Growth of Limited Liability Partnerships (LLPs) in India with special reference to Innovative Vehicle for Entrepreneurial Development

Limited Liability Partnerships (LLPs) have grown in favour in India due to their combination of the benefits of partnerships and limited liability companies. Since the passage of the Limited Liability Partnership Act in 2008, LLPs have seen rapid growth and development into new areas. The focus of this literature review is on the growth of LLPs in India and the ways in which they have paved the way for other types of enterprises to flourish in the country. LLPs are attractive business structures because they provide limited liability protection for participants while yet allowing for the operational flexibility of a partnership. The hybrid model is gaining traction among new and developing businesses because it allows for the sharing of costs, risks, and expertise amongst partners. The growth of LLPs may be attributed, in large part, to the protection from personal responsibility that they provide their partners. Because of this, business owners may risk losing everything in pursuit of their ideas without feeling completely helpless. Limited liability shields partners from financial loss and boosts a company's credibility and ability to draw new investors.[1-3] LLPs also provide managerial and decision-making leeway. Unlike general partnerships, limited liability partnerships (LLPs) allow members to choose one or more "designated partners" to handle administrative and legal matters. Partners are free to concentrate on their particular areas of competence, and the company is well-managed as a result. LLPs are a flexible and adaptable company model since they do not need frequent board meetings, shareholder motions, or complicated governance frameworks. LLPs also have the benefit of being simple to incorporate and dissolve.[4-5] When compared to more conventional business structures, the registration procedure is less cumbersome and more affordable. Because of its ease of use, the LLP structure is increasingly preferred by new company owners, especially those who are short on time and cash but nevertheless want to get their venture off the ground quickly. Because of their unique hybrid structure, LLPs are excellent incubators for new business ideas. Business owners may benefit from one other's skills and experience by working together in a partnership. Working together like this improves creativity, sharpens problem-solving skills, and raises the odds of business success. Partners may better align their interests and motivate entrepreneurial activities when revenues are distributed according to the partnership agreement.[6] backgrounds and skill levels to put their ideas for businesses into action with few restrictions. Because of their adaptability, LLPs provide their members the freedom to try out novel business ideas, respond quickly to changing market conditions, and expand their operations efficiently. This risk-taking spirit aids in economic growth by producing new businesses and spawning useful innovations.[7]

Kaiser, H.F. (2020) In recent years, India's LLP (Limited Liability Partnership) industry has expanded dramatically. A limited liability partnership (LLP) is a business structure that combines the tax benefits of a corporation with the operational leeway of a partnership. This article reviews the research on limited liability partnerships (LLPs) in India, focusing on how they have sparked the development of novel forms of business structure. This paper reviews the related literature to provide insight on the factors driving the rise of LLPs and their effects on Indian businesses' bottom lines. The rapid expansion of LLPs in India may be directly attributed to the legal protections afforded by the country's 2008 Limited Liability Partnership Act. LLPs have gained popularity as a business structure due to the liability protection they provide its members with, as well as the operational freedom typical of partnerships. Partners are more likely to attempt new things and take reasonable risks since their own assets are shielded from their business's liabilities.[8] Repudaman, T. (2017) LLPs have flourished in India because of the relative ease with which they may be managed and decisions made. Unlike corporations, LLPs encourage cooperation between its members and value each partner's individual contributions to the firm. Because of this adaptability, business partners may swiftly respond to shifts in the market, adopt novel approaches, and capture new possibilities. One of the biggest benefits of LLPs in India is how simple they are to create and dissolve. The registration procedure for LLPs is less cumbersome and expensive than that of a conventional company since fewer formalities and compliance criteria need to be met. Those with little resources and a need for rapid company establishment will find this simplified procedure especially appealing, and as a result, more people will choose for the LLP structure.[9] Atiyah, P. S. (2017) In India, limited liability partnerships (LLPs) are a new and exciting way for businesses to grow and innovate. Key components of business success—including teamwork, information sharing, and resource pooling—are fostered under the partnership model. Due to its hybrid structure, LLPs may better capitalize on the combined talents, resources, and connections of its members. This shared space helps to build an entrepreneurial spirit subject of several studies in India. LLPs let would-be company owners to put their plans into action, boosting the economy and creating jobs. Individuals in India now have more opportunities to pursue careers in business because to the expansion of limited liability partnerships (LLPs).[10] Sen, N. and Mathen, N. (2019) The LLP vehicle will be useful, and it will usher in a glorious new era for India's economy. We studied the legislative process, the key provisions of the Indian LLP Act, and the potential roadblocks that might limit the LLP model's expansion in India. The findings of this study are topical and significant because of the dearth of previous research on LLPs in India. After reviewing the literature, Gandhi and Thakur came to the conclusion that LLP is the best option for SMEs looking for a business structure with limited liability and less cumbersome setting up and taxation procedures, and they recommended that lawmakers address these issues to ensure the structure runs smoothly. advocated for GST on the basis that it would reduce tax burdens for families.[11] Booth, R. A. (2017) This article examines the growth of LLPs and provides an overview of this trend. In this report, we examine the economic performance and contributing responsibilities of Indian LLPs as of June30, 2018. This study provides a summary of the relevant literature and highlights the areas in which it differs from previous research. where LLPs may be located and how they are divided up in the UK, how successful company development and growth have been since the introduction of the LLP structure, etc. described the rise of LLPs and the variables that may be utilised to determine whether or not to adopt that structure; identifying different types of LLPs within the M&E sector and investigating the tax benefits of forming an LLP.[12]

