Very important to Students. Difference among Company, LLP & Firm (Section wise) more than 30 differences

1. Amit Kumar (Amicus Curiae) Jay Mata Di # 9717841557
BASIS COMPANY LLP FIRM
GOVERNING LAW ‘Companies Act, ‘The Limited Liability ‘The Indian Partnership
1956’ Partnership Act, Act, 1932’ and various
2008’ and various Rules made there under.
Rules made there
under.
REGISTRATION Registration with ROC Registration with Registration is optional.
Is compulsory. Registrar of LLP
required.
CREATION Created by Law Created by Law Created by Contract
DISTINCT ENTITY Separate legal entity Separate legal entity Not a separate legal
under the Companies under the Limited entity
Act, 1956. Liability Partnership
Act, 2008.
NAME 'Limited' in case of 'Limited Liability Any name as per choice
Public Company or Partnership' or 'LLP'
'Private Limited' in as suffix.
case of Private (Sec. 15)
Company as suffix.
(Sec. 13)
FORMATION COST Minimum Statutory fee Minimum cost of The Cost of Formation is
for incorporation of Formation of LLP is negligible
Private Company is Rs. 800 only.
Rs.6,000/- and
minimum Statutory fee
for incorporation of
Public Company is Rs.
19,000/-
PERPETUAL It has perpetual It has perpetual It does not have
SUCCESSION succession and succession and perpetual succession as
members may come partners may come this depends upon the
and go.(Sec. 34) and go.(Sec. 3(2)) will of partners
CHARTER Memorandum and LLP Agreement is Partnership Deed is a
DOCUMENT Article of Association a charter of the LLP charter of the firm which
is the charter of the which denotes its denotes its scope of
fee
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2. Amit Kumar (Amicus Curiae) Jay Mata Di # 9717841557
company. scope of operation operation and rights and
and rights and duties of the partners
duties of the
partners vis-à-vis
LLP.
COMMON SEAL Signature of the Signature and LLP There is no concept of
company and every may have its own common seal in
company shall have its common seal, partnership
own common seal. depends upon the
(Sec. 34) terms of the
Agreement(Sec. 14)
FORMALITIES OF Various e-forms along Various e-Forms In case of registration,
INCORPORATION the Memorandum & and the LLP Partnership Deed along
Articles of Association Agreement are filed with form / affidavit
are filled with Registrar with the Registrar of required to be filled with
of Companies with LLP along with the Registrar of firms along
prescribed fees prescribed Fee. with requisite filing fee
TIME PERIOD 10 days (approx.) to 10 days (approx.) to It will take 7 days
REQUIRED incorporate (inclusive incorporate (approx.) to incorporate
of time taken to obtain (inclusive of time
DIN) taken to obtain
DPIN)
LEGAL PROCEEDINGS A company is a legal A LLP is a legal Only registered
entity which can sue entity can sue and partnership can sue third
and be sued be sued (Sec. 14) party
FOREIGN Foreign Nationals can Foreign Nationals Foreign Nationals can
PARTICIPATION be a member in a can be a Partner in not form Partnership Firm
Company.(Sec.41) a LLP.(Sec. 5) in India
NUMBER OF 2 to 50 members in Minimum 2 partners Minimum 2 and
MEMBERS case of Private and there is no Maximum 10/20
Company and 7 to limitation of (as per Companies Act,
infinite members in maximum number of 1956)
case of Public partners.(Sec. 6)
(Sec.11)
Company. (Sec. 12)
OWNERSHIP OF The company The LLP Partners have joint
ASSETS independent of the independent of the ownership of all the
members has partners has assets belonging to
ownership of assets ownership of assets partnership firm
RIGHTS / DUTIES / Rights / Duties / Rights / Duties / Rights / Duties /
OBLIGATION OF THE obligation of the obligation of the obligation of the partners
directors are governed partners are are governed by
PARTNERS / by AOA and resolution governed by LLP Partnership Deed.
MANAGING passed by Agreement.
