Quick Summary
Limited Liability Partnership (LLP) is a hybrid business structure that provides the flexibility of a partnership while offering limited liability protection to its partners, similar to a company.
Limited Liability Partnership (LLP) is a corporate business structure that combines the flexibility of a partnership with the advantages of limited liability of a company. It was introduced in India through the LLP Act, 2008.
Key Features
- Separate legal entity from partners
- Limited liability of partners (to their contribution)
- Perpetual succession
- Flexibility in internal management
- No minimum capital requirement
- Lower compliance burden than companies
Who Should Form an LLP?
- Professionals (lawyers, accountants, consultants)
- Small and medium enterprises
- Startups not seeking VC funding
- Family businesses
- Businesses requiring operational flexibility
LLP Agreement
The LLP Agreement is the charter document that governs the LLP's operations, profit sharing, rights and duties of partners. It must be filed with MCA within 30 days of incorporation.
Key Points
- Introduced in India through LLP Act, 2008
- Minimum 2 partners, no maximum limit
- At least 2 designated partners (one must be Indian resident)
- Partners not liable for other partners misconduct
- Audit not mandatory below ₹40 lakhs turnover
- Cannot raise equity funding from public