• The goal of this study is to provide an estimate of the number of LLPs operating in India as of June 30, 2018.

• The purpose of this study is to assess the composition, permissible capital, and economic activity of India's LLPs as of June 30, 2018.

• To evaluate the financial contribution responsibilities of current LLPs as of June 30, 2018

 This study analyses the timeline of LLPs registrations from June 30, 2018, before the enactment of the Companies Act of 2013 and the Goods and Services Tax Act of 2017, and after their respective enactment. built upon a thorough analysis of information and understanding gained from secondary sources. Data for this study was culled from a wide range of sources, including those of the federal and state governments, the Reserve Bank of India, the Ministry of Finance, the National Institution for Transforming India (NITI) Aayog, as well as numerous reports from various professional institutes, academic journals, scholarly books, and Indian Bahasa publications. Descriptive statistics are utilised to analyse and understand the data in this study. These statistics include frequency distributions, frequency distribution tables, and bar charts. This study analysed the status of LLPs in India as of the 30th of June, 2018..

The degree and direction of an association between two variables may be analysed using the bivariate statistic known as correlation. The correlation coefficient takes on a range of values between +1 and -1, representing differing degrees of relationship. If the value is -1, then the correlation between the two variables is infinitely positive. We compared the number of LLP registrations before and after the passage of the Companies Act 2013 and the passage of the Goods and Services Tax Act 2017 using paired sample t-tests.

H0: ρ = 0 "There is no association; the population correlation coefficient is 0" H1: ρ > 0 "A positive correlation may exist because the population correlation coefficient is greater than 0" the population correlation coefficient is less than 0" In which the correlation coefficient between the population is utilised.

A significant positive correlation (r = 0.830) is seen in the paired samples correlation Table between the number of LLP registrations and the total requirement of contribution (in Rs. in. crore).

H0: μ1 = μ2: Following the introduction of the 2013 Companies Act, there are no differences in LLP registrations. H1: μ1 ≠ μ2: Following the introduction of the 2013 Companies Act, there is a variation in the LLP Registrations.

According to the paired samples correlation table, there is a positive relationship (r = 0.902) between the number of LLP registrations before and after the Companies Act 2013 went into effect.

Statistically significant differences between groups were found using a paired t test at the 5% level (t3 = -6.255, p 0.008), as indicated in the table. Considering that p > 0.05, you should not be concerned. What this means is that the alternative hypothesis is correct. After the Companies Act of 2013 was passed, limited liability partnerships (LLPs) became a new kind of entity that needed to be registered. Since the Companies Act of 2013 went into effect, more limited liability partnerships (LLPs) have been formed.

H0: μ1 = μ2: Following the passage of the GST Act of 2017, there are no differences in the registrations of LLPs. H1: μ1 ≠ μ2: Following the adoption of the GST Act 2017, there are differences in the LLP registrations.

Registrations for LLPs both before and after the Companies Act of 2013 went into effect are substantially negatively associated (r = -0.435) in the Paired Samples Correlation Table.

Table result: (t11 = -0.011, p 0.0.991), using a 5% significance level for the Paired t test. This has a significance level of 0.05 or above in statistics. We thus conclude that the null hypothesis is correct. No changes were made to LLP registrations before or after the 2017 GST Act was passed. The number of LLP registrations was found to remain stable between the pre- and post-GST Act 2017 eras.

Hypothesis Testing-6 H0: μ1 = μ2: The economic activities of LLP registrants have not changed since the GST Act of 2017 went into effect. H1: μ1 ≠ μ2: Business registrations for LLPs have shifted after the passage of the GST Act of 2017.

