New Delhi: The government on Tuesday introduced in the Upper House of Parliament the Limited Liability Partnership Bill, 2008, which aims to give professionals such as chartered accountants, lawyers and venture capitalists more flexibility in setting up new firms.
New form: Minister of corporate affairs Prem Chand Gupta.
The Bill was first introduced in the Rajya Sabha in 2006, and was referred to a parliamentary standing committee, which gave its report last year.
A limited liability partnership, or LLP, is an alternative business structure falling between a partnership firm and a corporate body, combining the limited liability benefits of a company with the flexibility of a partnership.
“LLP, as proposed in the Bill, is a new corporate form that enables professional expertise and entrepreneurial initiative to combine, organize and operate in an innovative and efficient manner,” said a statement by the ministry of corporate affairs.
According to the Bill, while an LLP will be a separate legal entity, liable to the full extent of its assets, the liability of the partners would be limited to their agreed contribution in the LLP.
The Bill proposes that the relevant provisions of the Companies Act, 1956, may be made applicable to LLPs by a notification by the Union government, if required, the statement said.
“LLP will encourage experts specializing in different fields—for instance, company law, accounting, capital markets, marketing, and so on—to come together and provide solutions to customers in a risk-free environment,” said Preeti Malhotra, former president of the Institute of Company Secretaries of India.
Currently, partnership firms cannot have more than 20 members, but LLP structures have no such limit.
“This will allow law firms to expand as we will be able to have more than 20 partners and, at the same time, not be bound by the complications of the Companies Act,” said Lalit Bhasin, partner at law firm Bhasin and Co.
“The incorporation of LLP firms, their structures, ownership and profiles will all be linked to the ministry website...and, therefore, will have transparency,” said an official at the ministry of corporate affairs (www.mca.gov.in).
The official didn’t want to be identified.