What Is Common In LLP And A Private Limited Company

Posted on 29th, May 18

Limited Liability

Limited liability is a form of legal protection for share possessors and owners which prevents individuals from being held personally responsible for their company’s debts or financial losses. Both LLP and Private Limited Companies have limited liability. Liability of partners of an LLP is limited to the extent of the agreed capital contribution in the LLP. Also, Liability of investors of a private limited company is limited to the extent of investments or shares held.

At a private limited company the potential loss cannot be beyond the investment. And the investor won’t be liable for any liability beyond this investment. Similarly, in an LLP, the liability of an individual will be to the amount he has invested in the LLP and nothing more. However, the LLP will be liable to the full extent of its assets.

Body Corporate

LLP and Private Limited companies are body corporate and a legal entity separate from their partners and share investors. LLP which is similar to a private Limited company, is able to enter contracts and holding property in its own name.

Perpetual Succession

An LLP has perpetual succession which means that it can continue its existence irrespective of changes in partners. Partners may change but the LLP continues to be in existence. The same happens in the case for a private limited company. The investors or shareholders have the option to transfer their shares to another individual and exit the business anytime they need. However, the company still continues to be in existence whatever happens between the share possessors.

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