Business Daily from THE HINDU group of publications
Wednesday, Oct 22, 2008
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Business Daily from THE HINDU group of publications Wednesday, Oct 22, 2008 ePaper | Mobile/PDA Version | Audio | Blogs |
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Corporate
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Company Law Government - Politics Govt paves the way for limited liability partnerships
An LLP would be a body corporate and a legal entity separate from its partners Seen as useful for small enterprises since the partnership does not impose legal and procedural requirements intended for large companies Bill stipulates that an LLP should maintain annual accounts Our Bureau New Delhi, Oct. 21 The stage is being set for a new corporate form that would enable professional expertise and entrepreneurial initiative to combine, organise and operate in an efficient manner. The alternative corporate business form envisages limited liability but allows its members the flexibility to organise their internal structure as a partnership based on agreement. The Minister for Corporate Affairs, Mr Prem Chand Gupta, on Tuesday introduced in the Upper House the Limited Liability Partnership Bill (LLP), 2008, that provides for the formation and regulation of limited liability partnerships firms. The concept is not restricted to professionals and the service sector but includes the manufacturing sector as well. Prior to introducing the LLP Bill, 2008, Mr Gupta withdrew the earlier Bill of 2006. The Minister said, “The advantage of the LLP form would be that it will not impose detailed legal and procedural requirements intended for large widely held companies on such enterprises. In this way it will also be useful for small enterprises.” The Bill does not restrict the benefit of the LLP structure to certain classes of professionals only and would be available for use by any enterprise that fulfils the requirements of the Act. While the LLP will be a separate legal entity, liable to the full extent of its assets, the liability of the partners would be limited to their agreed contribution in the firm. Further, no partner would be liable on account of the independent or un-authorised actions of other partners, thus allowing individual partners to be shielded from joint liability created by another partner’s wrongful business decisions or misconduct. An LLP would be a body corporate and a legal entity separate from its partners. It would have perpetual succession. The Indian Partnership Act, 1932, would not be applicable to LLPs. Since the LLP would be in the form of a body corporate, it was also proposed that the relevant provisions of the Companies Act, 1956, be made applicable to LLPs in the future by notification by the Centre, with the appropriate changes and modifications. The Bill also stipulates that an LLP should maintain annual accounts reflecting its state of affairs. However, the Government may exempt such class of LLPs from auditing of their accounts. The Bill envisages that the taxation of LLPs should be addressed in the Income Tax Act. Besides, provisions have also been made in the Bill for corporate actions such as mergers and amalgamations. While enabling provisions in respect of winding up and dissolutions of LLPs have been made in the Bill, detailed provisions in this regard would be provided by way of rules under the Act. More Stories on : Company Law | Politics | Accountancy
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