Indian Corporate Law & Corporate Governance Consultants
(Understanding the difference between Limited Liability Partnership firm and similarity is must in order to select right legal entity)
BASIS OF DIFFERENCE | COMPANY | LLP |
Documentation
| Memorandum is to be filed with ROC | Incorporation Document is required to be filed. |
Flexibility regarding Registration Office of the Company | Memorandum should contain State in which incorporated. | Incorporation Document is not required to contain State in which incorporated. Thus, registered office can be changed to any place in Indiajust by informing ROC subject to prescribed conditions. |
Nomenclature | Name to contain 'Limited' or 'Private Limited' as suffix | Name to contain 'Limited Liability Partnership' or 'LLP' as suffix |
Submission of main documents regarding LLP | Articles are to be filed at the time of incorporation. Private company must have Articles. In case of public company, provisions of Table A apply if there are no Articles. | LLP Agreement is required to be filed later. In absence of LLP Agreement, mutual rights and duties will be as specified in first schedule to LLP Act. Thus, practically, each LLP must have LLP Agreement, though not mandatory. |
Management Team | Managing Director and Whole time Director to look after day to day administration.. | Designated Partner to look after statutory compliances. Otherwise, all partners can look into affairs of the LLP. However, LLP can delegate powers to some partners who may be designated as 'Managing Partner', or 'Executive Partner' or any other name. |
Management of the Firm | Individual director or member does not have authority in conduct of business of company. | Every partner has authority to conduct business of LLP, unless the LLP Agreement provides to contrary. |
Remuneration | Restrictions on remuneration to director as per Companies Act | No restriction on remuneration to partner. Remuneration should be provided in LLP agreement. |
Change in Management | Notice of change of director is to be given by company. | A partner who has resigned from LLP can himself file notice of his resignation to ROC. |
Shares Certificate Etc | Share, share certificate, register of members, transfer and transmission of shares etc. required. | No requirement of share and share certificate. Hence, no question of its issue, allotment, transfer, rectification of register etc. |
Conduct of Business | Board meetings, general meetings are required. | No provision for regular meeting of Board and members. Partners can decide when and how to meet, delegation of powers etc. Provision is made that LLP should maintain minute book |
Treatment of Secured Loan | Charges are required to be registered | No provision for registration of charges. |
Maintenance of Records | Elaborate records and registers are required to be maintained | No records and registers have been prescribed. |
Restriction on Board or Partner | Restrictions on Board regarding some specified contracts, contracts in which directors interested, investments, loans and guarantees to other companies | Partners are free to enter into any contract. |
Disclosure | Disclosures required of contracts where directors are interested | No requirement of disclosures required of contracts where partners are interested, unless specified in LLP Agreement. |
Provision relating to Redressal | Elaborate provision relating to redressal in case of oppression and mismanagement | No provision relating to redressal in case of oppression and mismanagement |
Specific Provision | Specific provisions relating to nidhis, NBFC | No specific provisions relating to nidhis, NBFC |
BASIS | COMPANY | LLP |
perpetual succession | Limited liability and perpetual succession | Limited liability and perpetual succession |
common seal
| Must have common seal | Common seal is optional |
Provisions regarding approval of name
| Provisions of approval of name, change of name are similar. | Provisions of approval of name, change of name are similar. |
Administrative Authority | ROC is the administrative authority | ROC is the administrative authority |
Personal liability of director | No personal liability of individual director or member [except of director of private company in some cases like income tax and sales tax dues]. | No personal liability of partner, except in case of fraud. |
procedure for change registered office | Complicated procedure for change of registered office, particularly when change is to other State | Simple procedure to change registered office of LLP anywhere in India just by informing ROC and following prescribed conditions. |
Public Inspection | Memorandum and Articles, details of directors, accounts, annual return, special resolutions etc. filed by LLP with ROC will be available for public inspection | Incorporation document, details of partners, accounts, statement of solvency and annual return filed by LLP with ROC will be available for public inspection [clause 36 of LLP Bill, 2008] |
Powers to inspect records
Powers to inspect records
| Powers to Central Government to inspect records of company and to order investigation | Powers to Central Government to inspect records of company and to order investigation |
Provisions of compromise | Provisions of compromise, arrangement or reconstruction of companies are similar | Provisions of compromise, arrangement or reconstruction of LLP [clauses 60 to 62 of LLP Bill, 2008] |
Wind up | Company can be would up voluntarily or by order of Court | LLP can be would up voluntarily or by order of Court |
Defunct company | ROC can strike off name of defunct company. | ROC can strike off name of defunct LLP |