Similarities of an Limited liability Partnership and a Private Limited Company

Limited Liability

Both LLP and a Private Limited Companies have limited liability. Liability of partners of an LLP is limited to the extent of the agreed capital contribution in the LLP. Similarly, Liability of shareholders of a private limited company is limited to the extent of shares held.

For example, if Sam invested Rs 100,000 to start a private limited company. Sam’s liability is the investment of Rs 100,000. In other words, the potential loss cannot be beyond Rs 100,000. Sam won’t be liable for any liability beyond this Rs 100,000.

Similarly, in an LLP, the liability of Sam will be to the amount he has invested in the LLP and nothing more. However, the LLP will be liable to the full extent of its assets

Body Corporate
LLP and Private Limited companies are body corporate and a legal entity separate from its partners and shareholders. LLP, similar to a private Limited company, is capable of entering into contracts and holding property in its own name.

Perpetual Succession

It has perpetual succession. Which means the LLP can continue its existence irrespective of changes in partners. Partners may come and go but the LLP continues to be in existence.
The same is the case for a private limited company, shareholders have the option to transfer their shares to another person and exit. However the company still continues to be in existence.

Leave a Reply

Your email address will not be published. Required fields are marked *