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What Is Limited Liability Partnership?
LLP (LIMITED LIABILITY PARTNERSHIP) ACT 2008 brought LLP to the Indian context. LLP is like a partnership of a firm and a private limited company. While you have partners who share profits and losses in the ratio of the partnership agreement, the liability of the partners is limited to the amount they contribute in the partnership. In case they are unable to repay the debts of the LLP, their personal assets will not be affected.
Benefits Of LLP
- LLP has both the benefits of a Private Limited Company and the flexibility of a partnership firm. LLP is governed by LLP ACT of 2008.
- LLP needs to be registered with Registrar of Companies (ROC). Minimum of two partners are required. There is no limit to the maximum number of partners. Even foreign partners are allowed in LLP.
- Perpectual Succession - Even if one of the partners goes bankrupt or dies, the company is not dissolved. It runs perpectually like a Private Limited Company in this context.
- The personal assets of the are not affected even if the company goes bankrupt unlike the partnership firm where the liability is unlimited.
- The shareholders own and manage the company.
- LLP is very favourable for the establishment of small businesses.