Legal Aspects of Business Assignment

Submitted on: 12-11-2012 Submitted by: ANI K P2MBA11036

Limited Liability Partnership

LLP Act, 2008 passed by Lok Sabha on 12th of December 2008 and the President gave assent to the Bill on 7th January 2009. It can be defined as Hybrid of Corporate & Partnership business Form. Limits liability of partners to the extent of their contribution. provides flexibility without imposing detailed (and costly) legal and procedural requirements. The organization and operations are on the basis of an mutual agreement.

Features of LLP

Benefits as Compared to Partnership Firm Unlimited No. of Partners Limited Liability of Partners LLP is liable to the extent of assets.

 No Liability of a partner for the wrongful act of other partner. No exposure to the personal assets of partners except in case of fraud.

Partnership
Partnership is the relation between persons who have agreed to share the profits of a business carried on by all or any one of them acting for all. Essentials Agreement Association of two / more persons Sharing of profits Business Relation between partners

Formation of Partnerships May be formed by oral or written agreement All essential of valid contract be present Mutual rights and obligation to be in partnership deed The deed to be registered

Difference between LLP and Normal Partnership

Category
Registration

Partnership
Registration is optional

LLP
Registration with Registrar of LLP required. It denotes the signature and LLP may have its own common seal, dependant upon the terms of the Agreement A LLP is a legal entity can sue and be sued Minimum 2 partners and their is no limitation of maximum number of partners. The LLP independent of the partners has ownership of assets

Common Seal

There is no concept of common seal in partnership

Legal Proceedings

Only registered partnership can sue third party Minimum 2 and Maximum 20

Number of Members

Ownership of Assets

Partners have joint ownership of all the assets belonging to partnership firm Rights / Duties / obligation of the partners are governed by Partnership Deed. Unlimited. Partners are severally and jointly liable for actions of other partners and the firm and liability extend to their personal assets.

Rights / Duties / obligation of the Partners / Managing Partners / Directors Liability of Partners/Members

Rights / Duties / obligation of the partners are governed by LLP Agreement. Limited, to the extent their contribution towards LLP, except in case of intentional fraud or wrongful act of omission or commission by the partner. Voting rights shall be as decided as per the terms of LLP Agreement.

Voting Rights

It depends upon the partnership Agreement