Advantages of a LLP over a Company under Companies Act 1956

There are more than 700 sections and 15 schedules in the Companies Act 1956 whereas the Limited Liability Partnership Act 2008 contains only 81 sections and 4 schedules.  This shows that LLP has the advantage of simplicity and less compliances with various provisions than under the Companies Ace, given the nature and size of the enterprise that is intended to be carried on LLP Registration Coimbatore.

The essential differences start with incorporation documents and making changes therein being much simpler and informal and involving less cumbersome formalities.  The need for classifying the object clauses into main, ancillary and other objects as well as framing the Share Capital clause in the Memorandum for incorporation a Company is reduced into a simple procedure of filling up of the prescribed information in the Incorporation document and statement in Form No. 2.  Similarly the essential procedural requirements contained in Articles of Association or in Table A is substituted by the document called the ‘limited liability partnership agreement’ covering the matters as may be mutually agreed upon that otherwise would apply as contained in the First Schedule of the LLP Act which list about 14 significant items which may be of concern between the relationship of mutual rights and duties amongst the partners.  This document is to be filed along with Form No. 3 containing the required particulars LLP Registration Coimbatore.

The Deed of Partnership Agreement is not available for Public Inspection and thus the terms of Agreement amongst the partners are kept secret.There are no requirements of share certificate nor are any procedural formalities to be observed for transfer of the same.Whereas the memorandum of a Company is required to name the State in which it is required to be incorporated, there is no such obligation in the case of LLP.  Consequently the elaborate procedure involved in changing the Registered Office from the State of Incorporation to another state is not required to be followed.

Any charge either in the business to be conducted or in the manner of functioning could be mutually agreed upon between the Partners, documented and filed with the Registrar of Companies.  The elaborate procedure involved under the Companies Act for changes in the Memorandum and Articles of Association and the restrictions envisaged in the functioning of the Board of Directors and conducting the meetings of the shareholders have been completely dispensed with.  The procedure envisaged in meeting of partners either periodically or compulsorily at the yearend as stipulated for directors and shareholders’ meeting in the Companies Act are not found in LLP Act LLP Registration Coimbatore.

As regards the provisions of Management and Administration contained in the Companies Act, envisaging appointment of Managing Directors or Whole time Directors, the same is envisaged to be carried out  in the LLP by the ‘Designated Partners’.  Thus there is no divide between management of the company and the ownership as is normally envisaged in a company since the entire partner, unlike all the directors, can take part in the day to day affairs of the LLP LLP Registration Coimbatore.