Section 2 of LLP Act, 2008 : Section 2: Definitions

Explanation using Example

Imagine a group of four friends—Amit, Priya, John, and an existing company XYZ Pvt. Ltd.—decide to start a new business venture together. They want to establish a legal structure that allows them flexibility and limited liability. They choose to form a Limited Liability Partnership (LLP), which is a partnership registered under the Limited Liability Partnership Act, 2008.

They draft a Limited Liability Partnership Agreement, detailing their mutual rights and duties, and the duties of the LLP towards them. Amit, Priya, and John provide their usual residential addresses, while XYZ Pvt. Ltd. provides its registered office address as their respective addresses for the purpose of the LLP.

John, who has the most experience in managing businesses, is designated as the Designated Partner in accordance with Section 7 of the Act. The LLP's financial year is set from April 1st to March 31st, in line with the definition of financial year under the Act, since the LLP was incorporated in May.

Later, the LLP decides to appoint a Chartered Accountant to handle its financial audits and a Company Secretary to ensure compliance with statutory requirements, both of whom are certified professionals as defined under their respective Acts.

If the LLP faces any legal disputes, they will be addressed in the Court having jurisdiction as per section 77 of the Act. Should the LLP need to appeal any decision, it would approach the Appellate Tribunal, which is the National Company Law Appellate Tribunal.

As the business grows, the LLP's turnover exceeds the threshold, and it no longer qualifies as a small limited liability partnership. Consequently, it has to comply with additional regulatory requirements prescribed for larger LLPs.