Flexibility of operations the llp structure provides

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Flexibility of Operations The LLP structure provides a lot of flexibility to the partners with respect to complying with statutory norms. For example, since LLPs are governed by the LLP Agreement, it is possible for the LLPs to provide suitable clauses in such agreement to fix the time limits for the duration of the LLP in the LLP Agreement. In such cases, after realisation of the objectives of the venture, the LLP could either be wound up, or the provisions for striking-off of the name of the LLPs can be used, instead of the winding up provisions. 36 One of most beneficial aspect of the LLP structure is that mandatory auditing of the LLP is not required if the turnover of the LLP does not exceed forty lakh rupees in a financial year or whose contribution does not exceed twenty five lakhs rupees. However, even where mandatory audit of the accounts of the LLP is not required, the partners can optionally choose to get the accounts of the LLP audited. Foreign Nationals and LLPs Foreign nationals including foreign companies and LLPs can incorporate LLPs in India, subject to compliance with foreign exchange laws. The latest development in this regard is that the Government of India has decided to permit FDI in LLP firms, subject to specified conditions. 37 This provision is a laudable initiative to attract foreign direct investment and provide opportunities to global business concerns to conduct flourishing business activities in India, consequently enabling India’s economy and GDP to reap its benefits. 38
307 However, there is a flip side to this coin. The confusing part is that FDI in LLPs will be allowed only for LLPs operating in sectors/activities where 100% FDI is allowed, through the automatic route and there are no FDI-linked performance related conditions (such as ‘Non Banking Finance Companies’ or ‘Development of Townships, Housing, Built-up infrastructure and Construction-development projects’ etc.). 39 However, despite the restrictions on FDI in LLPs, this move by the Government to introduce FDI in LLPs will boost the number of joint ventures in the country and specifically in infrastructure sector, where most of projects till date are executed in form of unincorporated joint venture where most. 40 NOTES: 4. Waxman Scott et al, Delaware Limited Liability Partnerships. available at , (Last Visited on August 15, 2013). 5. RSHIP-ANEWBUSINESSMODEL.pdf, (Last Visited on July 1, 2013). 6. Id. 7. “Limited Liability Partnerships And Other Hybrid Business Entities” report of ALBERTA LAW 8. REFORM INSTITUTE EDMONTON, ALBERTA available at prejury.law.ualberta.ca/alri/docs/ip004.pdf, (Last Visited on July 1, 2013).

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