Business Studies · Forms of Business Organizations
Which of the following statements correctly distinguishes a Limited Liability Partnership (LLP) from a Public Limited Company concerning their governing legal framework and capital structure?
- 1Both an LLP and a Public Limited Company must maintain a Register of Charges with the Registrar of Companies (ROC), but only the LLP can have non-resident individuals as partners without any structural restrictions.
- 2The partners of an LLP have limited liability, and the LLP is a body corporate with perpetual succession, while a Public Limited Company is governed by the Companies Act, 2013, and its members have a maximum liability equal to the uncalled amount on their shares.✓
- 3A Public Limited Company can accept deposits from the public, has mandatory statutory audit requirements, and offers shares to the public; whereas an LLP cannot raise funds through public subscription but has partners who are mutually liable for all individual misconduct.
- 4A Public Limited Company is governed by the Companies Act, 2013, and must have a minimum of seven members, while an LLP is governed by the Limited Liability Partnership Act, 2008, and must issue a formal share capital.
Correct answer
The partners of an LLP have limited liability, and the LLP is a body corporate with perpetual succession, while a Public Limited Company is governed by the Companies Act, 2013, and its members have a maximum liability equal to the uncalled amount on their shares.
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