HDS & Co.

Chartered Accountants

DIFFERENCE BETWEEN COMPANIES AND LIMITED LIABILITY PARTNERSHIP

Sr No 1. 2 3 4 5 6 7 8 Particular Governing Law Company Companies Act, 1956 and various Rules made thereunder. Registration Compulsory Creation Created by law Separate Legal It is separate legal entity, separate from its member, Entity directors. Perpetual It has perpetual succession. succession Purchase of A company can purchase movable / immovable Property property in its name. Common Seal It denotes the signature of the Company and every company shall have its own common seal. Formalities of Various documents / declarations executed in Incorporation prescribed formats prefilled in designated eforms are required to be filed with ROC along with filing fee. Time line It will take approx. 15 days to incorporate ( inclusive of time taken to obtain DIN) Expenses for Minimum Statutory Fee for incorporation of Private formation Company is Rs. 6000/ and Minimum Statutory fee for Public Limited company is Rs. 19000/ Legal Proceeding A company can sue and be sued Taxation It is a separate taxable entity Name Suffix Limited or Private Limited has to be added to the name Change of name The name of the company can be changed with the prior approval of Central Government. Ownership of The company has ownership of assets and members Limited Liability Partnership The Limited Liability Partnership Act, 2008 and various Rules made thereunder. Compulsory Created by law It is separate legal entity, separate from its partners\ designated partners. It has perpetual succession. LLP can also purchase movable / immovable property in its name It denotes the signature of the Company and LLP may have its own common seal, if it besides to have one. Various documents / declarations executed in prescribed formats prefilled in designated eforms are required to be filed with ROC along with filing fee. It will take approx. 20 days to incorporate ( inclusive of time taken to obtain DPIN) Minimum Statutory fee for incorporation of LLP is Rs. 1500/ and Maximum fee for incorporation of LLP is Rs. 7000/ (approx.) LLP can also sue and be sued Its status in unclear, pending changes in income tax act. Suffix LLP or Limited Liability Partnership has to be added to the name. The name of the LLP can be changed with the prior approval of Central Government. The LLP has ownership of assets and Partners only

9 10

11 12 13 14 15

HDS & Co. Chartered Accountants

Assets Liability only have shares in the company have capital contribution in the LLP Liability of members is only limited to the shares held Liability of partners is limited upto their capital by them. contribution however in case a partners acts with an intension to conduct fraud, they are personally liable. The Directors act as an agents of the company Partners are agents of LLP A director \ member can enter into contract with the A partner can enter into contract with the LLP company

16

17 18

19

20

21 22

Agency Relationship Contracts / Business transaction by Member/ Directors/ Partners Power of Member\ Partner\ Director Dissolution by an act of partners / members / directors Offences Electronic filing of documents

Directors have power to conduct day to day affairs of the company, Member practically have no say in the management. Continuance of company is not affected by the acts of its directors\ members

The power of partners/ designated partners to conduct the day to day affairs is specified by LLP agreement / LLP act. Continuance of LLP is not affected by the acts of its Partners.

23

24 25

Obtaining Certified copy documents Transferability of Shares of every company except private company are interest freely transferable. Share Certificate Right/ Interest of the members in the company is denoted by share certificate

Company\ directors are liable Any documents required to be filed / recorded / registered has to be efiled through affixing digital signature Certified true copy of the documents will be obtained true electronically through MCA website www.mca.gov.in of by paying requisite fees

LLP\Partners\designated partners are liable Any documents required to be filed / recorded / registered has to be efiled through affixing digital signature Certified true copy of the documents will be obtained electronically through MCA website www.mca.gov.in by paying requisite fees Rights/ interest of partners are transferable as per the provisions of LLP agreement. There are no provisions for issuing of Share Certificate. Rights/ Interest of the Partners in the LLP are evidenced by Partnership agreement.

HDS & Co. Chartered Accountants

26 Jurisdiction of Company Law Board (CLB) Payment of filing Fees Nature CLB has jurisdiction over the affairs of the company. CLB has jurisdiction over the affairs of the LLP

27 28

29

30

31 32

33

34

Compromise arrangements merger amalgamation Minimum Capital Minimum paid up capital of Rupees One lac for requirement incorporation of Private company and Rupees five lacs for incorporation of Public Company to be required. Books of Books of accounts must be prepared as specified in the Accounts Companies Act, 1956 Manner of Accrual basis Keeping Books of Accounts Filing of Annual Balance Sheet and Profit and loss account are required Accounts to be filed with the ROC annually in the prescribed format Audit of As per the provisions of companies Act, 1956 accounts Accounts have to be audited annually

To be submitted Electronically through website www.mca.gov.in A company is a body corporate formed and incorporated under the Companies Act, 1956 and which has legal entity separate from its members, having perpetual succession and liability of its members shall be limited. \ Provisions exist for Compromise \ arrangements \ \ merger \ amalgamation for companies in the act. \

To be submitted Electronically through www.mca.gov.in A LLP is a body corporate formed and incorporated under this act and which has legal entity separate from that of its partners, having perpetual succession and liability of its partner shall be limited. Provisions exist for Compromise \ arrangements \ merger \ amalgamation for LLP in the act.

