The much-awaited Limited Liability Partnership (LLP) Bill was passed on Friday by the Rajya Sabha. Once approved by the Parliament and becomes an Act, the Bill will help make a company’s exit simpler. The structure of LLP is likely to be flexible and the number of partners is likely to be unlimited. The finance ministry is expected to decide on the taxation aspects of LLP.
The LLP would provide the benefits of limited liability and at the same time give flexibility to its members for organising their internal structure as a partnership based on an agreement.
It is expected that LLP will have an advantage of giving the ownership of assets to the partners. In such a case, the partner can use his asset anytime if he exits from the LLP. He will be in a position to easily withdraw his money without the LLP being dissolved. Further, no partner would be held responsible for the unauthorised actions of other partners, thus letting the individual partners to be protected from the joint liability created by some other partner’s wrongful business decisions. In the case of companies and partnerships, this flexibility does not exist.
LLP, which is an alternative corporate business form having benefits of limited liability of a company and the flexibility of the partnership, could prove to be more convenient and sustainable for many, particularly for micro, small and medium enterprises (MSMEs), professionals such as chartered accountants, company secretaries, advocates and also for others in scientific, technical and artistic services.
The industry chamber, Assocham has complimented the UPA government for the smooth sailing of the LLP Bill in the upper house. It is of the view that the Bill will be enacted shortly to give relief to the Indian corporate sector.
Corporate Bureau
Posted: Oct 25, 2008 at 2336 hrs IST
Updated: Oct 25, 2008 at 2336 hrs IST
The Financial Express
