Question 5 OR (b)

Private company and LLP distinguished

9 marks

Time to write: About 18 minutes
Topic: LLP: nature, features, comparisons, small LLP
Notes: Crux notes

Question

Question 5 OR (b) · 9 marks

Differentiate between Private Company and Limited Liability Partnership.

Reworded from the university paper; the task is the same. The original paper belongs to the University of Delhi. See DU's question bank.

Before you write

Read off the question and its marks

18 minfor 9 marks

Read from the question

Differentiate betweenSet the differences out in a table, basis by basis, not as two separate essays.

Write it in this order

Read; underline the asks; jot your points 1 min
1 Law, owners, internal governance, name 4 marks 8 min
2 Number of members, liability, management 4 marks 7 min
3 Conclusion 1 mark 1 min
Check: every ask answered, key terms underlined 1 min

123

Short on time? Trim steps 1 and 2 evenly rather than skip one: each is capped at its own marks. End with step 3 in a line or two.

Try it first. About 18 minutes for 9 marks. Write it out, then open the solution.

Solution

Hover or tap a marked figure, like 72,000, to see how it is made and where else it appears.

Differences between a limited liability partnership and a company limited by shares, including a private company:

Basis	LLP	Limited liability company
Governing law	LLP Act, 2008	Companies Act, 2013
Owners	Partners, who contribute to the LLP	Members, who invest in its shares
Internal governance	Governed by the agreement between the partners	Regulated by statute (Companies Act, 2013)
Name	Ends with "Limited Liability Partnership" or "LLP"	Ends with "Limited" (public) or "Private Limited" (private)
Number	Minimum 2 partners; no maximum	Private: 2 to 200 members; public: minimum 7, no maximum
Liability	Limited to the agreed contribution, except in wilful fraud	Limited to the amount unpaid on the shares held
Management	By the partners, with designated partners for compliance	By the board of directors elected by the members

Both are bodies corporate with limited liability, but the LLP gives the benefits of limited liability of a company together with the flexibility of a partnership, at low compliance cost.

Where the 9 marks sit

#	Component	Marks
1	Law, owners, internal governance, name	4
2	Number of members, liability, management	4
3	Conclusion	1
	Total	9

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