With the growth of the Indian economy, the role played by its entrepreneurs as well as its technical and professional manpower has been acknowledged internationally. The traditional partnership of entrepreneurship, knowledge and risk capital combine to provide a further impetus to India’s economic growth. However, a need has been felt for a new corporate form that would provide an alternative to this effect with unlimited personal liability on the other, in order to enable professional expertise and entrepreneurial initiative to combine, organize and operate in flexible, innovative and efficient manner.
Proposal in India
A UK LLP’s members have a collective (“Joint”) responsibility, to the extent that they may agree in an “LLP agreement”, but no individual (“several”) responsibility for each other’s actions. As with a limited company or a corporation Members in an LLP cannot, in the absence of fraud or wrongful trading, lose more than they invest.
Choosing name of the firm: The firm has to choose the name of the firm carefully since it would act as a brand and goodwill be created in the books. Read more.
The limited liability partnership was formed in the aftermath of the collapse of real estate and energy prices in Texas in the 1980s. This collapse led to a large wave of bank and savings and loan failures. Because the amounts recoverable from the banks was small, efforts were made to recover assets from the lawyers and accountants that had advised the banks in the early-1980s. The reason was that partners in law and accounting firms were subject to the possibility of huge claims which would bankrupt them personally, and the first LLP laws were passed to shield innocent members of these partnerships from liability 
Although found in many business fields, the LLP is an especially popular form of organization among professionals, particularly lawyers, accountants and architects. In some U.S. states, namely California, New York, Oregon and Nevada, LLPs can only be formed for such professional uses. Formation of an LLP typically requires filing certificates with the county and state offices. Although specific rules vary from state to state, all states have passed variations of the Revised Uniform Partnership Act.
The liability of the partners varies from state to state. Section 306(c) of the Revised Uniform Partnership Act (1997)(RUPA) (a standard statute adopted by a majority of the states) grants LLPs a form of limited liability similar to that of a corporation.
Sources and recommended reading:
Participate in discussion for LLP agreement on CMA India Portal.
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