PARTNERS / shareholders or
DIRECTORS directors.
fee
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3. Amit Kumar (Amicus Curiae) Jay Mata Di # 9717841557
LIABILITY OF Generally limited to Limited, to the Unlimited. Partners are
PARTNERS/ the amount required to extent their severally and jointly liable
be paid up on each contribution towards for actions of other
MEMBERS share. LLP, except in case partners and the firm and
(Sec.12) of intentional fraud liability extend to their
or wrongful act of personal assets.
omission or
commission by the
partner.(Sec. 28)
TAX ABILITY Income is taxed at a Income is taxed at a Income is taxed at a Flat
Flat rate of 30% Plus Flat rate of 30% rate of 30% plus
surcharge as plus education cess education cess as
applicable. (2%+1%) as applicable. applicable. (2%+1%)
(2%+1%)
MINIMUM TAX Minimum Alternate Alternate Minimum Not applicable
Tax @ 18.5% + Tax @18.5% +
Surcharge@ 5% + Cess @3%
Cess @3% i.e. 20% i.e. 19.05%
PRINCIPAL/AGENT The directors act as Partners act as Partners are agents of
RELATIONSHIP agents of the company agents of LLP and the firm and other
and not of the not of the other partners.
members partners.(Sec. 26)
TRANSFER / Ownership is easily Regulations relating Not transferable. In case
INHERITANCE OF transferable. to transfer are of death the legal heir
governed by the receives the financial
RIGHTS LLP value of share.
Agreement.(Sec.
42)
TRANSFER OF SHARE In case of death of In case of death of a In case of death of a
/ PARTNERSHIP member, shares are partner, the legal partner, the legal heirs
transmitted to the legal heirs have the right have the right to get the
RIGHTS IN CASE OF heirs. to get the refund of refund of the capital
DEATH the capital contribution + share in
contribution + share accumulated profits, if
in accumulated any. Legal heirs will not
profits, if any. Legal become partners
heirs will not
become partners
IDENTIFICATION Every director is Every Designated The partners are not
NUMBER OF required to have a Partners is required required to obtain any
Director Identification to have a DPIN identification number
DIRECTORS OR Number before being before being
PARTNERS appointed as Director appointed as
(DIN/DPIN) of any company(Sec. Designated Partner
266A) of LLP.(Sec. 7(6))
fee
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4. Amit Kumar (Amicus Curiae) Jay Mata Di # 9717841557
DIGITAL SIGNATURE As e-forms are filled As e-forms are filled There is no requirement
electronically, at least electronically, at of obtaining Digital
one Director should least one Signature
have Digital Designated Partner
Signatures should have Digital
Signatures.
DISSOLUTION / Voluntary or Voluntary or By agreement, mutual
WINDING-UP Compulsory ( by order Compulsory ( by consent, insolvency,
of National Company order of National certain contingencies,
Law Tribunal) Company Law and by court order.
(Sec. 425) Tribunal)
(Sec.63-65)
TRANSFERABILITY A member can freely A partner can A partner can transfer his
OF INTEREST transfer his interest transfer his interest interest subject to the
(Sec. 82) subject to the LLP Partnership Agreement
Agreement.
(Sec. 42)
ADMISSION AS A person can become A person can be A person can be
PARTNER / MEMBER member by buying admitted as a admitted as a partner as
shares of a partner as per the per the partnership
company.(Sec.41) LLP Agreement Agreement
CESSATION AS A member / A person can cease A person can cease to be
PARTNER / MEMBER shareholder can cease to be a partner as a partner as per the
to be a member by per the LLP agreement
selling his shares. Agreement or in
absence of the
same by giving 30
days prior notice to
the LLP.
MANAGERIAL Directors are Designated Partners No requirement of any
PERSONS FOR DAY appointed to manage are responsible for managerial persons,
the business and other managing the day to partners themselves
TO DAY statutory compliances day business and administer the business
ADMINISTRATION on behalf of the other statutory
AND CONTROLS members.(Sec.269) compliances.
(Sec. 7)
MEETINGS OF Board Meetings and There is no There is no provision in
MEMBERS/ General Meetings are provision in regard regard to holding of any
required to be to holding of any meeting
DIRECTORS/ convened every year. meeting.
