The Limited Liability Partnership Bill, 2006 is introduced in the Parliament. It seeks to make provision for the formation and regulation of Limited Liability Partnership and for matters connected therewith or incidental thereto. The Limited Liability Partnership (LLP) is defined to be a Body Corporate formed and incorporated under the Act, having legal entity separate from its Partners. It has the trappings of an Incorporated Company including perpetual succession, its existence, rights and liabilities remaining unaffected by a change in the Constitution. The essence of Partnership is mutual agency and the liability of the firm and other Partners to the acts and obligations incurred by anyone Partner is sought to be excluded by making the provisions of the Indian Partnership Act not applicable to LLPs. Specific provision is made for Incorporated Body Corporates to be admitted as Partners. There is a provision for Partner Identification Number and the provisions of Secs. 266A to 266G of the Companies Act relating to DIN is made applicable, mutatis mutandis. While the minimum number of Partners, as in the case of Private Limited Company, is two LLP must have a minimum two Designated Partners, one of whom shall be a resident in India. The Designated Partner assumes the role of the Director of a Limited Company and has to give his consent to act as a Designated Partner, such consent being filed with the Registrar in the prescribed manner. The Designated Partner shall satisfy the prescribed conditions and requirements. Specific provisions have been made with regard to the appointment of Designated Partner, changes and the extent of the liabilities and obligations, these being substantially similar to those of Directors in a Limited Company.

A Limited Liability Partnership has to be evidenced by incorporation documents, the incorporation being by registration with the Registrar. The effect of incorporation invests the LLP with the power of sueing and being sued, acquiring and holding properties, having a common seal and doing and suffering acts and deeds as if it were a Body Corporate. As in the case of a company which requires the use of the name "Limited", a LLP has to use the indicative suffix as part of its name either in whole or as an acronym. The procedure for registration is similar to the registration of a company, starting with the reservation of a name and compliance with the procedural formalities.

The partners of the LLP are the original subscribers and those who are admitted to the Partnership in accordance with the LLP agreement and their mutual rights and liabilities shall be governed by the terms of the agreement. The Registrar acting for the LLP shall be the Registrar having the duty of registering the companies under the Companies Act.

While a Partnership is based on mutual agency, Clause (26) of the Bill specifically provides that every Partner of a Limited Liability Partnership shall be the agent of LLP but not of the other Partners. This is a major and substantial departure from the provisions of the Partnership Act. Similarly, the extent of liability of Limited Partnership is also specifically provided under the statute. A Partner is saved from personal liability for an obligation arising in contract or otherwise in relation to LLP, such liability being the sole liability of the LLP. This again is a major departure from the provisions of the Partnership Act, which invests a LLP with an advantage of incorporation and saves it as well as the Partners from the onerous obligations cast on Partners under the Partnership Act. Various provisions have been made in regard to the financial disclosures, maintenance of accounts, filing of returns and other administrative matters. Partnership interest is transferable subject to certain restrictions.

The LLP Act is a welcome relief to technical and professional persons who, with the growth of Indian economy and globalisation of Trade and Industry, have to operate in wider areas. A Partnership with all the restrictions and limitations, and particularly the personal liability, is not an effective tool in the hands of the professional to operate in a global economy.

LLPs have come to stay in the global economy and though late, the Government has thought it fit to introduce the concept of LLP as a boon to Indian Professionals. The LLP satisfies the need for a new corporate form of Professional Association which excludes the disadvantages of traditional Partnership with unlimited personal liability and the rigid governance structure of Limited Liability Companies which has conceived of various restrictions necessary in the context of Industry, but would not apply to professional or technical ventures and would impose serious curbs on professional expertise and entrepreneurial initiative. The Limited Liability partnership viewed as an alternative Corporate Business Vehicle would provide the benefits of Limited Liability with flexibility of organisation which is essential for professional growth into wider areas. Since the Limited Liability Partnership is more likely to attract technical and professional experts, it is hoped that, before the Act is made into law, there would be public a debate on the provisions to make it a proactive instrument to achieve and sustain technical and professional excellence.