LLP Full Form

What is the full form of LLP?

The full form of LLP is a Limited Liability partnership. LLP is a combination of a traditional block, and for instance, it offers the flexibility of a conventional partnership firm and the advantage of a company’s limited liability at a low compliance cost. In an LLP, participants can coordinate their internal strategies on the performance of a mutually negotiated arrangement, such as a partnership firm, and even the partners have limited liability where the liability of every partner is restricted.

  • Besides that, in an LLP, one party is not liable or charged for another party’s neglect, wrongdoing or misconduct.
  • It’s a hybrid between a partnership & an organisation. An LLP must have at least one “General Partner” with unlimited liability in individual nations.
  • In businesses where liability is limitless, the partners’ private properties can be sold off to pay for the damages or cover the dues.
  • The Government has adopted Act LLP 2008, which entered into force on 1 April 2009, to resolve this restriction.
  • LLP is also a legal entity since it has to be licenced with the ROC (Registrars of Companies) and is regulated by the 2008 LLP Act.

Advantages of LLP

  • It is distinct from its partners, or partners are different from the company. No one can contact property rights if a business causes massive casualties. Only the sum they invested in companies will be affected.
  • The liabilities are restricted and are still in proportion to the equity of the partners’ capital. Besides, all partners must be Limited Liability Partnership agents and not other partners.
  • It allows the versatility to make the necessary changes. It will enable members to coordinate their internal operations, as is the case in a collaboration company, based on a shared agreement.
  • Easy to set up. The partners are expected to visit & sign the LLP agreement at the branch of the ROC (Registrar of Companies).
  • It also has endless succession, ensuring the corporation will not break if either partner expires or goes bankrupt.
  • There should be at least two partners, at least one of whom should be a citizen of India, but the maximum number of partners is not restricted and foreign partners are also permitted.
  • For charity or nonprofit purposes, an LLP could not be created.

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