Legal Aspects of Business Assignment

Date: 12-11-2012 Submitted by: Ani K AM.BU.P2MBA11006

Partnership A partnership is an association of two at more persons to carry on as co owners of a business and to share its profits and losses. Section 4 of the Partnership Act defines partnership as the relation between persons who have agreed to share the profits of a business carried on by all or any one of them acting for all. Persons who have entered into partnership with one another are called individual partners and collectively a firm and the name under which their business is carried on is called the firm name. Limited Liability Partnership The Limited Liability Partnership (LLP) is essentially a general partnership in form, with one important difference. Unlike a general partnership, in which individual partners are liable for the partnership's debts and obligations, an LLP provides each of its individual partners protection against personal liability for certain partnership liabilities. Difference between Limited Liability Partnership and Partnership Category Prevailing Law Partnership Partnership is prevailed by The Indian Partnership Act, 1932 and various Rules made there under LLP Limited Liability Partnership are prevailed by The Limited Liability Partnership Act, 2008 and various Rules made there under Registration with Registrar of LLP required. Created by Law Is a separate legal entity under the Limited Liability Partnership Act, 2008. Name to contain 'Limited Liability Partnership' or 'LLP' as suffix. Minimum cost of Formation of LLP is Rs. 800 only, comparatively much lesser than the cost of formation of Company

Registration

Registration is optional

Creation Distinct entity

Created by Contract Not a separate legal entity

Name of Entity

Any name as per choice

Cost of Formation

The Cost of Formation is negligible

Perpetual Succession

It does not have perpetual It has perpetual succession and succession as this depends upon partners may come and go the will of partners

Charter Document

Partnership Deed is a charter of the firm which denotes its scope of operation and rights and duties of the partners

LLP Agreement is a charter of the LLP which denotes its scope of operation and rights and duties of the partners vis--vis LLP. It denotes the signature and LLP may have its own common seal, dependent upon the terms of the Agreement Various eForms and the LLP Agreement are filed with the Registrar of LLP along with the prescribed Fee.

Common Seal

There is no concept of common seal in partnership

Formalities of Incorporation

In case of registration, Partnership Deed along with form / affidavit required to be filled with Registrar of firms along with requisite filing fee It will take 7 days (approx.) to incorporate

Time line

It will take 10 days (approx.) to incorporate (inclusive of time taken to obtain DPN) A LLP is a legal entity can sue and be sued Foreign Nationals can be a Partner in a LLP. Minimum 2 partners and their is no limitation of maximum number of partners.

Legal Proceedings

Only registered partnership can sue third party Foreign Nationals cannot form Partnership Firm in India Minimum 2 and Maximum 20

Foreign Participation

Number of Members

Ownership of Assets

Partners have joint ownership of The LLP independent of the all the assets belonging to partners has ownership of assets partnership firm Rights / Duties / obligation of the partners are governed by Partnership Deed. Rights / Duties / obligation of the partners are governed by LLP Agreement.

Rights / Duties / obligation of the Partners / Managing Partners / Directors