Peace of mind is on everybody’s lips in Coimbatore, nestled on the foothills of the Western Ghats in Tamil Nadu. Entrepreneurs, especially, love it. “In Coimbatore, entrepreneurship is celebrated because people here have traditionally been entrepreneurs. Coimbatore is a major business hub.
Coimbatore is a city in southern India, a major commercial and business hub in the state of Tamil Nadu. It is the highest revenue yielding district in the state even ahead of Chennai, thus making it one of the fastest-growing metro cities in India. It has trade associations like CODISSIA, COINDIA and COJEWEL representing industries in the city. It has emerged as one of the most trusted outsourcing destinations for the auto component industry. Several factors have contributed to this growth, including ready availability of resources and skilled technical talent.
A limited liability partnership (LLP) is a partnership in which some or all partners have limited liabilities. It therefore can exhibit elements of partnerships and corporations. In an LLP, each partner is not responsible or liable for another partner’s misconduct or negligence.
- In India, for all purposes of taxation (service tax or any other stipulated tax payment), an LLP is treated like any other Partnership firm.
- Liability is limited to each partners agreed upon contribution to the LLP.
- No partner is liable on account of the independent or unauthorized actions of other partners, thus allowing individual partners to be shielded from joint liability created by another partner’s wrongful business decisions or misconduct.
- An LLP shall be a body corporate and a legal entity separate from its partners. It will have perpetual succession. 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 cannot exceed 20.
- The LLP Act has a mandatory requirement that one of the partners in the LLP must be an Indian.
- Provisions have been made for corporate actions like mergers and acquisitions.
- While enabling provisions in respect of winding up and dissolutions of LLPs have been made, detailed provisions in this regard would be provided by way of rules under the Act.
- The Act also provides rules for Limited Partnerships.
- The Registrar of Companies (RoC) shall register and control LLPs too.
- It is more flexible to organize the internal structure of LLP. Comparatively, it is complex to organize the internal structure of a company.
- There is no maximum limit for the number of partners in LLP. In the private limited company, shareholders are limited to the extent of 200 shareholders.
- Raising and utilization of funds depends on the partners will. Funds can be bought and utilized only as per the norms listed under the Companies Act, 2013.
- LLP is exempt from Dividend Distribution Tax (DDT). In contrast, a company has to pay DDT on dividend distribution.
- Professionals like Chartered accountant, Cost Accountant(CMA), Advocates, engineers, and doctors may prefer to register as LLPs.
- No requirement of compulsory audit: All the companies, whether private or public, irrespective of their share capital, are required to get their accounts audited. But in case of LLP, there is no such mandatory requirement.
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