No such requirement

Books of accounts must be prepared as specified in the LLP Act. Cash basis or accrual basis

Statement of accounts and solvency are required to be filed with ROC annually in the prescribed format. As per the provisions of LLP act, accounts to be audited annually except for LLPs having turnover less than Rs. 40 lacs or Rs. 25 lacs contribution in any financial year. The Audit of accounts is as per the provisions of income tax act. Its status in unclear, pending changes in income tax act.

35

Applicability Accounting

of Accounting standard are Applicable

HDS & Co. Chartered Accountants

standards Mode of Service Documents to be served on company / directors may documents be served through electronic means Annual Return Annual Return is required to be filed with the ROC annually in the prescribed format Each Director required to have a Director Identification Director Number before being appointed as a Director of any Identification Number / company Designated Partner Identification Number Digital Signature Atleast one director of the company should have their Digital signature. Digital signature is a prerequisite for efiling. Minimum Minimum two for private Company and minimum Number of seven for public company as per the Companies Act, Member 1956 Minimum two partners Maximum Maximum 50 in case of Private Company and no cap of number of maximum number of Member in Public Company as Member per the Companies Act, 1956 Designated Minimum two directors in case of Private company and partner/ minimum three in case of Public company. Director/ Managing Partner Need for Directors need not be a members of the company Designated partner/ Director/ Managing

36 37 38

Documents to be served on LLP / designated partners may be served through electronic means Annual Return is required to be filed with the ROC annually in the prescribed format Each Designated partner required to have a DPIN before being appointed as a Designated Partner of LLP.

39

40

Atleast one designated partner of the LLP should have their Digital signature. Digital signature is a prerequisite for efiling. Minimum two partner

41

42

No cap of maximum number of its partners Maximum 10 for banking business and 20 for other business. Minimum two designated partner

43

The designated partner need not be a partner of the company

HDS & Co. Chartered Accountants

Partner to be partner/ member Vacancy In case the company has only minimum number of In case the LLP has only minimum number of director then casual vacancy in the office of director designated partner then casual vacancy in the office of must be filled in 30 days designated partner must be filled in 30 days Remuneration Salary / Remuneration can be given to the Executive / nonexecutive directors as per the provisions of Companies Act, 1956. Memorandum Memorandum and Articles of Association is a charter and Articles of of the Company which defines its scope of operation. Association \ Partnership deed/ Partnership Agreement Meetings Meeting of Board of Directors / Shareholders have to be held at specific time period as per the provisions of Companies Act, 1956. Compounding of Offences punishable with fine are compoundable offences Change in Notice of change of director is to be given to the ROC. directors / designated partners/ Partners Publication of Official correspondence / publication/ letter head/ name invoices must mention the full name of the company and address of the registered office. Remuneration will be provided only if provided in the LLP agreement. LLP Agreement is a charter of the LLP which denotes its scope of operation.

44

45

46

47

Meeting of the Designated Partners have to be held at specific time period as per the Provisions of LLP Act. Offences punishable with fine are compoundable Notice of change of director is to be given to the ROC.

48 49

50

51

Official correspondence / publication/ letter head/ invoices must mention the full name of the company and address of the registered office and a statement that it is registered with limited liability. Rights / Duties / Rights / Duties / obligation of directors are governed Rights / Duties / obligation of directors are governed obligation of by AOA and resolution passed by shareholders or by Partnership Agreement

HDS & Co. Chartered Accountants

Partners Managing Partners Directors Minutes / directors. / Decisions taken in meetings must be recorded as minutes with in 30 days No provision relating to redressal in case of oppression and mismanagement

52 53

54 55

56

Decisions taken in the meeting of board of directors/ shareholders must be recorded as minutes. Oppression and Elaborate provision relating to redressal in case of oppression and mismanagement Mismanagement by majority shareholders Voting Rights Voting rights are in proportion to the shares held by members. Transfer of Share In case of death of member, shares are transmitted to / Partnership the legal heirs. rights in case of death Cessation as A member/shareholder can cease to be a member by partners / selling his shares. member

Each partner has only one vote In case of death of partner, the legal heir has the right to refund of capital contribution + share in accumulated profits, if any. Legal Heirs will not become partners

57 58

A partner can cease to be a member by transferring his share but the transfer of right or cessation of partner does not by itself cause the disassociation of the partner notwithstanding his retirement, and he like the other continuing partners of the firm remain liable as partner to third parties for any act done by any of them which would have been an act of the firm if done before retirement until public notice is given of the retirement either by the retired partner or any other partners of the reconstituted firm. Admission as A person can become a member by buying shares of a A person can be admitted as a partner with the consent partner/ member company of all the partners. Drawing Drawings are not permitted Drawings are permitted as per the LLP agreement