LEGAL ASPECTS Presented by

OF BUSINESS
Rahana KV
37222027
 DIfference between LLP &
Partnership of 1932
TOPICS
Comparison between LLP and
Company
 A Limited Liability Partnership
(LLP) act ,2008 is a business entity
that comes with the benefits of a
private limited firm(company) and
a partnership firm. Regardless of
WHAT IS LLP?? the number of partners in an LLP,
all partners have limited liability
towards the company. The liability
is limited to the contribution they
themselves have made.
 Limited liability partnerships (LLPs) allow
for a partnership structure where each
partner’s liabilities are limited to the
amount they put into the business.
Having business partners means spreading
the risk, leveraging individual skills and
expertise, and establishing a division of

KEY TAKEAWAYS labor.

Limited liability means that if the
partnership fails, then creditors cannot go
after a partner’s personal assets or
income.
LLPs are common in professional
businesses like law firms, accounting
firms, medical practices, and wealth
managers.
 Section 4 of the Indian
Partnership Act defines a
partnership as

What is “Partnership is the relation

Partnership of 1932 between persons who have
agreed to share the profits of
a business carried on by all
or any one of them acting for
all”.
 According to Section 2 (20) of the Company
Act 2013 "Company means a company
incorporated under this Act or any previous
Company Law."
What is a
In general, a company is an artificial person,
company created by law that has a separate legal
?? entity, perpetual succession, and common
seal and has limited liability. It is a voluntary
association of person who together
contributes in the capital of the company to
do business.
 An LLP and a partnership firm
are similar forms of entities
but differ in their functioning,
DIFFERENCE maintenance of accounts,
between LLP & method of dissolution, etc.
They are governed by
Partnership of different Acts and Rules.
Knowing their differences will
1932
help an entrepreneur select
the right form of partnership
structure for his/her business.
 Particulars LLP Partnership of 1932

The Limited Liability Partnership Act, Indian Partnership Act 1932 governs
Governing law 2008 governs LLPs. partnership firms.

The registration of an LLP as per the The registration of a partnership firm under
Registration LLP Act is mandatory. the Indian Partnership Act is voluntary.

An LLP should submit the registration

Registering The firm must submit the partnership firm
form and all the subsequent e-forms registration form and other subsequent forms
authority with the Registrar of Companies with the Registrar of Firms.

Creation An LLP is created by law. A partnership firm is created by contract

Binding The LLP agreement is the charter The partnership deed is the charter
document of an LLP. document of a partnership firm.
document
The LLP must file its annual statement of
Annual form accounts and solvency and annual
A partnership firm need not file any annual
returns with the Registrar of Firms.
filling return with the Registrar of Companies
every year.
 Particulars LLP Partnership of 1932

Power to enter An LLP can enter into a contract in its A partnership firms firm cannot enter
name. into a contract in its name
into contract
Seperate legal LLP has a separate legal entity under A partnership firm has no separate legal
the law. status apart from its partners
entity

Liability of The partner’s liability of an LLP is The partner’s liability of a partnership

limited to the extent of their capital firm has unlimited liability
partners
contribution to the LLP
The partnership firm can have any name,
The name of an LLP must contain the
Name word ‘LLP’ at the end of its name.
and it need not mention any word in its
name.
Perpetual An LLP has perpetual succession, which A partnership firm does not have perpetual
means its existence is not affected when a succession, and its existence depends upon the will
succession partner joins or leaves of its partners.

Maximum There is no limit on maximum partners in The maximum number of partners in a

partnership firm is limited to 100 partners.
partners an LLP.
 Particulars LLP Partnership of 1932

Power to own The LLP can hold property in its name. The partnership firm cannot hold property in its
name. It must be in the names of all partners or the
property authorised partner as per the partnership deed.

The LLP has the ownership of assets which The partners have joint ownership of all the
Ownership assets belonging to the partnership firm. The
are independent of the partners. No partner
of asset owns the assets of the LLP. firm cannot own the assets

Agency The partners are agents of the LLP and The partners act as an agent of the
relationship not other partners. partners and the firm.

There is no concept of a common seal in a

Common seal An LLP has a common seal which denotes the signature of
an LLP. The common seal is used to sign documents partnership firm. The authorised partner must sign
the documents.

DPIN ,DSC Each designated partner of an LLP is required to have a

DPIN before being appointed as a designated partner. They
The designated partners of a partnership firm are
not required to obtain DPIN or DSC.
also need to have a DSC for signing documents digitally.

The partners themselves administer the business

Administration The designated partners are responsible for
administering and managing the day-to-day of the partnership firm. There is no requirement
business and other statutory compliances of an LLP. to appoint managerial personnel
 Particulars LLP Partnership of 1932
All LLPs (except those having a turnover All partnership firms must get their
below Rs.40 lakh or contribution below accounts audited as per the provisions of
Audit of Rs.25 lakh) in a financial year are required the Income Tax Act.
account to get their accounts audited annually
according to the provisions of the LLP
Act.
A partnership firm can be dissolved by an
Dissolution An LLP can be dissolved voluntarily or by agreement between partners, court order,
order of the National Company Law mutual consent of partners, insolvency of
Tribunal (NCLT). partners, etc.

