LLP is an alternative corporate business form that gives the benefits of limited liability of a company and the flexibility of a partnership.
The LLP can continue its existence irrespective of changes in partners. It is capable of entering into contracts and holding property in its own name.
The LLP is a separate legal entity, is liable to the full extent of its assets but liability of the partners is limited to their agreed contribution in the LLP.
Further, no partner is liable on account of the independent or un-authorized actions of other partners, thus individual partners are shielded from joint liability created by another partner's wrongful business decisions or misconduct.
Mutual rights and duties of the partners within a LLP are governed by an agreement between the partners or between the partners and the LLP as the case may be.
Structure of an LLP
LLP shall be a body corporate and a legal entity separate from its partners. It will have perpetual succession.
Under "Traditional Partnership Firm", every partner is liable, jointly with all the other partners and also severally for all acts of the firm done while he is a partner.
Under LLP structure, liability of the partner is limited to his agreed contribution. Further, no partner is liable on account of the independent or un-authorized acts of other partners, thus allowing individual partners to be shielded from joint liability created by another partner's wrongful acts or misconduct.
Seprate Legal Entity.
Internationally Legal Form of Business.
No Restriction on Maximum No Of Partners.
Personal Assets of Partners are not Exposed.
Liability of Partners would be limited to the Agreed Contribution in LLP.
No requirement to Maintain Statutory Books or Records.
Less Cost Of Formation.
Easy To Dissolve and windup.
Difference between LLP & a Company
A basic difference between an LLP and a joint stock company lies in that the internal governance structureof a company is regulated by statute (i.e. Companies Act, 2013) whereas for an LLP it would be by a contractual agreement between partners.