The concept
of Limited Liability is often misunderstood in the corporate world as no
responsibility.
A Company or Limited Liability Partnership (LLP) is an incorporated entity having separate legal identity in the eyes of law. The Shareholders and Partners are the owners of the organisation. The Director or Designated Partner is a representative of the legal entity appointed by the owners to have a human interface with the regulators and all other stakeholders.
Usually in small Company, a shareholder becomes Director and in LLP, a Partner becomes designated partner. In their capacity as owners and representatives, they are different roles to play.
Limited liability means that the personal financial liability of a shareholder or a partner is limited to the extent of a fixed amount that he has agreed to invest in a company or a limited liability partnership. In other words, the investor is not personally liable for the business debts and liabilities of the organisation. In the unfortunate event of winding up of the incorporated business, their financial liability is limited to the unpaid amount of agreed contribution by shares or otherwise. On the contrary, the liability of sole proprietors and partners in general partnership are unlimited and even their personal assets are exposed to pay off the business debts and other business liabilities.
The Directors of the company are the persons liable to run the day to day business of Company and are liable to comply with various legal requirements. In case of LLP, Designated Partner is responsible for the legal compliances. In case of default to comply with any legal requirements they are personally responsible for the same. In their role as a Director or Designated partners, the liability is unlimited and are exposed to penal provisions under the law for the noncompliance of respective regulations.
A Company or Limited Liability Partnership (LLP) is an incorporated entity having separate legal identity in the eyes of law. The Shareholders and Partners are the owners of the organisation. The Director or Designated Partner is a representative of the legal entity appointed by the owners to have a human interface with the regulators and all other stakeholders.
Usually in small Company, a shareholder becomes Director and in LLP, a Partner becomes designated partner. In their capacity as owners and representatives, they are different roles to play.
Limited liability means that the personal financial liability of a shareholder or a partner is limited to the extent of a fixed amount that he has agreed to invest in a company or a limited liability partnership. In other words, the investor is not personally liable for the business debts and liabilities of the organisation. In the unfortunate event of winding up of the incorporated business, their financial liability is limited to the unpaid amount of agreed contribution by shares or otherwise. On the contrary, the liability of sole proprietors and partners in general partnership are unlimited and even their personal assets are exposed to pay off the business debts and other business liabilities.
The Directors of the company are the persons liable to run the day to day business of Company and are liable to comply with various legal requirements. In case of LLP, Designated Partner is responsible for the legal compliances. In case of default to comply with any legal requirements they are personally responsible for the same. In their role as a Director or Designated partners, the liability is unlimited and are exposed to penal provisions under the law for the noncompliance of respective regulations.
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LLP
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