Limited Liability Partnership is a modernization form of partnership by giving facility of separate legal entity. A limited Liability Partnership, Popularly known as LLP combines the advantages of both the company and partnership into a single form of organization. In this globalization era, introduction of LLP concept is an exclusive benefit for entrepreneur with little annual compliance.
LLP is a body corporate and legal entity separate from its partners, have perpetual succession and any change in the partners of LLP shall not affect the existence, rights or liability of the LLP.
Limited Liability Partnership has been introduced in India by way of Limited Liability Partnership Act, 2008
Owing to the limited liability of partner, flexibility, low cost compliance and many more its became a beneficial platform for the small and medium entrepreneur to run their business in comparision with partnership business.
Private limited company means a company registered under the companies’ act 2013 or in any previous act and having a minimum paid-up share capital of one lakh rupees or such higher paid-up share capital as may be prescribed. The number of share holders should be at least 2 but which should not exceed 200 and at least 2 directors should be appoint but which should not exceed 15 directors.
The companies’ act 2013 introduced the concept of one person companies which enables entrepreneurs carrying their business as sole proprietor form to enter in to a corporate framework.
Private limited does have more statutory compliance in comparison with LLP.
Comparison between Private Limited companies and LLP:
|Registration Under Law||Registration under Companies Act 2013 Is Mandatory||Registration under Limited Liability Partnership Act 2008 Is Mandatory|
|Proof Of Registration||Certificate of Incorporation Issued By Registrar of Companies||Certificate of Incorporation Issued By Registrar of Companies|
|Name||Name of a public company to end with the word “Limited” and a private company with the words “private limited”||Name to end with “LLP”” Limited Liability Partnership”|
|Capital contribution||Private company should have a minimum authorized capital of Rs. 1 Lakh and Rs.5 Lakh for a public Limited Company. However, there is no requirement of Paid up capital.||Not specified in the law.|
|Legal status||Separate legal entity.||Separate legal entity.|
|Liability of shareholders/ partners||Shareholders Liability is Limited to the extent of the unpaid capital.||Partners Liability is Limited to the extent of the contribution to the LLP.|
|No. of shareholders / Partners||Private Limited:- Minimum 2 Shareholder and maximum of 200 shareholders.
Public Limited: – Minimum 2 Shareholder and no upper limit of shareholders
|Minimum of 2. No maximum Limit.
|Foreign Nationals as shareholder / Partner||Foreign nationals can be shareholders.||Foreign nationals can be partners.|
|Taxability||The income of domestic companies is taxed at 30% + surcharge+cess.||Income tax is levied at the rate of 30%+ surcharge+cess.|
|No. of Directors||Minimum 2 in Private Limited Company and 3 in Public Limited Company||No As such Requirement|
|Meetings||Difference between two Board meetings should not be more than 90 days and minimum one annual shareholding meeting is mandatory.||Not required.|
|Annual Return and Compliances||Annual Accounts and Annual Return to be filed with ROC with fee as prescribed.||Annual statement of accounts and solvency & Annual Return has to be filed with ROC with fee as prescribed.|
|Audit||Compulsory Audit by Qualified Chartered Accountant, irrespective of share capital and turnover.||Required, if the contribution is above Rs.25 lakhs or if annual turnover is above Rs. 40 lakhs.|
|Penalty for non compliance||Penalty for non compliance is flat fee of Rs 100 per day.||12 times of normal fees
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