Indian Corporate Law & Corporate Governance Consultants
Law Group

LLP (Limited Liability Partnership) in India

(Understanding the difference between Limited Liability Partnership firm and similarity is must in order to select right legal entity)

Company Formation Service, LLP Formation


Our services include:
  • Formation & Registration of Company
  • E-Filing of Documents with MCA.
  • Compliance under Companies Act, 1956
  • Getting the Company name changed.
  • Formation of Section 25 Company
  • Getting Charge Registered
  • Liaison with Registrar of Companies & Regional Directors
  • Getting Director Identification Number (DIN)
  • Maintenance of statutory records prescribed under Companies Act, 1956

BASIS OF DIFFERENCE

COMPANY

LLP

Documentation

Memorandum is to be filed with ROC

Incorporation Document is required to be filed.

Flexibility regarding Registration Office of the Company

Memorandum should contain State in which incorporated.

Incorporation Document is not required to contain State in which incorporated. Thus, registered office can be changed to any place in

India

just by informing ROC subject to prescribed conditions.

Nomenclature

Name to contain 'Limited' or 'Private Limited' as suffix

Name to contain 'Limited Liability Partnership' or 'LLP' as suffix

Submission of main documents regarding LLP

Articles are to be filed at the time of incorporation. Private company must have Articles. In case of public company, provisions of Table A apply if there are no Articles.

LLP Agreement is required to be filed later. In absence of LLP Agreement, mutual rights and duties will be as specified in first schedule to LLP Act. Thus, practically, each LLP must have LLP Agreement, though not mandatory.

Management Team

Managing Director and Whole time Director to look after day to day administration..

Designated Partner to look after statutory compliances. Otherwise, all partners can look into affairs of the LLP. However, LLP can delegate powers to some partners who may be designated as 'Managing Partner', or 'Executive Partner' or any other name.

Management of the Firm

Individual director or member does not have authority in conduct of business of company.

Every partner has authority to conduct business of LLP, unless the LLP Agreement provides to contrary.

Remuneration

Restrictions on remuneration to director as per Companies Act

No restriction on remuneration to partner. Remuneration should be provided in LLP agreement.

Change in Management

Notice of change of director is to be given by company.

A partner who has resigned from LLP can himself file notice of his resignation to ROC.

Shares Certificate Etc

Share, share certificate, register of members, transfer and transmission of shares etc. required.

No requirement of share and share certificate. Hence, no question of its issue, allotment, transfer, rectification of register etc.

Conduct of Business

Board meetings, general meetings are required.

No provision for regular meeting of Board and members. Partners can decide when and how to meet, delegation of powers etc. Provision is made that LLP should maintain minute book

Treatment of Secured Loan

Charges are required to be registered

No provision for registration of charges.

Maintenance of Records

Elaborate records and registers are required to be maintained

No records and registers have been prescribed.

Restriction on Board or Partner

Restrictions on Board regarding some specified contracts, contracts in which directors interested, investments, loans and guarantees to other companies

Partners are free to enter into any contract.

Disclosure

Disclosures required of contracts where directors are interested

No requirement of disclosures required of contracts where partners are interested, unless specified in LLP Agreement.

Provision relating to Redressal

Elaborate provision relating to redressal in case of oppression and mismanagement

No provision relating to redressal in case of oppression and mismanagement

Specific Provision

Specific provisions relating to nidhis, NBFC

No specific provisions relating to nidhis, NBFC



Similarities Between Company & LLP:



BASIS

COMPANY

LLP

perpetual succession

Limited liability and perpetual succession

Limited liability and perpetual succession

common seal

Must have common seal

Common seal is optional

Provisions regarding approval of name

Provisions of approval of name, change of name are similar.

Provisions of approval of name, change of name are similar.

Administrative Authority

ROC is the administrative authority

ROC is the administrative authority

Personal liability of director

No personal liability of individual director or member [except of director of private company in some cases like income tax and sales tax dues].

No personal liability of partner, except in case of fraud.

procedure for change registered office

Complicated procedure for change of registered office, particularly when change is to other State

Simple procedure to change registered office of LLP anywhere in India just by informing ROC and following prescribed conditions.

Public Inspection

Memorandum and Articles, details of directors, accounts, annual return, special resolutions etc. filed by LLP with ROC will be available for public inspection

Incorporation document, details of partners, accounts, statement of solvency and annual return filed by LLP with ROC will be available for public inspection [clause 36 of LLP Bill, 2008]

Powers to inspect records

Powers to inspect records

Powers to Central Government to inspect records of company and to order investigation

Powers to Central Government to inspect records of company and to order investigation

Provisions of compromise

Provisions of compromise, arrangement or reconstruction of companies are similar

Provisions of compromise, arrangement or reconstruction of LLP [clauses 60 to 62 of LLP Bill, 2008]

Wind up

Company can be would up voluntarily or by order of Court

LLP can be would up voluntarily or by order of Court

Defunct company

ROC can strike off name of defunct company.

ROC can strike off name of defunct LLP