(B) DISTINCTIONS
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S.N
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Feature
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Partnership Firm
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Limited Liability Partnership (LLP)
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1
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Statute
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Governed by Indian Partnership Act ,1932
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Governed by Limited
Liability Partnership Act ,2008.
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2
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Administration
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Regulated and administered by Registrar of Firms
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Regulated and administered by Registrar of Companies
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3
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Body corporate
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Firm is not a body corporate
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LLP is considered as a body corporate
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4
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Personal liability of partners
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Unlimited personal liability of each partner exists for dues of the partnership firm. Personal property of each partner is also liable
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There is no personal liability of partner, except in case of fraud.
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5
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Agreement
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Written agreement is not essential
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Incorporation document is mandatory
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6
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Execution of agreement
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Partnership deed/ agreement has to be executed . However, verbal agreement is also valid
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Incorporation document is required to be executed in addition to LLP agreement
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7
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Registration
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Partnership can be registered under the Indian Partnership Act 1932. However, registration is not mandatory.
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LLP in incorporated under the LLP Act 2008. Incorporation of LLP is mandatory
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8
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Legal entity
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Firm is not a legal entity separate and distinct from its partners
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LLP is a legal entity separate from its partners, having perpetual succession
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9
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Ownership of property
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Shares and property cannot be held or registered in name of partnership firm
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Shares and property can be held in name of LLP.
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10
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Documents to be filed at
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For registered firms, documents are required to be filed with Registrar of Firms (of concerned state)
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Office of Registrar of Companies is the administrating authority for LLPs
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11
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Number of partners
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A firm should have minimum two partners and maximum twenty partners (ten in case of banking business)
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LLP should have a minimum two partners. There is no limit on maximum number of partners
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12
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Participation of partners
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Each partner may take active part in business of firm
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All or any partner can take part in business of firm but LLP agreement can also provide otherwise.
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13
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Managing / Partner designated
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Partners may be designated as managing partner
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LLP should necessarily have at least two designated partners responsible for compliance of provisions of LLP Act and face penal consequences
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14
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Liability for compliance
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All partners are liable for statutory compliance under the Partnership Act, unless the deed stipulates otherwise
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Only designated partners are liable for statutory compliances required under the LLP Act .All partners may be liable under any other Act.
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15
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Business / Loan with firm
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Partner of a firm cannot enter into business with firm, though he can give loan to firm.
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Partner of LLP can enter into business with LLP. He can also give loans to LLP as both are separate entities
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16
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Partners as agent
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Every partner of firm acts as an agent of firm and also of other partners. He binds partnership firm as well as other partners by his acts.
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Every partner of LLP is considered as an agent of LLP but not of other partners. LLP partners can bind LLP by his acts but not other partners. However, LLP agreement can restrict powers of individual partners.
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17
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Foreign firms / LLPs
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There is no concept like foreign partnership firms
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LLPs can be incorporated as foreign LLPs registered outside India having a place of business in India.
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18
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Filing of accounts etc.
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Filing of accounts, statement of solvency and annual return are not required under Partnership Act.
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Filing of accounts, statement of solvency and annual return are required to be filed with office of Registrar of Companies
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19
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Resignation
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Partnership can be at will ,i.e,. any partner can resign or exit from the firm which may lead to dissolution
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Individual partners can resign but cannot dissolve the LLP
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20
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Conversion
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A firm can be converted into LLP or a company
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A LLP may be converted into a company but not as a firm
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21
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Retirement of partners
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Public notice is required for retirement of a partner
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Filing of return of retirement of partner with ROC is required, but there is no provision for public notice of retirement of partner.
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22
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Dissolution / winding up
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Partnership firm can be dissolved by mutual consent
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LLP can be wound up under the law
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23
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Death of partner
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Death of partner dissolves partnership, unless there is stipulation to the contrary
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Death of partner does not dissolve a LLP and it continues till wound up.
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24
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Compromise etc.
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There is no specific provision to enter into compromise, arrangement, amalgamation, reconstruction, etc. This can be done only under civil laws.
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LLP can enter into compromise, arrangement, amalgamation and reconstruction as provided in LLP Act
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25
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Role of Tribunal in compromise etc
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There is no provision for any Tribunal in case of compromise, arrangement, winding up etc.
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Special provisions exist in relation to winding up, compromise, arrangement etc to be regulated by Tribunal/ court.
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26
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Minor as partner
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A minor can be admitted to benefit of partnership though his guardian
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There is no specific provision to admit minor to benefit of partnership or as member of LLP.
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27
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Taxations
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Income of partnership is taxed which is not taxed again in hands of partners
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Taxation of LLP’s is not specified .
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28
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Common seal
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A firm is not required to have its common seal
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LLP require.
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Thanks for the update...
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