LIMITED LIABILITY PARTNERSHIP
The Limited Liability Act, 2008 brought to India a special form of business entity by name Limited Liability Partnership for the first time. Till then we had partnership and limited liability companies. This new form of business identity, combines several features of partnership and limited liability companies; yet it has its own unique features too.
A Limited Liability Partnership (LLP) is a body corporate and is a legal entity separate from that of its partners. It has perpetual succession. Any change in the partners will not affect the existence, rights or liabilities of the LLP.
An individual or body corporate may be a partner in an LLP. Every LLP shall have at least two partners. Every LLP shall have at least two designated partners who shall be individuals and at least one of them shall be a resident of India. Every designated partner of an LLP shall obtain a Designated Partner Identification Number (DPIN) from the central government.
A designated partner is responsible for all compliances and liable for all penalties under the LLP Act, 2008 on behalf of the LLP. Every LLP shall have a registered office to which all communications and notices may be addressed.
A registered LLP can sue and be sued. It can acquire, own, hold and dispose movable and immovable properties. It can have a common seal and can do and suffer lawful acts and things as body corporate.
Every Limited Liability Partnership shall have the words ‘Limited Liability Partnership’ or the acronym ‘LLP’ as the last word of its name. Every LLP shall ensure that its invoices, correspondences, and publications bear the name and address of the registered office and the registration number as well as a statement that it is having limited liability.
The mutual rights and duties of the partners of a limited liability firm as well as the rights and duties between the partners and the firm shall be governed by the provisions of the act as well as the terms in the partnership deed.
A person may cease to be a partner of an LLP:-
a) On his death or dissolution of LLP
b) If he is declared to be of unsound mind by a competent court,
c) If he has applied to be adjudged as an insolvent or declared as an insolvent.
If there is any change in the name or address of the partner LLP shall file a notice with the registrar within 30 days of such a change.
Every partner of an LLP is for the purpose of business of LLP an agent of LLP but not of other partners. An LLP is not bound by anything done by a partner in dealing with a person if:
a) The partner in fact has no authority to act for LLP in doing a particular act.
b) The person knows that he has no authority or does not know or believe him to be a partner of LLP.
If an LLP or its partners carryout any act with an intention to defraud creditors or any other person or for any fraudulent purpose, liability of LLP and partners shall be unlimited.
A partner can contribute to an LLP in the form of tangible or intangible property. Tangible property may include movable or immovable property. Intangible property may include money, promissory notes, contract for services etc. The obligation of a partner to contribute money, property or other benefit shall be as per LLP agreement.