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Category
Prevailing Law
Partnership
Partnership is prevailed by The Indian Partnership Act, 1932 and various Rules made there under
Company
LLP
ompanies are prevailed #imited #iability by ompanies Act, 19!" Partnership are prevailed by The #imited #iability Partnership Act, 2$$% and various Rules made there under Re&istration 'ith Re&istrar o( ompanies re)uired* reated by #a' Is a separate le&al entity under the ompanies Act, 19!"* Re&istration 'ith Re&istrar o( ##P re)uired*
Registration
Re&istration is optional
reated by #a' Is a separate le&al entity under the #imited #iability Partnership Act, 2$$%*
Name of ntity
+ame to contain ,#imited, +ame to contain ,#imited in case o( Public #iability Partnership, or ompany or ,Private ,##P, as su((i-* #imited, in case o( Private ompany as su((i-* /inimum 0tatutory (ee (or incorporation o( Private ompany is Rs*",$$$12 and minimum 0tatutory (ee (or incorporation o( Public ompany is Rs* 19,$$$12 /inimum cost o( .ormation o( ##P is Rs* %$$ only, comparatively much lesser than the cost o( (ormation o( ompany
Cost of Formation
Perpetual !uccession
It does not have It has perpetual It has perpetual perpetual succession as succession and members succession and partners this depends upon the 'ill may come and &o* may come and &o o( partners Partnership 3eed is a charter o( the (irm 'hich denotes its scope o( operation and ri&hts and duties o( the partners /emorandum and Article o( Association is the charter o( the company 'hich de(ines its scope o( operation* ##P A&reement is a charter o( the ##P 'hich denotes its scope o( operation and ri&hts and duties o( the partners vis2 42vis ##P* It denotes the si&nature and ##P may have its o'n common seal, dependant upon the terms o( the A&reement
Charter Document
Common !eal
It denotes the si&nature o( the company and every company shall have its o'n common seal
Formalities of "ncorporation
In case o( re&istration, Partnership 3eed alon& 'ith (orm 1 a((idavit re)uired to be (illed 'ith Re&istrar o( (irms alon& 'ith re)uisite (ilin& (ee It 'ill ta7e 8 days 9appro-*: to incorporate
5arious e(orms alon& the /emorandum 6 Articles o( Association are (illed 'ith Re&istrar o( ompanies 'ith prescribed (ees It 'ill ta7e 1$ days 9appro-*: to incorporate 9inclusive o( time ta7en to obtain 3I+: A company is a le&al entity 'hich can sue and be sued
5arious e.orms and the ##P A&reement are (iled 'ith the Re&istrar o( ##P alon& 'ith the prescribed .ee*
#ime line
It 'ill ta7e 1$ days 9appro-*: to incorporate 9inclusive o( time ta7en to obtain 3P+: A ##P is a le&al entity can sue and be sued
Legal Proceedings
Foreign Participation
.orei&n +ationals can not .orei&n +ationals can be .orei&n +ationals can be (orm Partnership .irm in a member in a ompany* a Partner in a ##P* India /inimum 2 and /a-imum 2 to !$ members in case 2$ o( Private ompany and /inimum 8 members in case o( Public ompany* Partners have <oint o'nership o( all the assets belon&in& to partnership (irm Ri&hts 1 3uties 1 obli&ation o( the partners are &overned by Partnership 3eed* The company independent o( the members has o'nership o( assets Ri&hts 1 3uties 1 obli&ation o( the directors are &overned by A;A and resolution passed by shareholders or directors* /inimum 2 partners and their is no limitation o( ma-imum number o( partners* The ##P independent o( the partners has o'nership o( assets
Number of $embers
%wnership of &ssets
Rights ' Duties ' obligation of the Partners ' $anaging Partners ' Directors
Liability of Partners'$embers
=nlimited* Partners are >enerally limited to the severally and <ointly liable amount re)uired to be (or actions o( other paid up on each share* partners and the (irm and liability e-tend to their personal assets*
#imited, to the e-tent their contribution to'ards ##P, e-cept in case o( intentional (raud or 'ron&(ul act o( omission or commission by the partner* Income o( ##P is ta-ed at a .lat rate o( 3$? plus education cess as applicable* Partners act as a&ents o( ##P and not o( the other partners* Re&ulations relatin& to trans(er are &overned by the ##P A&reement *
#ax Liability
Income o( Partnership is ta-ed at a .lat rate o( 3$? plus education cess as applicable* Partners are a&ents o( the (irm and other partners*
Income o( ompany is Ta-ed at a .lat rate o( 3$? Plus surchar&e as applicable* The directors act as a&ents o( the company and not o( the members ;'nership is easily trans(erable*
Principal'&gent Relationship
#ransfer ' "nheritance of +ot trans(erable* In case Rights o( death the le&al heir receives the (inancial value o( share* #ransfer of !hare ' In case o( death o( a
In case o( death o(
In case o( death o( a
