The Limited Liability Partnership (LLP) Bill, 2008, which proposes to provide an alternative model for doing business in India, was tabled in the Rajya Sabha today by Corporate Affairs Minister Prem Chand Gupta.
The LLP Bill, which has already been cleared by the Cabinet and incorporated recommendations of the Parliamentary Standing Committee, is likely to be passed during the current session of Parliament.
“We are optimistic that both Houses would clear this Bill in the current session and then it would get Presidential assent to become law,” said an official of the Ministry of Corporate Affairs.
A limited liability entity is a hybrid of existing partnership firms and full-fledged companies. It would change the way businesses are done in India by introducing an entirely new corporate form that would enable professional expertise and entrepreneurial initiative to combine, organise and operate in an innovative and efficient manner.
It is a separate legal entity, liable to the full extent of its assets with the liability of the partners being limited to their agreed contribution in LLP. It means that no partner is liable on account of the independent or unauthorised actions of other partners and there will be no limit on the number of partners, unlike the current limit of 20 members in a partnership.
The flexibility provided under LLP would suit the requirements of service, knowledge and technology-based enterprises. Under the LLP model, chartered accountants and company secretaries or even advocates can set up multi-disciplinary firms, which would act as a “one-stop” shop for people to avail of various professional services. Existing laws impose the restriction that these professional services cannot be carried out through companies, but only through partnership firms.
