1. CAN TWO PARTNERSHIPS FORM AN LLP?

2. THE LIMITED LIABILITY PARTNERSHIP:
 Two partnerships cannot form an LLP (Limited Liability Partnerships). LLP is a hybrid
structure with a combination of a partnership and a company.
 LLP removes defects of unlimited liability and rigidity of provisions in Company Law. It
ensures separation of ownership, thus liability is limited to the firm, and thus doesn’t
extend to partners.
 Limited liability partnership is one comprised of licensed professionals such as
attorneys, accountants and architect.The partners in an LLP may enjoy personal liability
protection for the acts of other partners but each partner remains liable for his own actions.

3. PARTNERS IN LLP:
 A partner cannot bind other partners.
 Who can be a partner? A company, LLP, foreign LLP and foreign company can be partner
of LLP [However, there would be difficulties in repatriation of profits or capital, unless FEMA
provisions are amended].
 A minimum of two partners, no upper limit.
 No restriction on partnerships- a person can become a partner in any number of LLPs.
 Designated partners- Minimum two partners should be nominated as ‘designated partners’
to fulfill statutory obligations under LLP Act. Other partners will not be normally held
liable, except in case of fraud.

4. GENERAL COMMENTS ON LLP AGREEMENT
 Careful drafting of agreement- there cannot be a standard LLP
agreement which fits all types of LLPs. Thus it has to be unique. For
example, some LLPs may be in the form of family partnerships, while
some may be in the form of joint ventures (JVs).
 The agreement should be as flexible as possible. Higher the rigidity of
the agreement, higher the degree of operational problems.
Requirements of all parties should be kept in mind.

5.  Types of Partners- As per the Indian Partnership Act, partners
are mutual agents in a firm. However under the LLP Act, the
authority of partners can be limited by way of an LLP
agreement.
 Veto Power- the agreement may make provisions for veto
power for one or more partners. Can be useful if you as a
partner of a LLP intend to take control of decision making.

6.  Executive/Managing Committee- in the case of large number of partners, it would be
advisable to form a committee of senior partners to handle management.
 Number of partners- The legal minimum is 2 partners to execute a LLP agreement.
However, if a large number of partners exist, it would be advisable to incorporate the
company with 2 partners and add more partners post incorporation.
 Draft LLP agreement to suit form 3- Columns 7 to 20 of Form 3 are in respect of
information with regard to LLP agreement. It is highly advisable to draft LLP Agreement
in same sequence as far as possible, so that filling form 3 and its checking by ROC will
be easy.