LLP Full Form | Full Form of LLP
LLP Full Form - Limited Liability Partnership
- LLP stands for Limited Liability Partnership.
- LLP may be a mixture of a standard partnership, and a corporation as a number of its features are almost like a traditional partnership and a few matches with a corporation.
- For example , it provides the flexibility of a standard partnership firm and advantage of limited liability of a corporation at a low compliance cost, which suggests , in an LLP, the members have the flexibility of organizing their internal management on the idea of a mutually arrived agreement, like a partnership firm, and also the partners have limited liability where each partner's liability is restricted to the amount they put into the business, which suggests nobody can touch their personal property if the firm incurs losses.
Limited Liability Partnership
- Furthermore, in an LLP, one partner isn't responsible or liable for other partner's negligence, misconduct or wrongdoing. So, it a hybrid between a corporation and a partnership. Whereas, in some countries, an LLP is required to possess a minimum of one "General Partner" with unlimited liability.
- In the companies, where the liability is unlimited, the private assets of the partners are often sold out to compensate the losses or to pay the dues.
- To overcome this limitation, the govt came with the act LLP2008, which came into effect on 1 April 2009. So, LLP may be a legal entity because it has got to be registered with Registrars of Companies (ROC) and is governed by LLP Act 2008.
Features/Advantages of the LLP
Advantages of The Llp
- Separate Legal Entity with limited liability :
- It's separate from its partners or partners are different from the firm. If a firm incurs heavy losses, nobody can touch their personal property. Only the quantity that they need invested within the business are going to be lost. The liabilities are limited and in proportion to the share of the partners in the capital. Furthermore, all the partners should be the agent of the Limited Liability partnership but not of other partners.
- Easy to establish :
- The partners are required to go to the Registrar of Companies (ROC) office and sign the LLP agreement.
- Flexible :
- It offers the flexibility to makes changes. It allows the members the flexibility of organizing their internal management on the idea of the mutual agreement, as is that the case during a partnership firm.
- Perpetual Existence :
- It also has perpetual succession,which suggests if any of the partners die or go bankrupt, the corporate won't dissolve.
- No Restriction on Max. Partners :
- There should be a minimum of two partners at least one among them should be a citizen of India, but there's no limit for max partners, and foreign partners also are allowed.
- Only For Profit :
- A LLP can't be formed for charitable or non-profit purposes.
- Furthermore, it's less expensive to start out an LLP, and easy to finish up because it requires less legal formalities, and also the partners can't be held liable for other partners' misdeeds, frauds, etc.