Page 183 - DMGT407Corporate and Business Laws
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Corporate and Business Laws
Notes
Did u know? The Limited Liability Partnership Act 2008 was published in the official Gazette
of India on January 9, 2009 and has been notified with effect from 31st March 2009.
However, the Act has been notified with limited sections only. The rules have been notified in
the official gazette on April 1, 2009. The Lok Sabha (Lower House) granted its assent to the Bill
on December 12, 2008 which was earlier passed by the Rajya Sabha (Upper House) in October
2008. The first LLP was incorporated in the first week of April 2009. For Income Tax purposes, an
LLP is treated as any other partnership firm.
Features of LLP
The salient features of the LLP Act, 2008 are as under:
1. The LLP has an alternative corporate business vehicle that would give the benefits of
limited liability but allows its members the flexibility of organizing their internal structure
as a partnership based on an agreement.
2. The LLP Act does not restrict the benefit of LLP structure to certain classes of professionals
only and would be available for use by any enterprise which fulfills the requirements of
the Act.
3. While the LLP has a separate legal entity, liable to the full extent of its assets, the liability
of the partners would be limited to their agreed contribution in the LLP. Further, no
partner would be liable on account of the independent or unauthorized actions of other
partners, thus allowing individual partners to be shielded from joint liability created by
another partner’s wrongful business decisions or misconduct.
4. LLP shall be a body corporate and a legal entity separate from its partners. It will have
perpetual succession. Indian Partnership Act, 1932 shall not be applicable to LLPs and
there shall not be any upper limit on number of partners in an LLP unlike an ordinary
partnership firm where the maximum number of partners can not exceed 20, LLP Act
makes a mandatory statement where one of the partners to the LLP should be an Indian.
5. Provisions have been made for corporate actions like mergers, amalgamations etc.
6. While enabling provisions in respect of winding up and dissolutions of LLPs have been
made, detailed provisions in this regard would be provided by way of rules under the Act.
7. The Act also provides for conversion of existing partnership firm, private limited company
and unlisted public company into a LLP by registering the same with the Registrar of
Companies (ROC).
Self Assessment
Fill in the blanks:
15. In a …………………………..Partnership one partner is not responsible or liable for another
partner’s misconduct or negligence.
16. In the case of a company limited by shares, the liability of members is limited to the
…………….value of shares held by them.
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