Limited Liability Partnership is a unique form of business entity that is a partnership firm by nature but inherits various features of a Company. This was introduced in India in 2008 with the approval of the Limited Liability Partnership Act, 2008. A normal partnership is often avoided due to the unlimited liability feature i.e. personal assets of the partners can be used to pay off the liability of the firm. To counter this shortcoming, the concept of LLP was introduced which provides a cushion of limited liability to partners.
It inherits the advantage of a separate legal entity & limited liability from a company but still, it is easier to manage it as compared to a company as post-registration compliances are quite lesser. It can be said as a corporate business vehicle that enables professional expertise and entrepreneurial initiative to combine and operate in a flexible, innovative, and efficient manner, providing benefits of limited liability while allowing its members the flexibility for organizing their internal structure as a partnership.
However, there are certain drawbacks associated with any LLP. Ownership transfer in LLP is not as easy as of a company. Neither an LLP can issue ESOP. Further, certain benefits under the “Startup India Programme” of the Government of India are not available to LLP.
