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DISADVANTAGES OF LLP

Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 Uma asked over 3 years ago

WHAT ARE THE DISADVANATGES OF LLP

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 narahari answered almost 3 years ago

Limitation in the formation of LLP: As the basic structure or model of the LLP is similar to that of any partnership firm but it requires minimum two partners to form it. LLP cannot be formed by a single person. NRI/ Foreign national who want to form an LLP in India then at least one partner should be a resident of India. Two foreign partners cannot form LLP without having one resident Indian partner along with them.

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Open uri20170510 32134 tcchcu?1494421832 Jitendra Suthar answered about 3 years ago

Hiiiii friend..... Dis - Advances of LLP (Limited Liability Partnership) ------------------ **Disadvantages of Limited Liability Partnership** There are also some disadvantages of LLP. Some of the cons are described briefly below. - **Special Tax Considerations** For tax purposes a LLP is recognized in some states as a non-partnership. This could impact the partners who require special tax considerations. Every state does not recognize a LLP as a legal business structure. Some states only allow certain professionals such as lawyers and doctors to form limited liability partnerships. - **Partners Not Consulting** The individual partners do not have to consult with each other over certain business arrangements. An agreement should be drawn up between the partners that outlines what each partner can and cannot do when making a decision about the business. Even though the general partners still have liability over the business, they do not have to consult with the other partners, this can cause dissention among the partners. - **Death of a Partner** The limited liability partnerships are automatically dissolved upon the death of a partner. Even if there are steps taken to ensure that the company will continue beyond the demise of the partners, the LLP will not continue. The surviving partners can opt to re-establish a LLP but this will need to be done after each partner dies. etc. Regards,

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 CHITRANJAN AGARWAL answered over 3 years ago

Dear Uma, The following disadvantage of LLP which is described as follows: 1) Limitation in the formation of LLP: As the basic structure or model of the LLP is similar to that of any partnership firm but it requires minimum two partners to form it. LLP cannot be formed by a single person. NRI/ Foreign national who want to form an LLP in India then at least one partner should be a resident of India. Two foreign partners cannot form LLP without having one resident Indian partner along with them. It takes more days to form, as all the partners’ signatures are required for each and every document which is then to be attached to required e-forms. Therefore self attestation of each partner on documents is more as compared to the formation of any Private Ltd company. 2) Difficulty in transfer of ownership: Ownership rights are not transferable easily without obtaining consents of all partners of the LLP. 3)Admission of new partner: The supplementary agreement containing details of new partners and his contribution has to be created and then accordingly the existing partners need to revise or change the contribution held by them due to admission of new partners in the LLP agreement. 4)Limitation in External Commercial Borrowing (ECB): LLP is not allowed to raise External Commercial Borrowing (“ECB”). Thus LLP cannot take commercial loans from its foreign partners, FII’s (Foreign Institutional Investors), banks from outside India, any financial institution outside India or any other entity outside India. Any other query feel free to contact us Writer CA Chitranjan Agarwal

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 lochan answered over 3 years ago

**DISADVANTAGES OF LLP** Hi, LLP cannot raise investments Corporate veil is not strong It is difficult to get listed if you want to in future PArtners have no obligation to consult each other LLP is dissolved if partner dies Thanks

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