Sr. No. | Basis of difference | Company | LLP |
1. | Prevailing Law and Creation | Companies are prevailed by Companies Act, 1956′. A company, like LLP, is created by law. | Limited Liability Partnership is prevailed by The Limited Liability Partnership Act, 2009′ and various Rules made there under. Both, Company and LLP, are separate legal entity which can sue and be sued. |
2. | Registration | Company: Registration with Registrar of Companies required. | Registration with Registrar of LLP required. |
3. | Name of Entity
| Name to contain ‘Limited’ in case of Public Company or ‘Private Limited’ in case of Private Company as suffix. | Name to contain ‘Limited Liability Partnership’ or ‘LLP’ as suffix.
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4. | Perpetual Succession
| It has perpetual succession and members may come and go. | LLP: It has perpetual succession and partners may come and go. |
5. | Charter Document | Memorandum and Article of Association is the charter of the company which defines its scope of operation. | LLP Agreement is a charter of the LLP which denotes its scope of operation and rights and duties of the partners vis-à-vis LLP. |
6. | Common Seal | It denotes the signature of the company and every company shall have its own common seal. | It denotes the signature and LLP may have its own common seal, dependant upon the terms of the Agreement. |
7. | Number of Members | 2 to 50 members in case of Private Company and minimum, 7 members in case of Public Company | Minimum 2 partners and there is no limitation of maximum number of partners. |
8. | Ownership of Assets | The company independent of the members has ownership of assets. | The LLP independent of the partners has ownership of assets. |
9. | Rights / Duties / obligation | Rights / Duties / obligation of the directors are governed by Articles of Association and resolution passed by shareholders or directors. | Rights / Duties / obligation of the partners are governed by LLP Agreement. |
10. | Liability of Partners/Members | Generally limited to the amount required to be paid up on each share. | Limited, to the extent their contribution towards LLP. The LLP is not liable for the acts done by the partners outside the scope of their authority and the partners are also not responsible for the wrongful acts of any other partner. Similarly, any obligation of the LLP is the sole obligation of it and not of its partners personally. However, there is unlimited liability of partners and LLP in case of intentional fraud. |
11. | Principal/Agent Relationship | The directors act as agents of the company and not of the members. | Partners act as agents of LLP and not of the other partners. |
12. | Transfer / Inheritance of Rights | Ownership is easily transferable. | Regulations relating to transfer are governed by the LLP Agreement. |
13. | Dissolution | Voluntary or by order of National Company Law Tribunal. | Voluntary or by order of National Company Law Tribunal |
14. | Admission/Cessation as Partner / member | A person can become member by buying shares of a company. Ä member / shareholder cease to be a member by selling his shares. | A person can be admitted as a partner as per the LLP Agreement. A person ceases to be a partner as per the LLP Agreement or in absence of the same by giving 30 days prior notice to the LLP. |
15. | Requirement of Managerial Personnel | Directors are appointed to manage the business and other statutory compliances on behalf of the members. | Designated Partners are responsible for managing the day-to-day business and other statutory compliances. |
16. | Annual Filing | Company: Annual Financial Statement and Annual Return is required to be filed with the Registrar of Companies every year. | Annual Statement of Accounts and Solvency and Annual Return is required to be filed with Registrar of LLP every year. |
17. | Share Certificate | Share Certificates are proof of ownership of shares held by the members in the Company. | The ownership of the partners in the firm is evidenced by LLP Agreement. |
18. | Audit of Accounts | Companies are required to get their accounts audited annually as per the provisions of the Companies Act, 1956 | All LLPs except for those having ‘turnover less than Rs. 40 Lacs’ or Rs. 25 Lacs contribution’ in any financial year are required to get their accounts audited annually as per the provisions of LLP Act, 2009. |
19. | Compromise/ arrangements/ merger/ amalgamation | Companies can enter into compromise / arrangements / merger / amalgamation. | LPs can enter into compromise / arrangements / merger / amalgamation. |
20. | Oppression and Mismanagement | Provisions providing for remedy against oppression and mismanagement exists. | No provision relating to redressal in case of oppression and mismanagement. |
21. | Credit Worthiness of organization | Due to Stringent Compliances and disclosures under various laws, Companies enjoys high degree of creditworthiness. | Lesser than a Company. |
22. | Whistle Blowing | No such provision is provided under the Companies Act, 1956 | Provision has been made to provide protection to employees and partners, providing useful information during an investigation or convicting any partner or LLP. |
23. | Foreign Participation | Foreign Nationals can be a member in a Company. | Foreign Nationals can be a Partner in a LLP. |
