Limited Liability Partnership known as LLP is one of the newest types of Partnership firms. In this type of partnership, the liabilities of the partners towards the business are less as compare to a general partnership.
The Content covered in this article:
- 1. What is Limited Liability Partnership: –
- 2. Limited Liability Partnership Act 2008: –
- 3. Benefits of LLP to Partners:-
1. What is Limited Liability Partnership: –
This type is clear from the name of the type of partnerships. It means in this type there will be the liabilities of the all partners are limited to the extent to their investment. In this type of court can not hold the personal assets of the partners. That why most of persons or businesses chose this type of partnership.
In Limited Liability Partnership, the main feature is that all partners are not responsible or liable for the miss conduct to any person by any partner. Who misconduct, he will responsible for that.
2. Limited Liability Partnership Act 2008: –
In India, the type of partnership business is administered with the Limited Liability Partnership Act 2008. LLP is different from the Partnership But it operated like a Partnership but the LLP act protect all partners from the personal liabilities. They do not need to sell their assets to meet the partnership liabilities. All the partners are liable to meet the liabilities to the extent of their capital. In other words, all Liabilities of the Partnership are meet to the extent of all assets of the Partnership.
3. Benefits of LLP to Partners:-
The LLP provides many benefits to the partners as compare with general Partnership. Some of these are shown as the following: –
- Limited Liabilities
- Not liable for the action of other partners.
- Sperate Legal Entity
- Managed by Registrar of Companies
- No Limit on Maximum Numbers of Partners
1. Limited Liabilities: –
One of the major benefits of LLP to partners is the liabilities of the partners are limited to the extent of their capital invested in the business. They do need to sell out their personal assets to meet firm liabilities.
2. Not liable for the actions of other partners: –
In this type of partnerships, A partners are not liable for the unauthorized acts of taken by another partner. For example, if there are A, B & C are partners in a firm. When B misconduct to firms vendor about the firm will pay him a fixed percentage of interest if the firm will get more time then 30days. But in the firm AOA or MOA did not carry such provision. So if that vendor claimed amount of interest then B will be liable for that not firm or its others Partners.
3. Sperate Legal Entity: –
Sperate Legal Entity means the firm will be treated differently from its partners.
4. Managed by Registrar of Companies: –
The Limited Liabilities Partnerships Businesses are register and control by the registrar of Companies.
5.No Limit on Maximum Numbers of Partners: –
In the Limited Liability Partnership Act 2018, there is no limit on the maximum number of partners. Just Minimum limit is of two partners.
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