Accounting School

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LLP Act, 2008 – Short Notes

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Here’s a crisp exam‑style short note on the Limited Liability Partnership (LLP) Act, 2008:

• Introduction:
  • Came into force on 31 March 2009.
  • Provides a hybrid structure combining flexibility of partnership with limited liability of companies.
• Key Features:
  • LLP is a separate legal entity with perpetual succession.
  • Minimum 2 partners, no maximum limit.
  • At least 2 designated partners, one must be resident in India.
  • Partners are agents of LLP, not of each other.
• Liability:
  • LLP liable to the extent of its assets.
  • Partners not personally liable except for fraud/unauthorized acts.
  • Unlimited liability in case of fraud (Sec. 30).
• Incorporation:
  • File incorporation document + statement of compliance with Registrar.
  • Registrar issues Certificate of Incorporation (conclusive evidence).
  • Name must end with “LLP” or “Limited Liability Partnership”.
• Partners & Relations:
  • Governed by LLP agreement; if absent → First Schedule applies.
  • Changes in partners must be registered.
• Contributions:
  • Can be in cash, property (tangible/intangible), or other benefits.
  • Value recorded in LLP accounts.
• Financial Disclosures:
  • Maintain books of account.
  • Audit required if turnover exceeds prescribed limit.
  • Annual return filed with Registrar.
• Conversion Provisions:
  • Firm → LLP (Second Schedule).
  • Private company → LLP (Third Schedule).
  • Unlisted public company → LLP (Fourth Schedule).
• Winding Up & Dissolution:
  • By Tribunal or voluntary.
  • Grounds: insolvency, partners < 2, acting against sovereignty, failure to file returns, etc.
• Comparison Table:

Feature	LLP	Partnership Firm	Company
Legal Status	Separate legal entity	Not separate	Separate legal entity
Liability	Limited	Unlimited	Limited
Partners	Min 2, no max	2–20	Min 2 (Pvt), 7 (Public)
Governance	LLP Agreement	Partnership Deed	Companies Act
Flexibility	High	High	Lower (rigid compliance)

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✨ In summary: The LLP Act, 2008 is designed for professionals, start‑ups, and service enterprises who want the operational flexibility of partnerships but the limited liability protection of companies.