LLP is a body corporate: An LLP is a body corporate formed and incorporated under LLP Act and is a legal entity separate from that of its partners and shall have perpetual succession. Therefore, any change in the partners of an LLP shall not affect the existence, rights, or liabilities of the LLP. An LLP is a body corporate formed and incorporated under LLP Act and is a legal entity separate from that of its partners.
Perpetual Succession: The LLP can continue its existence irrespective of changes in partners. Death, insanity, retirement, or insolvency of partners has no impact on the existence of LLP. It is capable of entering into contracts and holding property in its own name.
Separate Legal Entity: The LLP is a separate legal entity, is liable to the full extent of its assets but the liability of the partners is limited to their agreed contribution in the LLP. In other words, creditors of LLP shall be the creditors of LLP alone.
Mutual Agency: Further, no partner is liable on account of the independent or un-authorized actions of other partners, thus individual partners are shielded from joint liability created by another partner’s wrongful business decisions or misconduct. In other words, all partners will be the agents of the LLPalone. No one partner can bind the other partner by his acts.
LLP Agreement: Mutual rights and duties of the partners within an LLP are governed by an agreement between the partners. The LLP Act, 2008 provides flexibility to partner to devise the agreement as per their choice. In the absence of any such agreement, the mutual rights and duties shall be governed by the provisions of the LLP Act, 2008.
Artificial Legal Person: An LLP is an artificial legal person because it is created by a legal process and is clothed with all rights of an individual. It can do everything which any natural person can do, except of course that, it cannot be sent to jail, cannot take an oath, cannot marry or get divorce nor can it practices a learned profession like CA or Medicine. An LLP is invisible, intangible, immortal. It can be dissolved bylaw alone but not fictitious because it really exists.
Common Seal: An LLP being an artificial person can act through its partners and designated partners.LLP may have a common seal if it decides to have one. Thus, it is not mandatory for an LLP to have a common seal. It shall remain under the custody of some responsible official and it shall be affixed in the presence of at least 2 designated partners of the LLP.
Limited Liability: Every partner of an LLP is, for the business of LLP, the agent of the LLP, but not of other partners. The liability of the partners will be limited to their agreed contribution in the LLP. Such contribution may be of tangible or intangible nature or both.
Management of Business: The partners in the LLP are entitled to manage the business of LLP. But only the designated partners are responsible for legal compliances.
Minimum and Maximum number of Partners: Every LLP shall have at least two partners and shall also have at least 2 individuals as designated partners, of whom at least one shall be resident in India. There is no maximum limit on the partners in LLP.
Business for Profit Only: The essential requirement for forming LLP is carrying on a lawful business with a view to earning profit. Thus, LLP cannot be formed for charitable or non-economic purposes.
Investigation: The Central Government shall have powers to investigate the affairs of an LLP by the appointment of a competent authority for the purpose.
Compromise or Arrangement: Any compromise or agreements including merger and amalgamation of LLPs shall be in accordance with the provisions of the LLP, 2008.
Conversion into LLP: A firm, private company or an unlisted public company would be allowed to be converted into LLP in accordance with the provisions of LLP Act, 2008.
E-Filling of Documents: Every form or application of document required to be filed or delivered under the act and rules made thereunder, shall be filed in computer-readable electronic form on its websitewww.mca.gov.in and authenticated by a partner or designated partner of LLP by the use of the electronic or digital signature.
