Limited Liability Partnership (A New Business Vehicle for Indian MSMEs)

Abstract

In sole proprietorship/partnership firms, the liability of Proprietor/partners is unlimited. They have the exposure of their personal assets being appropriated & liquidated to meet proprietorship/ partnership dues. In case of companies the liability of promoter is limited. So, a need was felt for a new corporate form with operational flexibility on the one hand, and corporate personality as well as limited liability on the other. The LLP form of business is prevalent in many parts of the world including USA,UK, Canada, Germany, China, Singapore etc. LLP is a body corporate and a legal entity separate from its partners. Any two or more persons/ corporate may form a Limited Liability Partnership. No partner would be liable on account of the independent or un-authorized actions of other partners or their misconduct. Any firm, private company or an unlisted public company is allowed to be converted into LLP in accordance with the provisions of the Act.