News:The Centre has introduced a new scheme named LLP Settlement Scheme 2020.
Facts:
About the Scheme:
- It aims to help non-compliant Limited Liability Partnership(LLP) firms turn compliant and enable ease of doing business for such entities.
- Under the Scheme,the Government provides a one-time relaxation in additional fee to the defaulting LLPs by allowing filing of pending documents and help them serve as a compliant LLP in future.
About Limited Liability Partnership(LLP):
- LLP is an alternative corporate business form that gives the benefits of limited liability of a company and the flexibility of a partnership.
- They are governed under the limited liability partnership act of 2008 with the Corporate Affairs Ministry implementing the Act.
Difference between LLP vs Traditional partnership firm:
- Under a traditional partnership firm, every partner is liable jointly with all the other partners and also severally for all acts of the firm done while he is a partner.
- Under LLP structure, liability of the partner is limited to his agreed contribution.Thus,individual partners are shielded from joint liability created by another partner’s wrongful acts or misconduct.
Difference between LLP vs a Company:
- The internal governance structure of a company is regulated under the Companies Act, 1956 whereas for an LLP it would be by a contractual agreement between partners.
- The management-ownership divide inherent in a company is not there in a limited liability partnership.
- LLP has more flexibility and lesser compliance requirements as compared to a company.
