LLP being a hybrid between the two traditional forms, the paper explains how the LLP is a separate legal entity, being liable to the full extent of its assets, but at the same time, the liability of the partners is restricted to their agreed contribution. It is widely accepted as being an advantageous business model because it is organized and operates on the basis of an agreement. Also, it provides the flexibility without imposing detailed legal and procedural requirements, enabling professional expertise and initiative to combine with financial risk taking capacity in an innovative and efficient manner.
The paper brings out this concept, supplementing the information available with recommendations from various committees appointed by the government like the Naresh Chandra Committee and the Dr. J.J. Irani Committee. Most importantly, what has to be realized is that this concept of LLP has been found to be necessary as a separate concept because if a utopian situation is taken that the liability of a joint stock company is made unlimited, it may be beneficial to the economy, but is not as useful for the members of the company, including other stock holders. Therefore, instead of trying to convert one traditional form to a new form, the whole concept of Limited Liability Partnership is being introduced which brings about the specificity that is required on a scale such as this.
The paper also brings a comparative analysis between company, limited liability partnership and partnership firm which tells us how it is beneficial from the same, and how can a person’s with sharp mind but less money can have an extra edge over the others. It also provides suggestions regarding different issues of tax, bringing transparency and clarity of work, and how government can be a good facilitator and to work accordingly to make the Indian economy more efficient in the global market.
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