| Sr. No. | Particulars | Company | LLP |
| 1. | Governing Law | The Companies Act, 2013 | The LLP Act, 2008 |
| 2. | Liability | Liability of partners is limited to their capital contribution. | Directors may or may not infuse capital in the Company. However, to become shareholder, the person needs to infuse the capital. |
| 3. | Chartered document | Memorandum and Articles of Association. | LLP Agreement. |
| 4. | Commencement of business | Post obtaining the certificate of commencement of business, the Company can commence its business operations. | LLP can commence its business operations immediately upon incorporation. |
| 5. | Directors / Designated Partners | Minimum 2 Designated Partners are required to form the LLP. At least one of the Designated Partners shall be a resident of India. | Minimum 2 directors are to be appointed for a private limited company. At least one of director must be resident in India. |
| 6. | Limit of the members/partners | Directors may or may not infuse capital in the Company. However, to become a shareholder, the person needs to infuse the capital. | There is no limit for the partners. |
| 7. | Capital Contribution infusion | Banks, Financial Institutions, Directors, Venture Capitalists (VCs) or angel investors. | Designated partner and partner must contribute towards the capital; they cannot hold any position in the LLP. |
| 8. | Sources of funding | Banks, Financial Institutions, Designated Partners. | The VC and angel investors are mostly inclined to invest in a company structure as they become shareholders and seek ownership. |
| 9. | Paid-up capital can be withdrawn by shareholders with the approval of the court, or the company can either buy back the shares or redeem it subject to the provisions of the Companies Act. | External Investment – Angels / Venture Capital (VC)/ Private Equity Funds (PE), etc. | The VC’s and angel investors are less inclined to invest in LLP structures as they would need to become partners to contribute to the capital. |
| 10. | Withdrawal of Capital | Partners can withdraw capital subject to the LLP agreement and after giving notice to creditors. | It is mandatory to maintain is required to maintain several statutory registers and records. It is mandatory to maintain the minutes book of the statutory meetings. |
| 11. | Certificate for investment | The company need to issue a share certificate to the members of the company. | There are no provisions for issuing share certificates. |
| 12. | Meetings | No such requirements for meetings unless stated in the LLP agreement. | The profits of the Company may be distributed as dividends to the shareholders of the Company. |
| 13. | Registers and Records | In the case of private company, the maximum limit is 200. | It is required to maintain a minimum number of registers and records. The minute book needs to be maintained if it is stated in the LLP agreement |
| 14. | Distribution of profit | The profits of the LLP may be credited to the partners’ accounts as per the LLP Agreement. | The company can issue Employee Stock Options to identified employees |
| 15. | Employee Benefits | There is no concept of Employee Stock Options under the LLP regulation. | An audit is mandatory if the LLP is having turnover of more than INR 40 lakhs or a capital contribution of more than INR 25 lakhs in any financial year. |
| 16. | Annual Accounts | The Company’s accounts must be audited annually. | The company must file its annual financial statements and annual return with the registrar in Form AOC 4 and Form MGT 7/ 7A, respectively. |
| 17. | Annual Filing Requirement | Company must file its annual financial statements and annual return with the registrar in Form AOC 4 and Form MGT 7/ 7A, respectively. | An LLP must file the statement of account and solvency and annual returns with the registrar in Form 8 LLP and Form 11 LLP, respectively. |
Credits: This article has been co-authored by Vaishali Jaiswal, Associate, Transaction Advisory – Legal & Compliance, and Drashti Savle, Principal Associate, Transaction Advisory – Legal & Compliance at Aritra Partners
Disclaimer: This article is provided for informational purposes only and does not constitute legal advice or an official legal opinion. The views expressed are those of the author and are based on the applicable law and facts available at the time of writing. The information has been prepared with due diligence and accuracy. Readers are advised to consult their own advisors and refer to relevant statutory provisions, latest judicial decisions, circulars, and clarifications before taking any action based on the information in this article. Alternative interpretations of the subject matter may exist. By utilising this information, you agree that the author and Aritra Partners are not liable for the accuracy, authenticity, completeness, or any errors or omissions contained herein, nor for any actions taken based on this information.
