This module deals with a new form of business- Limited Liability Partnership. The rules regarding registrations, formation, minimum requirements and rights and duties of partners are discussed. Also discussed are the role and duties of Designated Partners in an LLP.

1. LIMITED LIABILTY
PARTNERSHIP
ACT, 2008
MODULE V
By:
Ms. LG Honey Singh,
Assistant Professor,
Sarala Birla University, Ranchi

2. 2
INTRODUCTION
• A need has been felt for a new corporate form
that would provide an alternative to the
traditional partnership with unlimited personal
liability on the one hand and the statute-based
governance structure of the limited liability
company on the other hand
• The Limited Liability Partnership (LLP) is
viewed as an alternative corporate business
vehicle. It provides the benefits of limited
liability but allows its members the flexibility
of organizing their internal structure as a
partnership based on a mutually arrived
agreement.

3. 3
• LLP is one of the easiest types of business to incorporate
and manage in India.
• With an easy incorporation process and simple compliance
formalities, LLPs are preferred by Professionals, Micro and
Small businesses that are family-owned or closely-held.
• Since LLPs are not capable of issuing equity shares, LLP
should NOT be chosen for any business that has plans for
raising equity funds from Angel Investors, Venture Capitalist
or Private Equity Funds.

4. MUTUAL
AGENCY
ARTIFICIAL
LEGAL
PERSON
LIMITED
LIABILITY
COMMON
SEAL
LLP
AGREEMENT
BODY
CORPORA
TE
SEPARATE
LEGAL
ENTITY
PERPETUA
L
SUCCESSI
ON
COMPROMI
SE/
ARRANGEM
ENT
CONVERSIO
N INTO LLP
FOREIGN
LLPs
E-FILLING
INVESTIGATI
ON
MANAGEME
NT OF
BUSINESS
PROFIT
ONLY
NUMBER OF
MEMBERS
Salient features of LLP

5. 5
ADVANTAGES OF LLP
ORGANISED
& OPERATES
ON
AGREEMENT
S
FLEXIBILITY
LIMITED
LIABILITY
EASY
FORMATION
FLEXIBLE
CAPITAL
STRUCTURE
EASY
DISSOLUTIO
N

6. Your Footer Here 6
DIFFERENCE BETWEEN
Date

7. 7
Basis LLP Partnership firm
1. Regulating Act The Limited Liability Partnership
Act, 2008.
The Indian Partnership Act, 1932.
2. Body corporate It is a body corporate. It is not a body corporate,
3. Separate legal entity It is a legal entity separate from its
members.
It is a group of persons with no
separate legal entity.
4. Creation It is created by a legal process
called registration under the LLP
Act, 2008.
It is created by an agreement
between the partners.
5. Registration Registration is mandatory. LLP can
sue and be sued in its own name.
Registration is voluntary. Only the
registered partnership firm can sue
the third parties.
6. Perpetual succession The death, insanity, retirement or
insolvency of the partner(s) does
not affect its existence of LLP.
Members may join or leave but its
existence continues forever.
The death, insanity, retirement
or insolvency of the partner(s)
may affect its existence. It has no
perpetual succession.
7. Name Name of the LLP to contain the
wordlimitedliability partners (LLP)
as suflx.
No guidelines. The partners can
have any name as per their choice.
8. Liability Liability of each partner limited to
the extent to agreed contribution
except in case of willful fraud.
Liability of each partner is
unlimited. It can be extended upto
the personal assets of the partners.
9. Mutual agency Each partner can bind the LLP
by his own acts but not the other
partners.
Each partner can bind the firm as
well as other partners by his own
acts.
10. Designated partners At least two designated partners
and atleast one of them shall be
resident in India.
There is no provision for such
partners under the partnership
Act, 1932.
11. Common seal It may have its common seal as its
oflcial signatures.
There is no such concept in
partnership
12. Legal compliances Only designated partners are
responsible for all the compliances
and penalties under this Act.
All partners are responsible for
all the compliances and penalties
under the Act.
LLP vs
Partnership

8. Your Footer Here 8
Date
Between LLP and Company

9. 9
INCORPORATION OF LLP
ESSENTIAL ELEMENTS TO INCORPORATE LLP –
i. To complete and submit incorporation document in the form prescribed with the Registrar
electronically;
ii. To have at least two partners for incorporation of LLP [Individual or body corporate];
iii. To have registered office in India to which all communications will be made and received;
iv. To appoint minimum two individuals as designated partners who will be responsible for
number of duties including doing of all acts, matters and things as are required to be done by the
LLP. Atleast one of them should be resident in India.
v. A person or nominee of body corporate intending to be appointed as designated partner of LLP
should hold a Designated Partner Identification Number (DPIN) allotted by MCA.
vi. To execute a partnership agreement between the partners inter se or between the LLP and its
partners. In the absence of any agreement the provisions as set out in LLP Act, 2008 will be
applied.
vii. LLP Name.