partner, the le&al heirs have the ri&ht to &et the re(und o( the capital contribution @ share in accumulated pro(its, i( any* #e&al heirs 'ill not become partners The partners are not re)uired to obtain any identi(ication number
partner, the le&al heirs have the ri&ht to &et the re(und o( the capital contribution @ share in accumulated pro(its, i( any* #e&al heirs 'ill not become partners Aach 3esi&nated Partners is re)uired to have a 3I+ be(ore bein& appointed as 3esi&nated Partner o( ##P*
Aach director is re)uired to have a 3irector Identi(ication +umber be(ore bein& appointed as 3irector o( any company* As e(orms are (illed electronically, atleast one 3irector should have 3i&ital 0i&natures
Digital !ignature
As e(orms are (illed electronically, atleast one 3esi&nated Partner should have 3i&ital 0i&natures* 5oluntary or by order o( +ational ompany #a' Tribunal*
Dissolution
#ransferability of "nterest
A partner can trans(er his A member can (reely interest sub<ect to the trans(er his interest Partnership A&reement
A person can be admitted A person can become A person can be admitted as a partner as per the member by buyin& shares as a partner as per the partnership A&reement o( a company* ##P A&reement A person can cease to be A member 1 shareholder a partner as per the can cease to be a a&reement member by sellin& his shares* A person can cease to be a partner as per the ##P A&reement or in absence o( the same by &ivin& 3$ days prior notice to the ##P* 3esi&nated Partners are responsible (or mana&in& the day to day business and other statutory compliances* There is no provision in re&ard to holdin& o( any meetin&*
3irectors are appointed to mana&e the business and other statutory compliances on behal( o( the members* Board /eetin&s and >eneral /eetin&s are re)uired to conducted at appropriate time* The proceedin&s o( meetin& o( the board o( directors 1 shareholders are re)uired to be recorded in minutes*
!tatutory $eetings
A ##P by a&reement may decide to record the proceedin&s o( meetin&s o( the Partners13esi&nated Partners 5otin& ri&hts shall be as
+oting Rights
partnership A&reement
as per the number o( shares held by the members* ompany can pay remuneration to its 3irectors sub<ect to la'*
Remuneration of $anagerial Personnel for day to day administration Contracts with Partners'Director
Restrictions on Board re&ardin& some speci(ied contracts, in 'hich directors are interested*
Re)uired to maintain Re)uired to maintain boo7s o( accounts as Ta- boo7s o( accounts, la's statutory re&isters, minutes etc* +o return is re)uired to be (iled 'ith Re&istrar o( .irms Annual .inancial 0tatement and Annual Return is re)uired to be (iled 'ith the Re&istrar o( ompanies every year* 0hare erti(icates are proo( o( o'nership o( shares held by the members in the ompany
&nnual Filing
Annual 0tatement o( accounts and 0olvency 6 Annual Return is re)uired to be (iled 'ith Re&istrar o( ##P every year* The o'nership o( the partners in the (irm is evidenced by ##P A&reement* All ##P e-cept (or those havin& turnover less than Rs*D$ #acs or Rs*2! #acs contribution in any (inancial year are re)uired to &et their accounts audited annually as per the provisions o( ##P Act 2$$%* The necessary rules in re&ard to the application o( accountin& standards are not yet issued*
!hare Certificate
The o'nership o( the partners in the (irm is evidenced by Partnership 3eed, i( any*
&udit of accounts
Partnership (irms are only ompanies are re)uired re)uired to have ta- audit to &et their accounts o( their accounts as per audited annually as per the provisions o( the the provisions o( the Income Ta- Act ompanies Act, 19!",
+o Accountin& 0tandards ompanies have to are applicable mandatorily comply 'ith accountin& standards
Compromise ' Partnership cannot mer&e ompanies can enter into ##Ps can enter into arrangements ' merger ' 'ith other (irm or enter ompromise 1 ompromise 1 amalgamation into compromise or arran&ements 1 mer&er 1 arran&ements 1 mer&er 1 arran&ement 'ith amal&amation amal&amation creditors or partners %ppression and mismanagement +o remedy e-ist , in case o( oppression o( any partner or mismana&ement o( Partnership redit'orthiness o( (irm depends upon &ood'ill and credit'orthiness o( Provisions providin& (or remedy a&ainst ;ppression and mismana&ement e-ists +o provision relatin& to redressal in case o( oppression and mismana&ement
3ue to 0trin&ent Eill en<oy omparatively ompliances 6 hi&her credit'orthiness disclosures under various (rom Partnership due to
its partners
la's, ompanies en<oys hi&h de&ree o( credit'orthiness* +o such provision is provided under the ompanies Act, 19!"*
0trin&ent re&ulatory (rame'or7 but lesser than a company* Provision has been made to provide protection to employees 6 partners, providin& use(ul in(ormation durin& an investi&ation or convictin& any partner or (irm*
-histle Blowing