While LLP has been a popular form of organization adopted by professionals, particularly lawyers, accountants and architects, internationally, GOI has as late as 2006 recognized the necessity to implement a regulatory framework to establish LLPs in India.
The LLP Bill, 2006 currently pending before the Parliament, if passed, would be a dynamic step towards the establishment, in India, of an alternative corporate business vehicle for multi-disciplinary partnerships incorporating the advantage of members' limited liability coupled with flexibility in the arrangement of their internal organizational structures, based on mutual agreements, and constituting a hybrid between a limited liability company and a partnership firm.
The Bill would incorporate provisions (inter alia) for incorporation of LLPs as body corporate with a separate legal entity, liability of members proportionate to their contributions, liability of the partnership etc.
The Bill may serve to exploit the growth potential of the service sector and afford the much- needed flexibility to small enterprises to participate in joint ventures and agreements, thereby enabling them to access technology and bring together business synergies. Large number of professional partnerships would be provided a platform for a wide range of business activities to garner greater resources and talent, face competition from multinational firms including foreign law firms (their entry is expected within a legal framework which is presently under process) and participate in the process of globalization in a meaningful manner.
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