The Limited Liability Partnership Act, 2008 is an Act of the Indian Parliament that governs the formation, regulation, and winding up of Limited Liability Partnerships (LLPs) in India. It was enacted on January 7, 2009, with most sections becoming operative from March 31, 2009. The Act was created to solve the problem of unlimited liability in traditional partnerships under the Indian Partnership Act, 1932, which made partners personally liable for the firm's debts and the misconduct of other partners. The LLP structure is a hybrid, combining the flexibility of a partnership with the limited liability of a company.
The Act works by establishing the LLP as a body corporate and a separate legal entity distinct from its partners, granting it perpetual succession. A key mechanism is the limitation of a partner's liability to their agreed contribution to the LLP, protecting their personal assets from the LLP's debts. Section 3 of the Act confirms the LLP's separate legal identity, and Section 4 explicitly states that the provisions of the Indian Partnership Act, 1932 do not apply to an LLP. Every LLP must have a minimum of two partners and at least two Designated Partners, one of whom must be a resident of India. The mutual rights and duties of the partners are governed by the LLP Agreement, which allows for a flexible internal management structure.
The LLP Act is administered by the Ministry of Corporate Affairs (MCA) and is closely connected to the Companies Act, 2013, as both govern corporate bodies. The most significant recent change is the Limited Liability Partnership (Amendment) Act, 2021, which came into effect on April 1, 2022. This amendment introduced the concept of a Small LLP, decriminalized several compliance-related offenses by converting them into civil defaults, and reduced the residency requirement for a designated partner from 182 days to 120 days during the financial year. The core features of limited liability and separate legal entity, however, remained the same.