Company under Companies Act

Limited Liability Partnership

Distinctions

1.

Companies are prevailed by the Companies Act, 2013 and Rules made thereunder

Limited Liability Partnership is prevailed by the Limited Liability Partnership Act, 2008 and Rules made thereunder.

2.

Memorandum is to be filed with ROC

Incorporation Document is required to be filed

3.

Memorandum should contain State in which incorporated.

Incorporation Document is not required to contain State in which incorporated. Thus, registered office can be changed to any place in India just by informing ROC, subject to prescribed conditions.

4.

Name to contain ‘Limited’ incase of Public Limited Company or ‘Private Limited’ incase of Private Limited Company at the end.

Name to contain ‘Limited Liability Partnership’ or LLP at the end.

5.

The Cost of formation of a Private Company depends on Authorised Capital of the Company. There is no ROC Fees for Private Companies having Authorised capital upto 15,00,000.

Minimum ROC fees for formation of LLP is Rs. 500.

6.

Articles are to be filed at the time of incorporation. Private company must have Articles. In case of Public company, provisions of Table A apply if there are no articles.

LLP Agreement is required to be filed later. In absence of LLP agreement, mutual rights and duties will be as specified in First Schedule to LLP Act. Thus, practically, each LLP must have LLP Agreement, though not mandatory

7.

Managing Director and Whole time director to look after day to day administration. There are restrictions on remuneration payable to MD/WTD.

Designated partner to look after statutory compliances. Otherwise all partners can look into affairs of the LLP. However, LLP can delegate powers to some partners who may be designated as ‘Managing Partner’ or ‘Executive Partner’ or any other name.

8.

Individual Director or member does not have authority in conduct of business of company.

Every partner has authority to conduct business of LLP, unless the LLP Agreement provides contrary

9.

Restriction on remuneration to director as per Companies Act.

No restriction on remuneration to partner. It should be provided in LLP Agreement.

10.

The number of members incase of Private Company is 2 and maximum 50 and incase of Public Limited Company minimum 7 and there is no limitation on the maximum number of members.

Minimum 2 partners and there is no limitation of the maximum number of partners.

11.

Financial Statements and Annual Return is required to be filed .

Filing of accounts, statement of solvency and annual return not required.

12.

Liability of Members is limited to the amount required to be paid up on each share.

Liability of Partners is limited to the extent of their contribution towards LLP, except incase of international fraud or wrongful act of omission or commission by the partner.

13.

Income tax is taxed at a flat rate of 30% plus surcharge as applicable.

Income tax is charged at a flat rate of 30% plus education cess as applicable.

14.

The directors act as agents of the company and not of the members.

Partners act as agents of LLP and not of the other partners.

15.

Ownership is easily transferable in case of transfer of shares.

Regulations relating to transfer are governed by the LLP Agreement.

16.

In case of death of a member, shares are transmitted to the legal heirs.

In case of a death of a partner, the legal heirs have the right to get the refund of the capital contribution plus share in accumulated profits, if any. Legal heirs will not become the partner.

17.

Each director is required to have a Director Identification Number before being appointed as the Director of the Company.

Each Designated Partner is required to have a Designated Partner Identification Number before being appointed as a Designated Partner.

18.

A person can become member of the Company by buying shares of the Company.

A person can be admitted as a Designated Partner as per LLP Agreement

19.

Holding of Board meetings and General meetings are mandatory requirement.

There is no need of holding Board meetings or General meetings.

20.

The proceedings of meetings are required to be recorded in minutes book.

A LLP by Agreement may decide to record the proceedings of meetings of the Partners/Designated Partners.

21.

There are restrictions on Board regarding some specified contracts in which directors are interested.

Partners are free to enter in to any contracts.

22.

The ownership of members in the Company is evidenced by Share Certificates issued to them.

The ownership of partners in the firm is evidenced by LLP Agreement.

23.

Companies are required to get their accounts audited annually as per the provisions of the Companies Act, 2013.

All LLP except those having turnover less than Rs. 40 lacs or Rs. 25 lacs contribution in any financial year are required to get their accounts audited annually as per the provisions of LLP Act, 2008.

Company under Companies Act

Limited Liability Partnership

Similarities

1.

Limited Liability and Perpetual Succession

Limited Liability and Perpetual Succession

2.

Common seal is optional

Common seal is optional

3.

Provision of approval of name, change of name are similar.

Provision of approval of name, change of name are similar.

4.

No personal liability of individual director or member [except of director of private company in some cases like income tax and sales tax dues]

No personal liability of partner, except in case of fraud.

5.

Registrar of Companies (ROC) is the administrating authority.

Registrar of Companies (ROC) is the administrating authority.

6.

Memorandum and Articles, details of directors, accounts, annual return, special resolution etc. filed by LLP with ROC will be available for public inspection.

Incorporation document, details of partners, accounts, statement of solvency and annual return filed with ROC will be available for public inspection [clause 36 of LLP Bill, 2008].

7.

Company can be wound up voluntarily or by order of court.

LLP can be wound up voluntarily or by order of Court.

8.

ROC can strike off name of defunct company.

ROC can strike off name of defunct LLP.