10. Your Footer Here 10
Date
Steps of Incorporation
Electronic
filing of some
documents
Drafting of LLP
Agreement
Issuing
Certificate of
Incorporation
along with
LLPIN (Limited
Liability
Partnership
Identification
Number)
Deciding
Partners and
Designated
partners
Obtaining
DPIN and
Digital
Signature
Certificates
(DSC)
Checking the
Availability of
Name [upto 6
choices can be
indicated]

11. Your Footer Here 11
Effect of registration
Date
suing and being sued
acquiring, owning,
holding and developing or
disposing of property,
doing and suffering such
other acts and things as
bodies corporate may
lawfully do and suffer
having a common
seal

12. 12
Incorporation Document
The Incorporation Document of a LLP contains key information about
the business to be registered and should:
(i) be in a form as may be specified i.e Form FiLLiP
(ii) state the proposed name of the LLP under which the business is
to be registered
(iii) state the proposed business of the LLP under incorporation;
(iv) state the details of proposed registered office of the LLP
(v) state the name and address of every individual proposing to be
partners of the LLP on incorporation;
(vi) state the name and address of every individual who are to be the
designated partners of the LLP on incorporation
(vii) contain any other information concerning the proposed LLP as
may be prescribed.

13. 13
PARTNERS AND THEIR RELATIONS
• A partner in relation to a limited liability partnership, means any
person who becomes a partner in the limited liability partnership in
accordance with the limited liability partnership agreement.
• He must fulfill following 2 conditions:
He must be a person of a sound mind.
He must not be an undischarged insolvent person.

14. 14
Rights & Duties
General Duties- Partners are bound to carry
on the business of the LLP to the common
advantage, to be just and faithful to each
other, and to render true accounts and full
information of all things affecting the firm to
any partner.
Duties to Indemnity- every partner of an LLP
to indemnify the LLP for any losses through
the occurrence of fraud in the conduct of the
business of the firm.

15. 15
• Rights of Partners in an LLP
Subject to the LLP Agreement between the Partners, a Partner in an
LLP typically has the following rights:
• Every Partner has a right to take part in the conduct of the business
of the LLP.
• Every Partner has to attend diligently to his/her duties in the
conduct of the business of the LLP.
• The majority of the Partners would decide in case of any difference
arising due to ordinary matter which connects with the business
and every Partner shall have the right to express his/her opinion
before the matter is decided.
• Every Partner has a right to have access and to inspect and copy the
book of accounts of the LLP.
• In the event of the death of a Partner, his/her heirs or legal
representatives shall have the right to access, inspect and copy any
of the books of accounts of the LLP.

16. 16
Designated Partner
• Designated Partners is a concept introduced by
the Limited Liability Partnership Act, 2008.
• Designated Partners are similar to Directors of
a Private Limited Company. A Designated
Partner in a LLP when compared to the Director
of a Company, enjoy more rights and privileges.
• Designated partners can only be individuals.
• Among the members of a Limited Liability
Partnership, two or more partners can be
designated as a Designated Partner.
• In all LLP, atleast one of the Designated Partner
must be an Indian Resident.

17. 17
Designated Partner Identification Number (DPIN)
All Designated Partners in an LLP are required to have a
Designated Partner Identification Number (DPIN) or
Director Identification Number (DIN).
All partners of a LLP are entitled to the role of a
Designated Partner. During LLP registration, the
incorporation document must specify certain people as
Designated Partners. The LLP Partnership Deed can
allow for perusal and rotation of the role of Designated
Partner, ensuring the participation of each and
everyone.
Any person can become a Designated Partner in a LLP
with the consent of other existing Partners in the LLP.

18. 18
Duties of a Designated Partner
• The Designated Partner is authorized to affix his signature on the
Statement of Account and Solvency, the filling of which is prepared by the
LLP.
• The LLP must file annual returns with the Registrar within a specified
period of 60 days from the date of closure of the financial year in a
prescribed manner. If this isn’t implemented, every Designated Partner will
be imposed with a fine exceeding Rs 10,000.
• The Designated Partner may file the returns of documents, if the need
arises.
• The Designated Partner must extend his/her co-operation to the inspector
on inquiry or inspection, by supporting the authority with the necessary
documents, information, signing the notes for examination etc.
• A Designated Partner is liable to reimburse expenses on an investigation
conducted by the Inspector.