Legal Environment For

Business Presentation
Presented By-
Mili Nigam
Nikhil Kumar
Nupur malhotra
Mohammad Aquib siddiquee
Mohammad Faizal siddiquee
Nirmal
FEATURES OF LIMITED LIABILITY
PARTNERSHIP ACT AND ITS
COMPARISON WITH COMPANY
 An Introduction To LLP
 In business studies, what is a Limited Liability Partnership is a common question.

 It is a broad concept that forms a crucial part of partnership norms. LLP or

Limited Liability Partnership is an alternative form of corporate business that
offers benefits of limited liability to partners at minimal compliance costs.

 It is a newer concept in a business where partners have lesser financial obligations

and limited personal liability in the firm.

 LLP, better known as Limited Liability Partnership, requires every partner to

contribute to daily business operations while having limited responsibilities.

 In usual partnership firms, partners have unlimited liability towards the overall
debts and legal concerns of business.
What is the Limited Liability Partnership Act 2008?

 The concept of LLP was introduced through the Limited Liability Partnership
Act of 2008 by the Parliament of India. As mentioned in Section 3 of the LLP Act,
a Limited Liability Partnership is a corporate body that is formed and
incorporated under this act. A partnership is a legal entity separate from the
partners.

 As per Section 2(m) of the LLP Act, an LLP that is founded, incorporated or

registered in a foreign country and sets up business in India is known as a foreign
limited liability company. 

 Section 59 of the Act empowers the Central Government to frame rules for
regulating the conduct of business by foreign limited liability companies in India. 
The salient features of  LLP Act, 2008

 It is a body corporate with separate legal entity from its partners.

The mutual rights and duties of the partners of an LLP are governed
by LLP Agreement.

 LLP is liable to the extent of its assets.  Partner’s liability is limited

to the extent of agreed contribution (capital) in the LLP Agreement.

 No partner is liable on account of the independent or unauthorized

action of other partners or for their misconduct.
The salient features of  LLP Act, 2008
 Every LLP should have at least two partners with at least two
individuals as “designated partners”, of whom at least one must be
resident in India. Only designated partners are responsible for
compliance with the Act.

 A firm, private company or an unlisted public company can be

converted into LLP.

 The Act empowers Central Government to apply provisions of the

Companies Act, 1956 as appropriate, by notification with such
changes as deemed necessary, in the LLP Act, 2008.

 The winding up of LLP is either voluntary or by the High Court.

 Advantages of a Limited liability partnership

• Since the internal management in an LLP is regulated by the terms of the Limited
Liability Partnership Agreement (hereinafter LLP Agreement), it provides flexibility to
the firm to adopt any form of internal organization.

• An LLP involves less statutory compliance as compared to a company registered under

the Companies Act, 2013.

• There is no ownership management divide in a limited liability partnership as every

partner is an agent of the firm but cannot be held liable for the wrongful acts of the
other partners.
 
• An LLP has a distinct identity that is separate from its members. Therefore, it is a
separate person in the eyes of the law.
 Disadvantage of a Limited liability partnership

• The documents that an LLP files with the Ministry of Corporate Affairs are
public documents, and anyone can obtain a copy of these documents by
paying a nominal fee. The documents of a general partnership are not public
documents and are not available in the public domain.

• The Act provides hefty penalties in case of non-compliance. The operation of

an LLP involves complex compliance, which can be a hindrance to the
growth of the LLP.

• The LLPs have a limited range of financing options. Venture capitalists and
angel investors do not usually invest in an LLP, and the only options left for
the LLP are borrowing from financial institutions or taking a loan from the
partners. 
 Classification of Entities

Limited
Private Public One Person
Liability
Company Company Company
Partnership

Minimum Members 2 7 1 2

Minimum
2 3 1 2
Directors/Partners

No No No No
Minimum Capital/
Minimum Minimum Minimum Minimum
Contribution
prescribed prescribed prescribed prescribed

Maximum Capital/
No Limit No Limit No Limit No Limit
Contribution
Private Public One Person Limited Liability
Company Company Company Partnership

Continuity of existence Liquidity to Suitable for small Limited Liability of

shareholders. business units as it the partners.
offers Corporate form of
sole proprietorship.

Less number of
Easy to raise capital Minimal or No Corporate form of
members makes it easy
from public. compliances. partnership.
to manage.

Many compliance
No restrictions on Limited liability of the Minimal compliances
related exemptions
number of members. shareholders required.
available

Only four board Company’s shares can

meetings be listed on Stock ___ Greater flexibility.
in a year required exchange.

Limited liability of the

Limited liability of the ___
shareholders Tax Benefits.
shareholders
 LLP vs Company
Particulars Company LLP
Compliances Tax compliances are similar for both a company and LLP. The nature of compliances, filings and
However, when it comes to compliance relating to the MCA, LLP maintenance of statutory registers is much
enjoys significant advantages in terms of compliances, filings and more in a company.
maintenance of statutory records.

DDT The Finance Bill 2020 has abolished the DDT for dividends An LLP is not required to pay DDT on
declared, distributed or paid on or after 1 April 2020. profits distributed to its members. The said
Consequently, dividends will be taxed in the hands of the distribution of profits would not be taxable in
shareholders at applicable tax rates. the hands of the members of the LLP.

Tax Rate Gross turnover of more than 400 crore - 30% For all LLPs, the tax rate will be 30% plus
Gross turnover up to 400 crore - 25% applicable surcharge and cess, depending on
The companies also have the option of paying tax at the rate of the income of the LLP.
22% in both the above categories, subject to the companies
complying with certain prescribed conditions. The tax rates are
different for manufacturing companies.

FDI There are few sectors which are prohibited for FDI. For other FDI is permitted in an LLP, in those
sectors which don’t fall within prohibited sectors, FDI is either sectors/activities where 100% FDI is allowed
permitted up to the prescribed limit as per extant FEMA through the automatic route and there are no
Regulations or is permitted up to 100% under the automatic route. FDI linked performance related conditions.
Project Partnership Agreement Document
The Partnership agreement was made on 27th
February,2013 with 4 members under the business of
Flour Mill at Morinda Road.

The transaction will be done under the firm name only

for the sale of flour which the parties are engaged into

Partners in the agreement

 Kamaljeet singh

 Parminder Kumar

 Gurmeet Singh

 Neelam Rani
Project Partnership Agreement Document
 Mr. Kamlimjeet Singh authorized as the signatory of
the firm.
 He is required to get the NOC if any from the
government and is required to sign the document.
 The accounts of partnership shall be closed on 31st
day of March every year.

Partners percentage in the agreement

 Kamaljeet singh:25%

 Parminder Kumar:25%

 Gurmeet Singh:25%

 Neelam Rani:25%
Project Partnership Agreement Document
 The partners do not have any rights to sell or
mortgage the shares to anyone without the
written consent of the others partners jointly.

 The documents hold the fact that the partners

need to maintain books of account which will
be at the work place and every partner has the
full authority to take copies of the books of
account.
THANK YOU