The much-awaited limited liability partnership (LLP) model is set to become a reality with the ministry of corporate affairs (MCA) being hopeful that the LLP Bill introduced in Parliament in 2006 would be cleared in the upcoming monsoon session.
The LLP will make the exit route from a company simpler. ?LLP bill is one of the major areas we are working upon and once the LLP bill is passed, it will certainly help?, said Prem Chand Gupta, minister of corporate affairs. The structure of LLPs is likely to be flexible and there may be no limit on the number of partners.
While there may be some amendments introduced to the original 2006 Bill, the ,ministry of finance is expected to decide on the taxation aspects of LLP.
A senior MCA official told FE that LLPs would also help venture capital funds joining hands with entrepreneurs of the start-ups that they invest in.
It is expected that LLP will have an advantage of giving the ownership of assets to the partners. In such a case, the partner can use his asset anytime and if he exits from the LLP, he will be in a position to easily take his money out without the LLP being dissolved. In the case of companies and partnerships, this flexibility does not exist.
LLP, which is an alternative corporate business form having benefits of limited liability of a company and the flexibility of the partnership, could prove to be more convenient and sustainable for many particularly for micro, small and medium enterprises (MSMEs), professionals such as chartered accountants, company secretaries, advocates and also for others in scientific, technical and artistic services.
The regime of limited liability partnership will provide professionals a platform to conduct their profession efficiently that would in turn increase their capability to compete with global firms apart from allowing them to make their presence felt in international market for professional services.
The introduction of LLP form of business would also promote entrepreneurship, particularly in relation to service sector and the knowledge-based industries such as the information technology and biotechnology sectors.