Limited liability bill to spur entrepreneurial activity: CII

New Delhi, Jan 1 (UNI) CII today welcomed the Limited Liability Partnership Bill, 2006 introduced in the Rajya Sabha during the Winter Session stating that it will spur entrepreneurial and professional activity.

''The Bill would act as a hybrid between a limited liability company and a partnership firm,'' CII said in a statement issued here today.

LLP is viewed as an alternative business vehicle that provides the benefits of limited liability and also allows its members the flexibility of organising their internal structure as a partnership based on a mutually arrived agreement.

The proposed Bill does not restrict the benefit of LLP structure only to certain classes of professionals but will also be available for use by any enterprise that fulfils the requirements of this Act.

CII viewed this as a key enabler to encouraging 'Innovation'.

LLP structure is available in countries such as the united kingdom, US, Australia, Singapore.

As per this Bill, LLP would be a corporate body and a legal entity separate from its partners. It would have perpetual succession and the Indian Partnership Act would not be applicable to LLPs. However, other entities may convert themselves to LLP in accordance with the proposed legislation.

Currently in India, the small businesses operate as private limited companies or sole proprietors or partnerships. Each of these is subject to different regulatory and tax regimes reflecting their organisation and ownership.

The bill will bring greater clarity in this regard.

UNI