September 15, 2008

Limited Liability Partnerships- An Opportunity for Globalisation of Professional Firms

The concept of Limited Liability Partnerships (LLPs) has facilitated the professional firms especially in the accountancy field to expand on a global scale.
Limited Liability Partnerships can be considered as a mixture of Corporations and Partnerships. Here the partners of the firm have limited as that of shareholders of a corporation. However it is distinct from a corporation in the context that the partners are the ones who manage the regular business of the corporation while the shareholders of a corporation have to appoint board of directors to manage the business.
Moreover, Limited Liability Partnerships can have any number of partners. This enables the partnerships to expand their scale of operations on a global perspective.
In countries like USA, the concept is quite popular. Formation of an LLP requires filing with the county and state offices. Although specific rules vary from state to state, all states have passed variations of the Revised
Uniform Partnership Act (RUPA).
In India, the concept is soon expected to be placed before the Parliament for approval. If approved, it would be a major boost for the professional firms such as Chartered Accountancy Firms to have a multinational presence.

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