Introduction

With the development of the Indian economy, the part promulgated by its capitalists and its industrial and specialized human resources has been recognized worldwide. It is seen as timely that entrepreneurship, understanding and risk resources come together to further boost India’s economic development. In this context, the need for an innovative business structure that provides a substitute has been felt. It should be a substitute for the conventional association. It should contain unlimited personal liability, on the one hand, and the law-based control organization of the limited liability company, on the other. This will make it easier for specialized knowledge and the capitalist enterprise to come together, arrange and function in a flexible, pioneering and well-organized manner.

Therefore, the Limited Liability Company is considered a form of business surrogate company. This form of business offers the advantages of limited liability while giving its members the flexibility to organize their internal organization as a partnership. The partnership must be based on a jointly signed contract. Due to the flexibility offered by the operation and structure, the LLP is suitable for small businesses, as well as investments through venture capital. Therefore, with this background in mind, Parliament passed the 2008 Limited Liability Companies Act which obtained the agreement of the President on January 7, 2009.

Law relating to the incorporation of an LLP

The procedure to incorporate an LLP is very simple. The Registrar of Companies has the authority and command over the integration. The following steps are required:

  1. Make a decision regarding partners and designated partners.
  2. Purchase the designated partner identification number along with a digital signature certificate.
  3. Choose a name for your LLP and check its availability.
  4. Describes the LLP contract.
  5. Finally, you must present the Agreement along with the different constitution documents to obtain the Certificate of Incorporation.

Current LLP Law Position in India

The LLP Law grants the creation and statute of limited liability companies and the issues related to them and complementary to them. The Law expresses an LLP as a legal person created and included in Chapter III of the Law. It presents in an LLP the position of a disconnected legal body. All other characteristics are also granted by law, such as perpetual succession and the ability and control to sue and be sued. It is imperative that an LLP also designates at least two partners as designated partners. Of these two partners, one must be an Indian individual.

If an alteration occurs in the partners, it will have no effect on the survival, privileges or responsibilities of the LLP. The partnership between the partners, with any admission and termination of the LLP, is administered primarily by the contract of the restricted liability firm. But if there is no such agreement, then they are governed by the rules included in the First Annex of the Law.

Concern about the termination of the partnership can also be conveyed by the disappearance or suspension of the LLP. The reasons for termination are more equivalent to dissolving a corporation. Termination may be voluntary or by court order.

Liability of LLP and partners

The law at the beginning, in addition to granting the separate legal features, says that each partner is the representative of the LLP. But each partner cannot be a representative of another partner. This is a clear change from the current form of association. Here the rule of the agency relationship is further extended. In some way it establishes the responsibility of the partners for the acts of other partners.

Despite the likely discredit, the Indian LLP Act appears to go beyond the Minnesota Model. The personal liability of a partner is excluded under Section 28 (1). Liability can be direct or indirect, but it is still excluded from an obligation. It is not awarded solely for the mere reason of being a member of the LLP. The Act further establishes that a limited liability company duty, even if it occurs outside of an agreement or otherwise, is the sole responsibility of LLP. This provides an Indian LLP with the equitable position as a company within the meaning of Section 3 of the Companies Act.