Off with the shackles

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Limited liability partnerships should be introduced swiftly to enable Indian law firms to expand and compete effectively, argues Vikrant Pachnanda of Perot Systems

Proprietorships and partnerships have long characterized the Indian business landscape, offering simple procedures for establishment without the requirement for extensive legal formalities. Lawyers, entrepreneurs, other professionals and corporations have, nevertheless, stressed the need for new corporate forms to reduce the strains of liability associated with standard partnership structures.

Vikrant Pachnanda
Vikrant Pachnanda

The Indian Partnership Act, 1932, defines a partnership as “the relation between persons who have agreed to share the profits of a business carried on by all, or any of them acting for all”. Under this agreement, every partner is equally liable for the actions executed by one or more partners, collectively known as a “firm”. Depending on the arrangement agreed upon, a partner may be liable to the extent that they are required to pay the firm’s debts using their personal properties.

A limited liability partnership (LLP) in many ways shares the features of a standard partnership, however, partner liability in this structure is strictly limited to the extent of their investment in the LLP.

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Vikrant Pachnanda is a lawyer with Perot Systems in India.

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