|S.NO |CONTENT |PAGE NO. | |1 |Introduction |2-4 | |2 |Overview of Limited Liability Partnership|4-10 | | |Act, 2008 | | |3 |Tax implication |10-11 | |4 |Comparative Analysis |11-12 | |5 |Advantages & Disadvantages |12-13 | |6 |ONGC & LLP |13 | |7 |Challenges |13-14 | |8 |Critical Analysis of LLP |14-15 | |9 |Conclusion |15-16 | |10 |Bibliography |17 |
LIMITED LIABILITY PARTNERSHIP – INDIAN PERSPECTIVE
Over the past decade, India has evolved from being an almost closed economy to a liberal and open economy. ‘Destination India’ has been the buzzword in many western countries ever since, as they seek to utilize the ever growing process of the ‘services’ sector of India. With the growth of Indian economy, the role played by its entrepreneur as well as technical and professional manpower has been acknowledged internationally.
With the opportunities galore, Indian entrepreneurs /professionals earlier had the option to explore setting up a proprietary concern, partnership firm, or a corporate entity. Amateur professionals or venture capitalists were forced to form proprietary/partnership firm on a small scale in absence of capital required to start a large scale corporate entity. Partnership firm were however, not the first choice in the view of the mutual agency, unlimited liability and lack of perpetual succession clause attached with them. Further a partnership firm lacked sufficient credentials in the eyes of banks/financial institution as opposed to corporate entity. However enormous compliance and administrative requirement coupled with high capital requirement, managerial difficulties, difficult winding up procedure etc. generally proves to be deterrent in formation of a corporate entity. This gap is sought to be bridged by introducing a Limited Liability Partnership Law. This subject has been dealt in the Naresh Chandra Committee on Regulation of Private Companies and Partnership Concerns and the Expert Committee on Company Law. In foreign countries, LLPs have been important vehicles that have catered to the needs of small-scale sector and venture capital funds. Even though the concept of limiting the financial liability of non-active partners to the capital investor has been debated in various forums of the Government for more than a decade, the case for having LLPs has been strengthened by the new business environment and initiatives of the Department of Small-Scale Industries.[i] As such, the need for a hybrid entity (having traits of partnership firm and corporate entity) was being felt to help the emerging entrepreneurs prosper and to bring them at par with international competitors. This notion gave birth to the concept of ‘Limited Liability Partnership’ setup in India. The Limited Liability Partnership (LLP) Act was passed by...