Company vs. LLP

17-Apr-2026

Companies Act, 2013

Introduction

Both a company and a Limited Liability Partnership (LLP) are separate legal entities created by law, enjoying perpetual succession and the capacity to sue and be sued in their own names. However, they are governed by distinct statutes — the Companies Act, 2013 and the Limited Liability Partnership Act, 2008 respectively — and differ considerably in their structural framework, compliance requirements, and internal governance.

Difference between Company and LLP

Parameter	Company	LLP
Governing Law	Companies Act, 2013	Limited Liability Partnership Act, 2008
Charter Document	Memorandum and Articles of Association	LLP Agreement
Common Seal	Mandatory; every company must have one	Optional; depends on the LLP Agreement
Number of Members/Partners	Private: 2–50; Public: minimum 7	Minimum 2; no upper limit
Liability	Limited to unpaid amount on shares	Limited to capital contribution, except in cases of intentional fraud or wrongful acts
Transfer of Interest	Freely transferable	Governed by the LLP Agreement
Statutory Meetings	Board Meetings and General Meetings are mandatory	No statutory requirement for meetings
Minutes	Mandatory recording of proceedings	Optional; only if agreed upon in the LLP Agreement
Annual Filing	Annual Financial Statement + Annual Return filed with ROC	Annual Statement of Accounts, Solvency Statement + Annual Return filed with Registrar
Audit	Mandatory annual audit under Companies Act, 2013	Mandatory only if turnover exceeds ₹40 lakh or contribution exceeds ₹25 lakh
Accounting Standards	Mandatory compliance	Rules not yet issued; not mandatorily applicable
Identification Number	Directors require Director Identification Number (DIN)	Designated Partners require Designated Partner Identification Number (DPIN)
Remuneration to Managerial Personnel	Subject to legal restrictions under the Companies Act	As per the LLP Agreement; no statutory cap
Contracts with Directors/Partners	Restrictions apply on certain specified contracts in which directors are interested	Partners are free to enter into any contract without such restrictions
Oppression & Mismanagement	Statutory remedy available under the Companies Act	No such provision exists under the LLP Act
Whistle Blowing	No provision under the Companies Act, 2013	Protection provided to employees and partners who furnish information during investigation
Creditworthiness	Highest, owing to stringent compliance and disclosure norms	Comparatively higher than a partnership, but lower than a company
Merger/Amalgamation	Can enter into compromise, arrangements, merger, or amalgamation	Can enter into compromise, arrangements, merger, or amalgamation

Conclusion

While both a company and an LLP offer the twin advantages of separate legal personality and limited liability, they cater to different organisational needs. A company, with its rigorous statutory framework, mandatory audits, and structured governance, is suited to larger enterprises requiring high creditworthiness and public participation. An LLP, by contrast, offers greater operational flexibility and reduced compliance burden, making it preferable for professional services and smaller ventures.