The advantages of which forms of business organization is incorporated in Limited Liability Partnership (LLP) Act, 2008 ?

The correct answer is - Partnership firm and Private Co.

Key Points

• The Limited Liability Partnership (LLP) Act, 2008 incorporates the advantages of both:
  • Partnership firms - Flexibility in management and operations.
  • Private Companies - Limited liability for partners, ensuring protection of personal assets.
• The LLP structure allows partners to operate with the flexibility of a partnership while enjoying the benefit of limited liability, which is a feature of companies.
• Unlike traditional partnerships, the liability of partners in an LLP is limited to their agreed contribution, reducing the risk to personal assets.
• LLPs ensure a clear distinction between management and ownership, similar to private companies, enabling efficient operations.

Additional Information

• Key features of Limited Liability Partnership (LLP):
  • Separate Legal Entity - An LLP is treated as a separate legal entity, distinct from its partners.
  • Perpetual Succession - The LLP continues to exist irrespective of changes in its partners.
  • Flexibility - LLPs offer operational flexibility without the strict compliance requirements of private or public limited companies.
  • No Minimum Capital Requirement - There is no mandatory minimum capital for forming an LLP.
• Difference between Partnership and LLP:
  • In a traditional partnership, partners have unlimited liability, whereas LLP partners have limited liability.
  • LLPs are governed by the LLP Act, 2008, while partnerships are governed by the Indian Partnership Act, 1932.
• Examples of LLP Usage: LLPs are commonly used for professional services such as legal firms, accounting firms, and consulting services due to their flexibility and liability protection.