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Illustrating the distinctions between a Private Limited Company ("the Company") and a Limited Liability Partnership ("the LLP")

Updated: Jul 2

Sr. No.





Governing Law

The Companies Act, 2013

The LLP Act, 2008



Liability of members is only limited to the shares held by them.

Liability of partners is limited upto their capital contribution.


Chartered document

Memorandum and Articles of Association.

LLP Agreement.


Commencement of business

Post obtaining the certificate of commencement of business, the Company can commence its business operations.

LLP can commence its business operations immediately upon incorporation.


Directors / Designated Partners

Minimum 2 directors to be appointed for private limited company. At least one of director must be resident in India.

Minimum 2 Designated Partners are required to form the LLP. At least one of the Designated Partner shall be a resident of India.


Limit of the members/partners

In case of private company, the maximum limit is 200.

There is no limit for the partners.


Capital Contribution infusion

Directors may or may not infuse capital in the Company.


However, to become shareholder the person needs to infuse the capital.

Designated partner and partner must contribute towards the capital, otherwise they cannot hold any position in the LLP.



Sources of funding

Banks, Financial Institution, Directors, Venture Capitalists (VCs) or angel investors.

Banks, Financial Institution, Designated Partners.


External Investment – Angels / Venture Capital (VC)/ Private Equity Funds (PE) etc.

The VC and angel investors are mostly inclined to invest in Company structure as they become the shareholder and seek the ownership.


The VC’s and angel investors are less inclined to invest in LLP structures as they would need to become partners to contribute to the capital.


Withdrawal of Capital

Paid up capital can be withdrawn by shareholders with the approval of the court, or the company can either buy back the shares or redeem it subject to the provisions of the Companies Act.

Partners can withdraw capital subject to LLP agreement and after giving notice to creditors.




Certificate for investment

The company need to issue a share certificate to the members of the company.

There are no provisions for issuing share certificates.



Directors are required to meet once in every quarter and general meetings of shareholders to be conducted once in a year.

No such requirements of meetings unless stated in the LLP agreement.


Registers and Records

  • It is mandatory to maintain is required to maintain several statutory registers and records.

  • It is mandatory to maintain the minutes book of the statutory meetings. 

  • It is required to maintain a minimum number of registers and records.

  •  The minute book needs to be maintained if it is stated in the LLP agreement


Distribution of profit

The profits of the Company may be distributed as dividend to the shareholders of the Company.

The profits of the LLP may to be credited to partners’ account as per the LLP Agreement.


Employee Benefits

Company can issue Employee Stock Options to identified employees

There is no concept of Employee Stock Options under LLP regulation.


Annual Accounts

The Company’s accounts must be audited annually.

An audit is mandatory if the LLP is having turnover more than INR 40 lakhs or a capital contribution of more than INR 25 lakhs in any financial year.


Annual Filing Requirement

Company must file its annual financial statements and annual return with the registrar in Form AOC 4 and Form MGT 7/ 7A, respectively.

An LLP must file the statement of account and solvency and annual returns with the registrar in Form 8 LLP and Form 11 LLP, respectively.

Credits: This article has been co-authored by Vaishali Jaiswal, Associate, Transaction Advisory - Legal & Compliance, and Drashti Savle, Principal Associate, Transaction Advisory - Legal & Compliance at Constellation Blu. Disclaimer: This article is provided for informational purposes only and does not constitute legal advice or an official legal opinion. The views expressed are those of the author and are based on the applicable law and facts available at the time of writing. The information has been prepared with due diligence and accuracy. Readers are advised to consult their own advisors, and refer relevant statutory provisions, latest judicial decisions, circulars, and clarifications before taking any action based on the information in this article. Alternative interpretations of the subject matter may exist. By utilizing this information, you agree that the author and Constellation Blu are not liable for the accuracy, authenticity, completeness, or any errors or omissions contained herein, nor for any actions taken based on this information.

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