The number of LLPs that were economically active before and after the adoption of the GST Act of 2017 is positively correlated with this figure (r = 0.997).

p 0.057). This is true even after adjusting for many variables. This lends credence to the idea that the null hypothesis is correct. Despite the passage of the GST Act in 2017, no changes have been made to the types of business that may be registered as an LLP. No new LLP registrations were discovered to have occurred after the passage of the GST Act of 2017. The most important findings from the research are summarised below. There were 1,26,733 LLPs operating in India as of June 30, 2018, with a total contribution obligation of Rs. 38,447.21. Among all LLPs, the service industry accounts for 76%, followed by the manufacturing sector (22%), and agriculture and related activities (2%). The largest part (71%) is held by the service industry, followed by the manufacturing sector (28%), and then the agricultural and ancillary sectors (1%). The business services industry accounts for the largest share of limited liability partnerships (47,285, or 41%), followed by the retail industry (14,320, or 12%), the manufacturing industry (13,496 or 11%), and the real estate and rental industry (11,571, or 10%). In 2015, 74 percent of LLPs were actively doing business. Business services have the highest Contribution (in Rs. lakh) need (24%), followed by retail (17%), manufacturing (15%), and finally real estate and rental (14%). Minimum LLP contributions are 70% of the minimum. Among the 67,351 LLPs now in operation, 58.72% have a contribution requirement of 1-5 lakh, with 23.37 percent owing less than 1 lakh. In India, 82.09 percent of the 94,155 LLPs that are now operational have a duty of contribution of less than Rs. 5 lakh. Using a paired samples t-test, we find that the number of LLP registrations has a positive connection (r = 0.830) with the sum of contribution obligations (in Rs. in crore). After the implementation of the Companies Act of 2013, there was a rise in the number of LLP registrations (t = -6.25, p 0.01). Moreover, since the Companies Act of 2013 took effect, there has been a rise in the number of LLPs being registered as businesses. A t-test confirmed these outcomes (t = -2.46, p = 0.03). In addition, we found no statistically significant difference in the total number of LLP registrations between the years before to and after the implementation of the GST Act of 2017. There has been no rise in the number of Limited Liability Partnership registrations since the passage of the GST Act in 2017.

number of tax modifications in order to encourage LLP registration. When compared to other business structures like partnerships, public companies, and private corporations, LLPs emerge as the most advantageous innovation vehicle for start-ups and growing businesses. Businesses, both domestic and foreign, now have an easier time setting up business in India thanks to the new goods and services tax that went into effect on July 1, 2017. India has risen in the eyes of both local and global investors as a promising market because to its recent economic reforms, rising domestic demand, and promising return on investment. India has invested much in its infrastructure to help its business owners compete with the rest of the world.

In India, limited liability partnerships (LLPs) have emerged as a promising new business structure. Awareness and education, streamlined registration processes, a supportive regulatory environment, improved access to finance, skill development and mentorship programs, collaboration and networking initiatives, and so on are all recommended to further promote and enhance the growth of LLPs. These reforms have the potential to foster an environment where LLPs may flourish, making them a driving force behind entrepreneurship and development in India's economy.

1. Carney, W. J. (2015), Limited Liability Companies: Origins and Antecedents, 66 Colorado Law Review, 66, pp. 855, 857- 858 2. Lee, T. (2018), Corporate Audit Theory, Chapman & Hall, London, pp. 95-96, 108-109, 103-104 3. Agrawal, A. K. (2015), LLP to Be Subject to Alternate Minimum Tax, The Chartered Accountant, 60 (5), November, pp.78-84 4. Heller, K. H. And Carnevale, M. K. (2017), Check-the-Box Final Regs. Simplify Entity Classification, The Tax Adviser, 28, p. 296 5. Chitale, C. V. (2018), Opportunities for CAs in LLP Law, The Chartered Accountant, 62 (5), November, pp. 64-67 6. Morris, P. and Stevenson, J. (2017), The Jersey Limited Liability Partnership: A New Legal Vehicle for Professional Practice, Modern Law Review, 60, pp. 538-551 7. Napier, C. (2018), Intersections of law and accountancy: unlimited auditor liability in the United Kingdom, Accounting, Organizations and Society, 23(1), pp. 105-128 8. Kaiser, H.F. (2020). The application of electronic computers to factor analysis, Educational and Psychological Measurement, 20, pp. 141-151 (7), January, pp. 68-73 10. Atiyah, P. S. (2017), Vicarious Liability in the Law of Torts, Butterworths, London, pp.1, 12-28 11. Sen, N. and Mathen, N. (2019), Decoding the new business vehicle of India, NUJS Law Review, October- December, pp. 669-689 12. Booth, R. A. (2017), Fiduciary Duty, Contract, and Waiver in Partnerships and Limited Liability Companies, Journal of Small and Emerging Business Law, pp. 55, 62

Associate Professor, Motilal Nehru College, Delhi University