Last verified: July 2026
Two founders sit across a table from their chartered accountant on the same afternoon, both asking the same question: LLP or private limited company? The first runs a two-person design studio. It bills clients, keeps its costs low, and has no intention of ever taking outside money. The second is building a software product and expects to close an angel round within a year, hand out stock options to early hires, and one day be acquired. On paper they are asking an identical question. The right answer is opposite in each case.
That is the trap in the LLP-versus-company decision. It looks like a form-filling choice – pick a structure, register it, move on – when it is really a decision about how your business will be taxed, how much compliance you will carry every year, whether you can give employees equity, whether a venture capitalist can legally write you a cheque, and how cleanly you can sell or exit later. Those consequences compound for years. Undoing the wrong choice means a conversion that is slow, costs money, and can trigger a tax bill.
Both forms share the two features that make people incorporate in the first place. Each is a separate legal person – it owns assets, signs contracts, and sues or is sued in its own name, apart from its owners. And in both, the owners’ liability is limited, so a business failure does not, as a rule, reach into their personal savings. The separate-legal-person idea is more than a century old and traces back to Salomon v. A. Salomon & Co. Ltd., [1897] AC 22. So the choice is not about liability protection, which both give. It is about everything that sits on top of it.
The Limited Liability Partnership was introduced in India by the Limited Liability Partnership Act, 2008, to give professionals and small businesses the limited-liability shield of a company without a company’s compliance weight. The private limited company, governed by the Companies Act, 2013, is the older and heavier vehicle – and the one built for raising capital and scaling. The differences that follow all flow from that basic difference in design.
The short answer: Choose a limited liability partnership (LLP) if you are bootstrapped, run a service or professional practice, will not raise external equity, and want low compliance and single-layer taxation. Choose a private limited company if you plan to raise money from angels, venture capital or private equity, want to grant employee stock options (ESOPs), or intend to scale and eventually exit – accepting heavier compliance and a mandatory annual audit in return. Both give you limited liability and a separate legal identity; the decision turns on tax, compliance cost, and how you will raise money.
LLP vs private limited company: the 2026 comparison at a glance
Before the detail, it helps to see where the two forms actually part ways. They are identical on the things people worry about most – both are body corporates with a separate legal identity, perpetual succession, and limited liability for their owners. A partner in an LLP is not even personally liable for another partner’s misconduct, and a shareholder in a company risks only the money put into the shares. On those points there is nothing to choose between them.
The differences sit in five places. Ownership and management – in an LLP the partners both own and run the business, while a company splits ownership (shareholders) from management (directors). Taxation – an LLP is taxed once, whereas a company’s profits can be taxed twice, though a concessional company rate narrows that gap. Compliance – a company must hold board meetings and an annual general meeting and must have its accounts audited every year regardless of size, while an LLP escapes all three below modest thresholds. Fundraising – a company can issue shares, preference shares and stock options; an LLP cannot, which is why investors insist on the company form. And cost – an LLP is cheaper to set up and to run.
The table below is the whole decision on one screen. Each row is unpacked in the sections that follow.
What is a limited liability partnership (LLP)?
A limited liability partnership is a hybrid. It gives its partners the operational flexibility of a traditional partnership while wrapping them in the limited liability and separate legal personality of a company. It is the natural home for professional firms, consultancies, and closely held businesses that value simplicity.
Legal basis and structure
An LLP is created under the Limited Liability Partnership Act, 2008. Section 3 of that Act makes it a body corporate – a legal entity separate and distinct from its partners, with perpetual succession, so partners can come and go without disturbing the LLP’s existence, contracts or liabilities. It holds property, borrows, and contracts in its own name. iPleaders has a detailed walkthrough of the statute in its guide to the Limited Liability Partnership Act, 2008 if you want the full provision-by-provision picture.
The internal rulebook of an LLP is its LLP agreement, contemplated by Section 23. It sets out the partners’ mutual rights and duties, profit-sharing, decision-making, and admission and exit of partners. If the LLP has no agreement, or the agreement is silent on a point, the default rules in the First Schedule to the Act step in – for example, equal profit-sharing and decision by a majority of partners. Because so much is left to the agreement, an LLP is highly customisable.
