The regime of limited liability partnership, the government hopes, will provide a platform for small and medium enterprises, and professional firms of company secretaries, chartered accountants, advocates, etc., to increase their global competitiveness, and thus, accelerating the growth of the services sector.It is heartening to note that the Government of India is progressing towards recognizing the concept of Limited Liability Partnerships (LLP) and is enacting a new legislation, a draft of which has been posted on the Department of Company Affairs website for public comments (www.dca.nic.in).
A limited liability partnership is what it means—limits the liability of a partner to his contribution and nothing more, similar to a limited company— while allowing the flexibility of a partnership. In a regular partnership, each partner is liable for the actions of the firm as well as the other partner, and as a consequence dispute resolution becomes extremely complex. The LLP provides the internal flexibility of a partnership, i.e., by allowing the partners to adopt whatever form of internal organization that they prefer, while at the same time, limiting their liability to their individual contributions. |
