Edited by Robert W. Hillman and Mark J. Loewenstein
Chapter 25: The advent of the LLP in India
Around the world, unincorporated business associations have evolved to play a significant role in economic life. In the United States, for example, the limited liability company form is now often preferred by entrepreneurs and at times by even more established businesses. Countries around Europe have begun to introduce new forms of business associations to compete with the corporate form to better meet the needs of small and medium businesses and professional associations. Similarly, alternative entity forms have begun to make inroads in other parts of the world. In 2008, India, one of the world’s largest economies, passed a ground-breaking law to allow for the Limited Liability Partnership. The Indian LLP Act was the first major introduction of a new business form in India in over 50 years. While the partnership and corporate forms (i.e. companies under the Indian Companies Act) have long flourished in India, both forms have presented challenges for certain Indian businesses. For example, as the Indian government recently noted in a 2014 report, about 95 percent of firms in India are micro, small and medium enterprises, but less than 2 percent of these firms are corporations given the high compliance costs associated with the Indian Companies Act. Like India’s other business and financial law reform efforts in the 1990s and 2000s, the introduction of the LLP form is tied to India’s rapid economic growth in the 1990s.
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