Limited Liability Partnership
The Parliament of India passed the Limited Liability Partnership Act in 2008 to govern LLP businesses in India. According to Section 2 of this law, an LLP is a partnership registered under the Act. Further, an LLP agreement means a written agreement either between an LLP’s partners or between the LLP itself and its partners. This agreement defines the rights,
liabilities, duties, and powers of the partners.
Since the Limited Liability Partnership Act, 2008 specifically governs limited liability partnerships in India, the provisions of the Indian Partnership Act, 1932 are not applicable to LLPs. They only apply to traditional partnership firms.
Partnerships vs. LLPs
| Governing law | Indian Partnership Act, 1932 | Limited Liability Partnerships Act, 2018 |
| Separate entity? | No | Yes |
| Unlimited liability of partners? | No | Yes |
| Nature of partners | Only natural persons, i.e. individuals | Individuals as well as body corporates |
| Number of partners | Minimum 2, maximum 50 | Minimum 2, maximum unlimited |
| Registration | Optional | Mandatory |
| Assets | Only partners can own assets of the firm | A firm can own assets in its name |