Divyamaan Singh Rathore, School of Law, Christ University
Concept of LLP
Limited liability partnership is an amalgamation of two separate business models, i.e., partnership and corporation. It contains features belonging to both of the aforementioned arrangements. As is evident from the name, partners in an LLP have limited liability in the company, which protects the partner’s personal assets in case of insolvency proceedings against the company.
The formation of an LLP has gradually developed into the foremost choice for startups. It allows for the change of partners in a new company without affecting the unrelated partners. There are various partners in the firm, and the liability for individual acts of a partner is not reflected jointly in the firm. Everyone is liable for their own acts. It is a separate juristic entity distinct from its owners with the power to enter into a contract and acquire property in its name. It borrows this property of a legal personality from the concept of a corporation.
This business structure has been prevalent in developed capitalistic countries with high ease of doing business rankings such as the US, the UK, Singapore and Australia., for a significant amount of time; however, it is still a new Indian market. In India, the Limited Liability Partnership Act, 2008 was notified on 31st March 2009. Section 2(n) under the LLP Act,2008 defined a limited liability partnership and described under Section 3 of the abovementioned act.
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