number of Partners:
- Explanation: Minimum two partners required, with at least

two individuals as designated partners.
- Main Point: LLP must have a minimum of two partners,

including designated partners.

6. Annual Accounts and Audit: - Explanation: LLP is obligated to maintain annual accounts; audit may be required.- Main

Point: Annual accounts and potential audit are mandatory for LLPs.

7. Application of Other Laws:
- Explanation: Not subject to the Indian Partnership Act;

some provisions of the Companies Act may apply.
- Main Point: LLP is exempt from the Indian Partnership Act,

but certain Company Act provisions may apply.

8. Conversion:
- Explanation: Partnership, private company, and unlisted

public company can be converted into LLP.
- Main Point: Conversion options are available for different

business structures.
2. Who Can Be Partners:

Explanation and Points:

1. Individuals and Body Corporates:
- Explanation: Any individual or body corporate can be a

partner.
- Main Point:- Broad eligibility for both individuals and

corporate entities.
3. Incorporation of Limited Liability Partnership: All Main Points:

1. Incorporation Document:
- Explanation: LLP must prepare a document specifying

details like name, business, and partners.
- Main Point: Detailed incorporation document required for

registration.

2. Filing with Registrar:- Explanation: Document filed with the Registrar in the state of the LLP's registered office.

- Main Point: Filing with Registrar is a crucial step for LLP registration.

4. Partners and Their Relations:

All Points:

1. Eligibility:
-Explanation: Partners on incorporation are those subscribing

to the document; others may join through the LLP agreement. - Main Point: Partners defined at incorporation, others join

through agreement.

2. Mutual Rights and Duties:
- Explanation: Rights and duties are governed by the LLP

agreement; changes filed with the Registrar.
- Main Point: Agreement governs relationships, filed changes

with Registrar.
5. Difference Between LLP and Partnership:

All 6 Points:

1. Regulation:
- Explanation: LLP governed by LLP Act; partnership

governed by the Partnership Act.
- Main Point:-Different regulatory frameworks.

2. Registration:
- Explanation: LLP requires registration; partnership

registration not compulsory.
- Main Point:- Compulsory registration for LLP, optional for

partnership.

3. Perpetual Succession:
- Explanation: LLP has perpetual succession; partnership

lacks perpetual succession.

- Main Point: Perpetual succession is a feature of LLP, absent in partnerships.

4. Liability of Partners:
- Explanation: LLP offers limited liability; partnership

involves unlimited liability.
- Main Point:** Limited liability in LLP, unlimited liability in

partnership.

5. Mutual Rights and Duties:
- Explanation: LLP agreements deBine rights and duties;

partnership relies on mutual agreement.
- Main Point: Structured agreements in LLP, reliance on

mutual agreements in partnership.

6. Number of Partners:
- Explanation: No upper limit on partners in LLP;

partnerships limited to 50 partners.
- Main Point: LLP can have more partners without an upper

limit.

6. Difference Between Limited Liability Partnership and Company:

All 7 Points:

1. Regulation:
- Explanation:- LLP regulated by the LLP Act; companies

regulated by the Companies Act.
- Main Point: Different regulatory frameworks.

2. Minimum and Maximum Members:
- Explanation: LLP requires a minimum of two partners; no

maximum limit. Companies have specified minimum and maximum member requirements.

- Main Point: Flexibility in the number of partners in LLP; specific limits in companies.

3. Governance Structure:
- Explanation: LLP governed by agreements; companies'

governance structured by statute.
- Main Point: Contractual governance in LLP, statutory

governance in companies.

4. Management:
- Explanation: LLP management by authorized partners;

companies'
management vested in the Board of Directors.

- Main Point: Partnership agreements control LLP management; Board of Directors in companies.

5. Transfer of Interest:
- Explanation: Transferable economic rights in LLP; shares

freely transferable in companies.
-Main Point: Different rules for transferring economic rights.

6. Audit:
- Explanation: Audit not mandatory for LLPs meeting criteria;

compulsory for companies.
Main Point: Audit requirements vary.

7. Meeting:
- Explanation: Annual general meetings not mandatory for

LLPs; compulsory for companies.
- Main Point: Flexibility in meetings for LLPs; mandatory

meetings for companies.

These detailed explanations and main points provide a comprehensive overview of the nature of Limited Liability Partnership, who can be partners, the incorporation process, partner relations, differences between LLP and partnership, and differences between LLP and company.