PARTNERS (Min- 4 BM and 1 GM)
(Sec.165,166,169,285)
MAINTENANCE OF The proceedings of A LLP by agreement There is no concept of
MINUTES meeting of the board may decide to any minutes
of directors / record the
shareholders are proceedings of
fee
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5. Amit Kumar (Amicus Curiae) Jay Mata Di # 9717841557
required to be meetings of the
recorded in Partners/Designated
minutes.(Sec-193) Partners(Sec. 34)
VOTING RIGHTS Voting rights are Voting rights shall It depends upon the
decided as per the be as decided as partnership Agreement
number of shares held per the terms of LLP
by the members. Agreement.
(Sec. 87)
REMUNERATION OF Company can pay Remuneration to The firm may pay
MANAGERIAL remuneration to its partner will depend remuneration to its
Directors Max.11% of upon LLP partners (limit is not
PERSONS N/P (as per Sec.-198) Agreement (limit is specified)
not specified).
CONTRACTS WITH Restrictions on Board Partners are free to Partners are free to enter
PARTNERS/DIRECTOR regarding some enter into any into any contract.
specified contracts, in contract.
which directors are
interested.(Sec-297)
MAINTENANCE OF Required to maintain Required to Required to maintain
STATUTORY BOOKS books of accounts, maintain books of books of accounts as Tax
statutory registers, accounts. laws
AND RECORDS minutes etc. (Sec.- (Section-34)
49,58A,143,150,151,
152,158,193,209,301
303,307,372A etc...)
ANNUAL FILING Annual Financial Annual Statement of No return is required to
Statement and Annual accounts & be filed with Registrar of
Return are required to Solvency and Firms
be filed with the ROC Annual Return are
every year.(Sec-220, required to be filed
159,160) with Registrar of
LLP every year.
(Sec. 34(2), 35(1))
SHARE Share Certificates are The ownership of The ownership of the
CERTIFICATES proof of ownership of the partners in the partners in the firm is
shares held by the firm is evidenced by evidenced by Partnership
members in the LLP Agreement. Deed, if any.
Company
AUDIT OF ACCOUNTS Companies are All LLP except for Partnership firms are
required to get their those having only required to have tax
accounts audited turnover less than audit of their accounts as
annually. Rs.40 Lacs or Rs.25 per the provisions of the
Lacs contribution in Income Tax Act.
any financial year
are required to get
their accounts
fee
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6. Amit Kumar (Amicus Curiae) Jay Mata Di # 9717841557
audited annually.
(sec. 34(4))
APPLICABILITY OF Companies have to The necessary rules No Accounting Standards
ACCOUNTING mandatorily comply in regard to the are applicable.
with accounting application of
STANDARDS. standards accounting
standards are not
yet issued.
COMPROMISE / Companies can enter LLP’s can enter into Partnership cannot
ARRANGEMENTS / into Compromise / Compromise / merge with other firm or
arrangements / merger arrangements / enter into compromise or
MERGER / / amalgamation. merger / arrangement with
AMALGAMATION (Sec. 390-396A) amalgamation. creditors or partners
(Sec. 60-62)
OPPRESSION AND Provisions providing No provision relating No remedy exist , in case
MISMANAGEMENT for remedy against to redressal in case of oppression of any
Oppression and of oppression and partner or
mismanagement mismanagement. mismanagement of
exists. Partnership.
(Sec. 397-409)
FIDELITY OR Companies enjoy high Enjoy Creditworthiness of firm
CREDIBILITY OF degree of Comparatively depends upon goodwill
creditworthiness. higher and creditworthiness of
ORGANIZATION creditworthiness its partners.
from Partnership
due to Stringent
regulatory
framework but
lesser than a
company.
WHISTLE BLOWING No such provision is Provision has been No such provision is
provided under the made to provide provided under
Companies Act, 1956. protection to Partnership Act, 1932.
employees &
partners, providing
useful information.
(Sec. 31)
fee
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