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The presentation is based on advantages of a company over LLP
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STATUTE COMPANY • The Companies Act, 2013 LIMITED LIABILITY PARTNERSHIP (LLP) • Limited Liability Partnership Act, 2008
FEATURES COMPANY • Separate Legal entity • Perpetual Succession • Limited liability on the members till the extent of their contribution LIMITED LIABILITY PARTNERSHIP (LLP) • Separate Legal entity • Perpetual Succession • Limited liability on the partners till the extent of their contribution
MINIMUM CONTRIBUTION COMPANY • The minimum capital in a private company should be at least Rs.1 lakhs and in a public company at least Rs.5 lakhs LIMITED LIABILITY PARTNERSHIP (LLP) • There is no requirement of minimum capital in case of LLP. Also, the contribution of partners need not be necessarily in the form of share capital but may be in the form of tangible, intangible, movable or immovable assets
LIMIT ON NO OF PEOPLE/MEMBERS COMPANY • Minimum – 2 members in case of a private company & 7 members in case of a public company • Maximum – 200 members in case of a private company & no maximum limit in case of a public company LIMITED LIABILITY PARTNERSHIP (LLP) • Minimum – 2 partners. Partners can be an individual or body corporate provided there are at least 2 individual partners to be resident in India • Maximum – No limit
OWNERSHIP MANAGEMENT COMPANY • Division of Ownership and Management since the shareholders do not form a part of the working of the company LIMITED LIABILITY PARTNERSHIP (LLP) • There is not a clear distinction between ownership and management. In LLP, the partners hold ownership and also hold powers to manage the LLP
INTERNAL WORKING COMPANY • The working of a company is majorly governed by the provisions of Companies Act as may be applicable since the statute provides a detailed and complex procedure to be followed in the interest of the shareholders LIMITED LIABILITY PARTNERSHIP (LLP) • The working of the LLP is governed by a contractual agreement between the partners or between the partners and the LLP
EASE OF RASING FUNDS COMPANY • A company is recommended for any investments of Equity funding or Venture Capital Funding due to the high level of transparency and governance LIMITED LIABILITY PARTNERSHIP (LLP) • Equity investors and Venture Capital Funds prefer investments in LLP to a very minimum level due to lack of confidence on account of low level of transparency in working
COMPLIANCES COMPANY • In the interest of the shareholders , the compliances to be ensured by a company are in a very complex nature involving detailed legal procedures LIMITED LIABILITY PARTNERSHIP (LLP) • The compliance requirements for LLP are very minimum since the ownership and management is the same
COST EFFECTIVE COMPANY • The cost involved for an incorporation of a company is very high as well as the maintenance of company due to the legal compliance requirements involved LIMITED LIABILITY PARTNERSHIP (LLP) • LLP is incorporated at a very low cost considering the bare minimum fee structure of registration as well as the minimum compliance requirements, making it cost effective as compared to a company
TRANSFERABILITY COMPANY • The shares of a company are freely transferable except in the case of a private company LIMITED LIABILITY PARTNERSHIP (LLP) • The rights/interest of a partner in the LLP are transferable either in whole or partly as per the agreement between the partners
RECOGNITION COMPANY • A company enjoys a high recognition since it has been in existence in the country for a very long time as compared to LLP LIMITED LIABILITY PARTNERSHIP (LLP) • The rights/interest of a partner in the LLP are transferable either in whole or partly as per the agreement between the partners
MANAGEMENT COMPANY • A company has a very strong Board of Directors for the management of the company which includes independent directors making the working of a company very reliable LIMITED LIABILITY PARTNERSHIP (LLP) • The partners forming the LLP are the ones managing it and it does not involve independent parties in the working
FOREIGN INVESTMENT COMPANY • RBI guidelines/regulations on FDI are more liberal and provide investment opportunities in a company under automatic route LIMITED LIABILITY PARTNERSHIP (LLP) • RBI guidelines/regulations on FDI are stringent for investments in LLPs and provide opportunities under approval route
RAISING FUNDS FROM MEMBERS/PARTNERS COMPANY • A company can raise further capital from its Members through equity as well as debt subject to compliance with provisions of the Act LIMITED LIABILITY PARTNERSHIP (LLP) • A member can lend money or transact other business with the limited liability partnership and enjoys same rights and obligations as available to any other person not being a partner
AUDIT REQUIREMENT COMPANY • All companies, whether public or private, irrespective of their share capital are required to get their accounts audited under Company law LIMITED LIABILITY PARTNERSHIP (LLP) • There is no mandatory requirement of audit for all LLPs. However , a LLP is required to get its accounts audited if the contribution of the LLP exceeds Rs. 25 lakhs or annual turnover exceeds Rs. 40 lakhs
TAXATION BENEFIT COMPANY • A Company is liable to pay dividend distribution tax on distribution of profits to shareholders • A company is liable to pay Minimum Alternate Tax @ 18.5% on its book profits in case tax payable on its book profits are higher than tax payable on its income tax profits LIMITED LIABILITY PARTNERSHIP (LLP) • There is no tax payable on withdrawal of profits by partners of the LLP • A LLP is not liable to pay any such tax. However it is liable to pay Alternate Minimum Tax but only incase certain conditions are satisfied • Interest payments, Salary payments etc to Partners are allowed as a deduction in computing taxable profits.
