preview

Advantages And Disadvantages Of Llp

Decent Essays
LLP is combination of limited liability Company (private ltd. company) and partnership firm and it has advantage of both of these. Due to its flexible nature LLP is preferred by small, medium business organization, service sectors and professional. It is one of the easiest business structure to manage and incorporate in long run.
In 2008 LLP was introduced to invite foreign or angel investors to invest in Indian companies and make partnership. In 2011 Government issued a noticed through which FDI in LLPs was granted but RBI did not recognize it, later in 2014 RBI gave permission for FDI in LLPs under government approval route. On 16th April 2014 RBI clarified through a circular that only in specific sector FDI was allowed. In 2015 an amendment
…show more content…
 Earlier corporate body who is partner in the LLP can be appointed as a designated partner if it is incorporated under Indian Company Act. Now this requirement is removed. Another requirement of “residency test under Foreign Exchange Management (section 7 of LLP act 2008)” is removed.
 The explicit prohibition of External Commercial Borrowing by LLP is removed but at the same time permission is not granted. Permission depends on the framework of External Commercial Borrowing.
 LLPs have to submit the report of foreign assets and liability every year
There was huge confusion and ambiguity between foreign direct investment and Indian regulations issued by RBI before 2017 amendment. Indian Govt. is looking for delivering an easy doing environment for business and 2017 amendment helps limited liability partnership by giving advantage of flexible in managing business and company status to a limited liability partnership. Current direct dividend tax is 20.36%, but LLPs don’t have to pay direct dividend tax while distributing profit. Due to relaxation, now, non-resident Indians and foreign nationals can choose to incorporate LLP if capital of the business will not excide twenty-five lakhs or turn over will not excide forty lakhs and also, they don’t have to appoint an auditor or conduct a board meeting. These advantages definitely make LLP as easy corporate way for business group in abroad who wants to do business in
Get Access