Professional Documents
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Indian Partnership Act, 1932 shall not be applicable to LLPs and there shall not be
any upper limit on number of partners in an LLP unlike an ordinary partnership firm
where the maximum number of partners can not exceed 20.
LLP Act makes a mandatory statement where one of the partners to the LLP should
be an Indian.
Provisions have been made for corporate actions like mergers, amalgamations etc.
The Act also provides for conversion of existing partnership firm, private limited
company and unlisted public company into a LLP by registering the same with the
Registrar of Companies (ROC).
A private limited company is a voluntary association of not less than two and not more
than fifty members, whose liability is limited, the transfer of whose shares is limited to its
members and who is not allowed to invite the general public to subscribe to its shares or
debentures. Some advantages & disadvantages are mentioned below The liability of its members is limited
The shares allotted to its members are also not freely transferable between them.
It enjoys continuity of existence i.e. it continues to exist even if all its members die
or desert it.
Shares are not freely transferable
Open invitation to public to subscribe to its shares does not allow
Certainly LLP model is much more tax advantageous compared to a private company,
which we have tried to explain by way of a mathematical example.
To Conclude Thus, there is no doubt that a LLP structure has better tax planning options,
however, that should not be only criteria for a startup while selecting the best legal entities.