The Senate on Wednesday approved the Limited Liability Partnership (LLP) Bill 2017, which is considered an updated and internationally acceptable business vehicle for entrepreneurs with limited capital.
The bill was tabled before the Senate by Commerce Minister Khurram Dastgir on behalf of Finance Minister Ishaq Dar.
The proposed law is expected to fill the gaps between business firms such as sole proprietorships or partnerships, the liability of whose partners is unlimited, and the companies governed under the Companies Ordinance of 1984, whose members enjoy the benefits of limited liability.
It also provides an alternative form of business organisation, which has the flexibility of general partnership and would avail all the advantages of a limited liability company.
The proposed LLP framework possesses limited liability, active member management, simplicity and ease of doing business.
The bill provides for the establishment of a new corporate vehicle to enable professional expertise and entrepreneurial initiative to combine, organise and operate in an innovative and efficient manner having the benefit of limited liability on account of incorporation.
The bill will provide professionals and entrepreneurs with a platform on par with other international jurisdictions to combine, organise and operate in flexible and innovative framework.
The proposed law also provides that limited liability partnership will be a body corporate, which has the flexibility of a general partnership and would avail all the advantages of a limited liability company.
The law also provides the conversion of firms, including private companies, into LLPs. An LLP is proposed to be taxed as a partnership but will have the benefits of being a corporate, separate juristic entity, having perpetual succession but distinct from its partners.