Foreign The foreign national can form an LLP along Foreign nationals cannot form a
nationals with an Indian resident as a partner. partnership firm in India.

Arrangement, An LLP can enter into a compromise with

A partnership firm cannot enter into any
compromise its creditors or partners. It can also
arrangement or compromise with its
amalgamate with another LLP. The foreign
and national can form an LLP along with an
creditors or partners. It also cannot
amalgamation amalgamate with any other firm.
Indian resident as a partner.
 Comparison between LLP and
Company can be analysed on
parameters such as Business
Formation and Legal Status,
Comparison of Business Risk on Personal Assets,
Acceptance and Credibility,
LLP & Company
Attracting Investments, Tax and
Legal Compliances, and Startup
advantages, Business Succession
etc. etc.
 Particulars LLP Company
The Limited Liability Partnership Act, 2008 Companies Act, 2013 (previously
Governing law
and various Rules made there under Companies Act, 1956) and various rules
made thereunder.

Nature Has legal entity separate from Has legal entity separate from its
that of its partners, having perpetual members, having perpetual succession
succession and liability of its partner and liability of its members shall be
shall be limited. limited.

Registration Compulsory Compulsory

Creation An LLP is created by law. Created by law

Seperate legal It is separate legal entity, separate It is separate legal entity, separate
entity from its partners . from its member, directors.

Perpetual It has perpetual succession. It has perpetual succession.

succession
Keeping Books of Cash basis or accrual basis Accrual basis
Accounts.
 Particulars LLP Company
LLP can also purchase movable / A company can purchase movable /
Purchase of immovable property in its name immovable property in its name.
property
It denotes the signature of the company It denotes the signature of the company and
Common seal and LLP may have its own common seal, if every company shall have its own common
it decides to have one. seal.
Legal
proceeding LLP can also sue and be sued A company can sue and be sued

Taxation Similar to Partnership Firm. It is a separate taxable entity

Name Suffix ‘LLP’ or Limited Liability Suffix ‘Limited’ or ‘Private Limited’

partnership has to be added to the has to be added to the name
name.
Agency
The Directors act as an agents of
Partners are agents of LLP
relationship the company
Documents to be served on LLP / Documents to be served on
Mode of Service designated partners may be served company / directors may be served
documents through electronic means. through electronic means.
 Particulars LLP Company
The LLP has ownership of assets The company has ownership of
Ownership of and Partners only have capital assets and members only have
asset contribution in the LLP shares in the company

Liability of partners is limited upto Liability of members is only limited

Liability their capital contribution to the shares held by them.

A director \ member can enter into

Contracts A partner can enter into contract contract with the company subject
with the LLP to the provisions of the Act.

The power of partners/ designated Directors have power to conduct

Power of
partners to conduct the day to day day to day affairs of the company,
member affairs is specified by LLP agreement Member practically have no say in
/ LLP act. the management.

Drawings are permitted as per the Drawings are not permitted

Drawing LLP agreement.
Max 200 in case of PVT LIMITED and no caps
Maximum No cap of maximum number of its in case of public company as per company
members partners act 2013
 Particulars LLP Company

Audit of As per the provisions of LLP act,

accounts to be audited annually As per the provisions of companies
account except for LLP’s having turnover less Act, 2013 accounts have to be
than Rs. 40 lacs or Rs. 25 lacs audited annually
contribution in any financial year.

Continuance of company is not affected by

Continuance of LLP is not affected by
Dissolution the acts of its Partners.
the acts of its directors\members
Continuance of LLP is not affected by acts
of its Partners.
Minimum Minimum paid up capital of Rupees One lac
Capital No such requirement for incorporation of Private company and
Rupees five lacs for incorporation of Public
requirement
Company to be required.
Each Designated partner required to Each director are required to have a
DPIN have a DPIN before being appointed Director identification number before being
as a Designated Partner of LLP. appointed as a director of any company

Voting Rights Each partner has only one vote Voting rights are in proportion to
the shares held by members.
 Advantages of LPP
over
Company & Partnership of 1932

Limited Liability
Flexibility
Tax Benefits
Ease of Formation
No Minimum Capital Requirement
Separate Legal Entity
Advantages of Partnership of 1932
over
Company & LLP

Simplicity
Direct Control
Tax Benefits
Flexibility
Cost-Effectiveness
Informality
 Advantages of Company
over
Partnership of 1932 & LLP

Limited Liability
Separate Legal Entity
Access to Capital
Perpetual Existence
Credibility
Transferability of Ownership
 The Companies Act of 1932 in India
introduced the concept of limited
liability partnerships (LLPs) and
partnerships. This legislation
aimed to provide legal structures
for businesses with different levels
Conclusion of liability and governance. In
conclusion, the act expanded
options for business organization,
offering varying degrees of liability
protection and flexibility to suit
different needs and preferences.
Any queries ????
THANK YOU