LLP Formation

LLP Formation

LLP stands as an alternative corporate structure that amalgamates the benefits of limited liability companies with the flexibility inherent in partnerships. An LLP possesses the unique characteristic of perpetuity, enabling its continued existence regardless of changes in partners. It holds the capacity to engage in contracts and own property under its own distinct identity. As a separate legal entity, an LLP assumes liability to the full extent of its assets. However, the liability of individual partners remains confined to their agreed contributions within the LLP. Furthermore, partners are shielded from joint liability arising from the independent actions or unauthorized decisions of other partners. The formation of an LLP requires a minimum of two partners, with no upper limit on the maximum number. Among the partners, a minimum of two designated partners, individuals by nature, are mandated, with at least one being a resident of India. The roles and responsibilities of designated partners are delineated within the LLP agreement, where they bear direct responsibility for ensuring compliance with the LLP Act of 2008 and the provisions outlined in the agreement. To initiate a business under the Limited Liability Partnership model, registration under the Limited Liability Partnership Act, 2008 is imperative.

Features of LLP

• Possesses a separate legal entity akin to companies.
• Limits the liability of each partner to their respective contributions.
• Offers a cost-effective formation process with reduced compliance obligations.
• Imposes no minimum capital contribution requirement.

Advantages of the LLP Form

• Operates on the basis of an agreement, facilitating flexibility without imposing stringent legal procedures.
• Encourages the amalgamation of professional expertise with financial acumen, fostering innovative and efficient business endeavors.

Sections, Regulations, and Rules Applicable to LLP

• Limited Liability Partnership Act, 2008.
• LLP Agreement.