The Institute of Cost Accountants of India

(Statutory Body Under an Act of Parliament)

Partnership & Limited Liability Partnership

(LLP)
 Partnership

According to Sec 4, para 1 of IPA,1932 , “Partnership” is the

relation between persons who have agreed to share the
profits of a business carried on by all or any of them
acting for all.

LLP

According to Sec. 2(1)(n) of LLP Act, 2008 , a Limited Liability

Partnership is “an incorporated partnership formed and
registered under the Act .”
 Difference between Partnership & LLP
Si.N. Basis
1 Regulating Act
2 Registration
3 Creation
4 Separate Legal Entity
5 Perpetual succession
6 Body Corporate
7 Charter document
Partnership
It is governed by Indian Partnership
Act, 1932.
Its registration is optional.
It is created by an agreement.
It has no separate entity different
from its members and can have any
name by choice.
Its succession is dependent on the
death, insanity, retirement or
insolvency of partners.
It is a firm.
Partnership deed is a charter
document for its scope of operation
and partner's rights and duties.
LLP
It is governed by LLP Act, 2008.
Its registration is compulsory
It is created by Law.
It has separate legal entity distinct
from members and the name must
contain 'LLP‘ as suffix.
It has perpetual succession which is
not effected by any change in
partners. They may come and go but
the LLP goes on forever.
It is body corporate
LLP is charter document for
its scope of operation and
partner's rights and duties.
Si.N. Basis Partnership LLP

There is no concept of common There may be a common seal as per

8 Common seal
seal. agreement.

The number is 10 for banking business There is no maximum number of partners

9 Maximum no. of partners
and 20 for other businesses. in a LLP.

10 Liability of partners Liability of each partners is unlimited. Liability of each partners is limited.

Each partner is bound by the acts of firm Each partner can bind the LLP only by its
11 Mutual Agency
as well as other members of the firm. acts but not other partners.

There must be two designated partners at

12 Designated Partners There is no provision of it. least and at least one of them shall be
resident fo India.

Minor can be admitted to the benefits of

13 Minor as Partners partnership with the prior consent of the Minor cannot be admitted to LLPs.
existing partners.

All partners are liable for legal Only designated partners are responsible
14 Legal Compliance
compliance. for legal compliance.

The LLP is required to get its accounts

15 Audit The firms are required to have tax audit.
audited annually.

Its dissolution may take place by mutual

Dissolution may take place voluntarily or
16 Dissolution agreement, insolvency, certain
by National company Law tribunal.
contingencies and by court.
 Difference between LLP’s & Companies
Si.N. Basis Company LLP
It is governed by Indian It is governed by LLP Act,
1 Regulating Act
companies Act, 2013. 2008.

It can be formed for profit or It can be formed by profit

2 Object of Formation
service motive. motive only.

Memorandum of association is
LLP is charter document for
the charter of the company
3 Charter agreement its scope of operation and
defining the scope of the
partner's rights and duties.
operation.

Name of the public company

must contain 'Ltd.' And private A LLP must contain 'LLP'
4 Name
company must add 'Pvt. Ltd.' as suffix.
As suffix

It must have its own common There may be a common

5 Common Seal
seal. seal as per agreement.

The number is 2 minimum and

50 maximum members for
Minimum/maximum private company. Public There is no maximum
6
number of Partners company requires minimum number of partners in a LLP.
07members but no limit on
maximum number.

Liability of each partners is

Liability is limited to the paid up
7 Liability limited except in case of
capital on each share.
fraud or wrongful act.
Si.N. Basis Company LLP
Memorandum & articles of
LLP agreement with various forms
Formalities of association with various forms
8 along with prescribed fee is to be
Incorporation along with prescribed fee is to be
submitted to the Registrar.
submitted to the Registrar

Shares of public co. are freely Partners interest is transferable

9 Transfer of shares
transferable. subject to the provisions of LLP Act.

Transmission of Shares are transmitted to legal

10 Legal heirs cannot become partners.
shares heirs.

The affairs of the company are LLP is managed by partners and

11 Management
managed by board of directors. designated partners.

In a private company there must be

Minimum number of Minimum 02 designated members
12 02 and in public company there
Directors are required.
must be 03 directors.

13 Minimum capital Specified by law Not specified

It is Mandatory If annual turnover

14 Audit It is mandatory. exceeds Rs.40 Lakhs or contribution
exceeds Rs.25 Lakhs.
The company is required to hold
15 Meetings meetings within statutory limits No meetings are required to be held.
prescribed for them.

Oppression & Provisions does not exists in LLP

16 Provisions exists in company Act.
Mismanagement Act.