The Government of India has initiated steps to introduce a new legal entity in India in the form of ‘Limited Liability Partnerships’ or LLPs. This is being done on the recommendations of the Naresh Chandra and Irani Committees. These committees had opined that LLPs would be a suitable vehicle for partnership among professionals who are already regulated by professional bodies. The introduction of this new entity would enable knowledge based enterprises to enter the global market and compete internationally.

Unlike general partnerships which are formed under the Partnership Act, partners of a LLP will be liable only to the extent of their investment and not beyond that. These partnerships will have to be registered with the Registrar of Companies. Under the proposed law, an LLP can be formed by any individual or body corporate resident in India. A minimum of 2 individuals can form an LLP. There is no limit on the maximum number of members.

The Government has introduced a concept paper on the subject and has invited comments from chambers of commerce, business organizations and professional bodies. After reviewing the comments, the Government intends to introduce a Bill in the February session of Parliament.