In fast changing business scenarios, there are changing laws, rules and regulations which over the time now and then, require actions and steps to be undertaken in order for smooth functioning. Our clientâ€™s function in this complex business scenario and there is a need to centralize all their legal compliances, mandatory requirement laws and regulations, and therefore Unimarks Legal Solutions assists its clients in providing further mentioned services meeting client expectations.
Partnership is defined as a relation between two or more persons who have agreed to share the profits of a business carried on by all of them or any of them acting for all. The owners of a partnership business are individually known as the â€œpartnersâ€ and collectively as a â€œfirmâ€. Its main features are:-
- A Partnership is easy to form as no cumbersome legal formalities are involved. Its registration is also not essential. However, if the firm is not registered, it will be deprived of certain Legal Benefits. The Registrar of Firms is responsible for registering Partnership Firms.
- The Minimum number of Partners must be two, while the Maximum number can be 10 in case of Banking Business and 20 in all other types of Business.
- The Firm has no Separate Legal Existence of its own i.e., the Firm and the Partners are one and the same in the Eyes of Law.
- In the absence of any Agreement to the Contrary, all Partners have a Right to participate in the Activities of the Business.
- Ownership of Property usually carries with it the Right of Management. Every Partner, therefore, has a Right to Share in the Management of the Business Firm.
- Liability of the Partners is unlimited. Legally, the Partners are said to be jointly and severally liable for the Liabilities of the firm. This means that if the Assets and Property of the Firm is insufficient to meet the Debts of the Firm, the Creditors can recover their Loans from the Personal Property of the Individual Partners.
- Restrictions are there on the Transfer of Interest i.e. none of the Partners can transfer his Interest in the firm to any Person(except to the Existing Partners) without the unanimous consent of all other Partners.
- The Firm has a limited span of life i.e. legally, the Firm must be dissolved on the Retirement, Lunacy, Bankruptcy, or Death of any Partner.
Like Partnership, Partners of LLP can frame Agreement for defining their Terms, Profit Sharing Ratio etc. The Basic Contents of Agreement are, Name of LLP, Name of Partners and Designated Partners, and Form of Contribution, Profit Sharing Ratio and Rights and Duties of Partners.
In case no Agreement is entered into, the Rights & Duties as prescribed under Schedule I to the LLP Act shall be applicable. It is possible to amend the LLP Agreement but every change made in the said agreement must be intimated to the Registrar of Companies.
Advantages of LLP Formation
- Renowned and accepted form of Business worldwide in comparison to Company
- Low Cost of Formation
- Easy to Establish
- Easy to Manage & Run
- No Requirement of any Minimum Capital Contribution
- No Restrictions as to maximum number of Partners
- LLP & its Partners are distinct from each other
- Partners are not liable for Act of Partners
- Less Compliance Level
- No Exposure to Personal Assets of the Partners except in case of Fraud
- Less Requirement as to maintenance of Statutory Records
- Less Government Intervention