Until now, three forms of organisation have predominantly dominated the Indian business scene — companies, partnerships firms and sole proprietorships, each subject to different regulatory and tax regimes. The inherent restrictive characteristics of the existing forms created a definite need to evolve a different and flexible structure which would be a blend of these forms.
Taking the cue from the developed nations, the Ministry of Company Affairs (MCA) came up with the concept of limited liability partnerships (LLPs). Basically, the idea of introducing the LLPs was to combine the characteristics of corporate and non-corporate entities and provide the Indian corporate sector with a new format of doing business.
Introducing Limited Liability Partnerships (LLP) as a new business structure is considered to be a path breaking reform initiative, providing the much needed flexibility, especially to small and medium sized entrepreneurs. This is evident from the fact that approximately 400 LLP have been formed so far. LLP, a legal form available world-wide is now introduced in India and is governed by the Limited Liability Partnership Act 2008, with effect from April 1, 2009. It would be interesting to know the history of the origin of an LLP as a business enterprise. LLP as a business model first emerged in USA in early nineties. With the passage of time LLP gained popularity and was adopted as a business structure in many countries across the globe including Australia, Japan, Singapore, China and UK.
The desirability of LLP form has been expressed in the context of small enterprises by :-
• Bhat Committee (1972);
• Naik Committee (1992);
• Expert Committee on Development of Small Sector Enterprises headed by Sh. Abid Hussain in 1997 and
• Study Group on Development of Small Sector Enterprises (SSEs) headed by Dr. S P Gupta (2001).
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