limited liability partnership

Limited Liability Partnership-Is it quasi-partnership, quasi-corporation or sui generis?

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Limited Liability Partnership basically means a kind of business entity which have the benefits of a limited liability corporation also, it have the flexibility and the less complicated internal structure of a partnership.

Due to this distinct nature of LLP, it is neither governed under the Companies Act, 2013 nor governed under Partnership Act, 1932. It is governed under a separate act known as Limited Liability Partnership Act.


The idea of LLP in India can be traced back to a suggestion to Law Commission of India in 1957. This suggestion was not accepted by Commission due to various problems with LLPs that might render the sections of the Companies Act, 1956 more strict.

After that, a report of Naresh Chandra Committee came in the year 2003 that suggested a need to introduce LLPs in service industry. Then, the same opinion was followed in the report of J.J. Irani Committee in 2005.

After that, Ministry of Corporate Affairs introduced concept paper in order to gather the public opinion on the idea on LLPs. This all led to introduction of Limited Liability Partnership Bill, 2006 and finally the present act in the year 2008.


In partnership firm, every partner is liable along with all the other partners. Also, the partner is individually liable for all the acts of the firm. The partners are also liable for the acts of the other partners in the course of partnership firm.

Similarly, if we see the structure of a LLP then the liability of the partners are limited to their agreed contribution. No partner is liable for the independent or any unauthorized acts of other partners. So, the individual partners are protected from the joint liability of wrongful act of another partner.

But LLP is called quasi partnership because it has some differences from the partnership structure. One of the differences is in the administrative provisions of the Partnership Act and LLP Act.

All the filings and registration process and the rules regarding the enforcement of Act vary from state to state. On the other hand, the rules regarding enforcement of LLP Act are governed by various ruled enforced by Central Government.

limited liability partnership


Limited Liability Partnership is also termed as quasi corporation because it has some of the features of the corporation and some features are distinct.

The main difference between LLP and private limited company is that the internal structure of governance of company must be regulated by Companies Act, 1956. On the other hand, LLP is a contractual agreement between the partners and known as the LLP Agreement.

The process of formation and incorporation of an LLP is less complicated and also less expensive in comparison to a corporation.

Under Companies Act, 1956 and its adjoining rules, a limited liability company is required to consider balance sheet, profit and loss account, hold meetings, director’s report and auditor’s report.

It also has to make declaration with regard to dividend and appoint auditors. On the other hand, annual compliance in case of LLP consists of presentation of statement of account and solvency along with annual report.


Sui generis in a literal sense is a Latin word which means a class of its own kind. Some experts term the LLP as a class of its own and sui generis in nature. The reason for the same is given that it is a unique business vehicle to address the vacuum between partnership and company law. So, LLP is seen as a marriage of principles of company law and partnership law in order to address the deficiencies in both the areas for small scale business and professional firms.

Thus, distinct features of LLP are combination of both company law and partnership law so that a distinct vehicle to bridge gap between both. LLP is a body corporate incorporated under Act and therefore it has separate legal entity together with all characteristics of separate legal personality of a company, which are, perpetual succession, capacity to sue and being sued, capacity to own and deal with property, both movable and immovable property and a common seal.

Ass it is a separate legal entity, so the existence of rights or liabilities of LLP are not affected by a change in partners. Therefore, partners are agents of LLP and not of each other and hence, are not in general liable for its debts and obligations.

Also, LLP is not a partnership, so there is no implied duty of good faith between members of the partnership. The relationship of the members with the LLP is of a fiduciary nature. The Act also provides for residuary provision which confers upon LLP power of “doing and suffering such other acts and things as bodies corporate may lawfully do and suffer.”

So, LLP also has some distinct features of its own and can be seen as having a sui generis nature. There are different ideologies regarding the LLP as quasi partnership, quasi corporation and of sui generis nature.


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