Legal Question in Business Law in India

10.02.2015

Dear Sir / Madam,

Difference between Limited Liability Partnership & a Limited Company

A basic difference between an LLP and a joint stock company lies in that the internal governance structure of a company is regulated by statute (i.e. Companies Act, 1956) whereas for an LLP it would be by a contractual agreement between partners.

The management-ownership divide inherent in a limited company is not there in a limited liability partnership.

LLP will have more flexibility as compared to a company.

In the Limited Liability Partnership structure, liability of the partner is limited to his agreed contribution. Further, no partner is liable on account of the independent or un-authorized acts of other partners, thus allowing individual partners to be shielded from joint liability created by another partner�s wrongful acts or misconduct.

Answers to your queries :

1). The reason behind the ordinary partner giving an application to get the Bank A/c of the LLP seized is essential. Secondly, since an LLP is constituted on the Agreement, it may be worthwhile taking into consideration whether the Agreement specifically restraints and prohibits any partner from taking such a drastic step;

2). Yes, an LLP is covered under Section 9 of the Arbitration Act.

Central Government Act : Section 9 in THE ARBITRATION AND CONCILIATION ACT, 1996

Section 9 : Interim measures, etc. by Court.�A party may, before or during arbitral proceedings or at any time after the making of the arbitral award but before it is enforced in accordance with section 36, apply to a Court�

(i) for the appointment of a guardian for a minor or a person of unsound mind for the purposes of arbitral proceedings; or

(ii) for an interim measure of protection in respect of any of the following matters, namely:�

(a) the preservation, interim custody or sale of any goods which are the subject-matter of the arbitration agreement;

(b) securing the amount in dispute in the arbitration;

(c) the detention, preservation or inspection of any property or thing which is the subject-matter of the dispute in arbitration, or as to which any question may arise therein and authorising for any of the aforesaid purposes any person to enter upon any land or building in the possession of any party, or authorising any samples to be taken or any observation to be made, or experiment to be tried, which may be necessary or expedient for the purpose of obtaining full information or evidence;

(d) interim injunction or the appointment of a receiver;

(e) such other interim measure of protection as may appear to the court to be just and convenient, and the Court shall have the same power for making orders as it has for the purpose of, and in relation to, any proceedings before it.

Regards,