The document discusses the key differences between a partnership firm and a Limited Liability Partnership (LLP) under Indian law. It notes that an LLP provides benefits of limited liability for partners along with flexibility of a partnership in terms of governance structure. However, concerns are raised about the government potentially subjecting LLPs engaged in large businesses to taxes like dividend distribution tax in the future. The document also examines whether chartered accountants are allowed to form LLPs or convert existing partnerships to LLPs under relevant regulations.

1. LLP FORM OF CA PRACTICE THE CHARTERED ACCOUNTANTS DAY CELEBRATIONS The Institute of Chartered Accountants of India

10. Pros & Cons of LLP vis-à-vis Partnership Firm Category Partnership LLP Prevailing Law Partnership is prevailed by ‘The Indian Partnership Act, 1932’ and various Rules made there under Limited Liability Partnership are prevailed by ‘The Limited Liability Partnership Act, 2008’ and various Rules made there under Registration Registration is optional Registration with Registrar of LLP required. Creation Created by Contract Created by Law Distinct entity Not a separate legal entity Is a separate legal entity under the Limited Liability Partnership Act, 2008. Name of Entity Any name as per choice Name to contain 'Limited Liability Partnership' or 'LLP' as suffix. Cost of Formation The Cost of Formation is negligible Minimum cost of Formation of LLP is Rs. 800 only, comparatively much lesser than the cost of formation of Company Perpetual Succession It does not have perpetual succession as this depends upon the will of partners It has perpetual succession and partners may come and go Charter Document Partnership Deed is a charter of the firm which denotes its scope of operation and rights and duties of the partners LLP Agreement is a charter of the LLP which denotes its scope of operation and rights and duties of the partners vis-à-vis LLP. Common Seal There is no concept of common seal in partnership It denotes the signature and LLP may have its own common seal, dependant upon the terms of the Agreement Formalities of Incorporation In case of registration, Partnership Deed along with form / affidavit required to be filled with Registrar of firms along with requisite filing fee Various eForms and the LLP Agreement are filed with the Registrar of LLP along with the prescribed Fee. Time line It will take 7 days (approx.) to incorporate It will take 10 days (approx.) to incorporate (inclusive of time taken to obtain DPIN) Legal Proceedings Only registered partnership can sue third party A LLP is a legal entity can sue and be sued Category Partnership LLP Prevailing Law The Indian Partnership Act, 1932 LLP Act, 2008 Registration Optional Compulsory Creation Created by Contract Created by Law Distinct entity Not a separate legal entity Is a separate legal entity Perpetual Succession No perpetual succession as this depends upon the will of partners Has perpetual succession & partners may come & go Charter Document Partnership Deed LLP Agreement Common Seal No concept of common seal It denotes the signature & LLP may have its own common seal

11. Pros & Cons of LLP vis-à-vis Partnership Firm Category Partnership LLP Prevailing Law Partnership is prevailed by ‘The Indian Partnership Act, 1932’ and various Rules made there under Limited Liability Partnership are prevailed by ‘The Limited Liability Partnership Act, 2008’ and various Rules made there under Registration Registration is optional Registration with Registrar of LLP required. Creation Created by Contract Created by Law Distinct entity Not a separate legal entity Is a separate legal entity under the Limited Liability Partnership Act, 2008. Name of Entity Any name as per choice Name to contain 'Limited Liability Partnership' or 'LLP' as suffix. Cost of Formation The Cost of Formation is negligible Minimum cost of Formation of LLP is Rs. 800 only, comparatively much lesser than the cost of formation of Company Perpetual Succession It does not have perpetual succession as this depends upon the will of partners It has perpetual succession and partners may come and go Charter Document Partnership Deed is a charter of the firm which denotes its scope of operation and rights and duties of the partners LLP Agreement is a charter of the LLP which denotes its scope of operation and rights and duties of the partners vis-à-vis LLP. Common Seal There is no concept of common seal in partnership It denotes the signature and LLP may have its own common seal, dependant upon the terms of the Agreement Formalities of Incorporation In case of registration, Partnership Deed along with form / affidavit required to be filled with Registrar of firms along with requisite filing fee Various eForms and the LLP Agreement are filed with the Registrar of LLP along with the prescribed Fee. Time line It will take 7 days (approx.) to incorporate It will take 10 days (approx.) to incorporate (inclusive of time taken to obtain DPIN) Legal Proceedings Only registered partnership can sue third party A LLP is a legal entity can sue and be sued Category Partnership LLP Legal Proceedings Only registered partnership can sue third party Is a legal entity & can sue & be sued Number of Members Minimum 2 and Maximum 20 Minimum 2 partners & their is no maximum limit Ownership of Assets Partners have joint ownership of all the assets belonging to partnership firm The LLP has ownership of assets Personnel for compliance with Act It depends upon the partnership Agreement DPs are to be appointed & are responsible for compliance with LLP Act

12. Pros & Cons of LLP vis-à-vis Partnership Firm Category Partnership LLP Prevailing Law Partnership is prevailed by ‘The Indian Partnership Act, 1932’ and various Rules made there under Limited Liability Partnership are prevailed by ‘The Limited Liability Partnership Act, 2008’ and various Rules made there under Registration Registration is optional Registration with Registrar of LLP required. Creation Created by Contract Created by Law Distinct entity Not a separate legal entity Is a separate legal entity under the Limited Liability Partnership Act, 2008. Name of Entity Any name as per choice Name to contain 'Limited Liability Partnership' or 'LLP' as suffix. Cost of Formation The Cost of Formation is negligible Minimum cost of Formation of LLP is Rs. 800 only, comparatively much lesser than the cost of formation of Company Perpetual Succession It does not have perpetual succession as this depends upon the will of partners It has perpetual succession and partners may come and go Charter Document Partnership Deed is a charter of the firm which denotes its scope of operation and rights and duties of the partners LLP Agreement is a charter of the LLP which denotes its scope of operation and rights and duties of the partners vis-à-vis LLP. Common Seal There is no concept of common seal in partnership It denotes the signature and LLP may have its own common seal, dependant upon the terms of the Agreement Formalities of Incorporation In case of registration, Partnership Deed along with form / affidavit required to be filled with Registrar of firms along with requisite filing fee Various eForms and the LLP Agreement are filed with the Registrar of LLP along with the prescribed Fee. Time line It will take 7 days (approx.) to incorporate It will take 10 days (approx.) to incorporate (inclusive of time taken to obtain DPIN) Legal Proceedings Only registered partnership can sue third party A LLP is a legal entity can sue and be sued Category Partnership LLP Liability of Partners Unlimited. Partners are severally & jointly liable for actions of other partners & the firm. Liability extend to their personal assets Limited to the extent their contribution towards LLP except in case of intentional fraud or wrongful act of omission or commission by the partner Principal / Agent Relationship Partners are agents of the firm & other partners Partners act as agents of LLP & not of other partners Transfer/Inheritance of Rights Not transferable. In case of death the legal heir receives the financial value of share Regulations relating to transfer are governed by the LLP Agreement Transfer of Share / Partnership rights in case of death Same as LLP On death of a partner, the legal heirs have right to get refund of capital contribution + share in accumulated profits, if any. Legal heirs will not become partners