The advantages of forming a Limited Liability Partnership
A Limited Liability Partnership (“LLP”) allows the partners to retain the flexibility of a partnership agreement but it is not regulated by an identical set of legal principles governing partnerships.
Must upkeep its financial records, as well as report its financial status of solvency or insolvency annually
When compared to a partnership, a LLP must upkeep its financial records as well as report its financial status of solvency or insolvency annually.
Cannot be terminates as easily as general partnership
Also, as the partners enjoy limited liability, it cannot be terminated as easily as a general partnership. The law provides a comprehensive set of rules to govern the winding up of LLPs to ensure protection to the creditors.
The disadvantages of forming a Limited Liability Partnership
Financial institutions and potential business partners may be more reserved for collaboration
However, as the LLP is a novel concept, we think financial institutions and potential business partners may be more reserved when dealing with it, as compared to a company or general partnership.
The law also places restrictions on certain categories of persons (see sections 33 to 37 of the Limited Liability Partnerships Act) who can manage a LLP.