Partners and designated partners
An LLP needs a minimum of two partners, and there is no upper limit – it can have as many as it likes. At least two of them must be designated partners, who take on responsibility for the LLP’s statutory compliance, and at least one designated partner must be a resident in India – defined, since the 2021 amendment, as someone who has stayed in India for at least 120 days during the financial year (down from the earlier 182 days). Designated partners need a Designated Partner Identification Number (DPIN) and a digital signature.
Liability is the point of the whole structure. Under Sections 26 to 28, each partner is an agent of the LLP but not of the other partners, and – crucially – a partner is not personally liable for the wrongful acts or omissions of another partner. In a traditional partnership every partner is on the hook for what the others do; in an LLP that exposure is cut off. A partner’s own misconduct still attracts personal liability, but a partner does not inherit a colleague’s mistakes.
Who an LLP suits
The LLP was designed for people who provide services rather than raise capital: law firms, CA and CS practices, architecture and design studios, consultancies, agencies, and family businesses that will stay closely held. If the owners intend to run the business themselves, keep profits flowing to themselves, and never sell equity to an outsider, the LLP delivers limited liability with the least possible friction.
What is a private limited company?
A private limited company is the default vehicle for anyone building a business that will grow, hire, and raise money. It is more structured than an LLP, carries more compliance, and in return gives founders the one thing an LLP cannot: the ability to issue shares.
Legal basis and structure
A private company is defined in Section 2(68) of the Companies Act, 2013. Its articles must do three things: restrict the right to transfer its shares, limit its members to 200 (employees and former employees who are members do not count), and prohibit any invitation to the public to subscribe for its securities. Those restrictions are what keep it “private” – ownership stays in known hands. Like an LLP, it is a separate legal person with perpetual succession, a principle Indian company law inherits from Salomon.
Since the Companies (Amendment) Act, 2015, there is no minimum paid-up capital, so a private company can be started with nominal capital. A company can also qualify as a small company under Section 2(85) if its paid-up capital does not exceed ₹4 crore and its turnover does not exceed ₹40 crore – a status that unlocks several compliance reliefs, discussed later. To see how the private company sits among all the other forms, iPleaders has a full breakdown of the types of companies under the Companies Act, 2013.
Shareholders, directors and shares
Here is the structural break from an LLP. A company separates ownership from management. The shareholders own the company; the directors run it. The two groups often overlap in a young startup – the founders are both – but they are legally distinct roles, and that separation is exactly what outside investors and professional managers rely on. A private company needs a minimum of two members and two directors, at least one of whom must have stayed in India for at least 182 days in the financial year (Section 149(3)). It can have up to 15 directors, and more by passing a special resolution.
Ownership in a company is expressed in shares, which can be transferred (subject to the articles), issued in different classes, and used to bring in investors or reward employees. This is the machinery an LLP simply does not have. A founder who might one day want a co-founder to hold a defined equity stake, an investor to take preference shares, or employees to earn stock options is describing a company, not an LLP.
Who a private company suits
Startups that will raise angel, venture-capital or private-equity money; businesses that want to grant ESOPs to attract talent; ventures that plan to scale, bring in institutional investors, or exit through a sale or IPO; and any business for which credibility with banks, large customers and investors matters. The private company carries more compliance, but it is the only form that can do these things. A solo founder who wants the company form without a second shareholder can also consider a one person company, which is a species of private company built for a single owner.
Taxation: which is more tax-efficient in 2026?
Tax is where founders expect the LLP to win outright, and for a business that pays out all its profit, it often does. But the picture changed when companies got access to a 22% concessional rate, and the honest answer in 2026 is “it depends on whether you distribute profits or reinvest them.”
How an LLP is taxed
An LLP pays income tax at a flat 30%, with no slabs. A surcharge of 12% applies if total income exceeds ₹1 crore, and a 4% health and education cess sits on top. That works out to an effective rate of about 31.2% below ₹1 crore and roughly 34.94% above it (subject to marginal relief). An LLP may also fall within Alternate Minimum Tax (AMT) at 18.5% of its adjusted total income if it has claimed certain deductions, though an LLP claiming none of those deductions stays outside AMT.
The advantage is what happens next – or rather, what does not. When an LLP distributes profit to its partners, that share of profit is exempt in the partners’ hands (under Section 10(2A) of the Income-tax Act, 1961, and the corresponding provision of the Income-tax Act, 2025). There is no second tax on distribution. On top of that, an LLP can pay its working partners remuneration and interest that the LLP then deducts from its taxable income, within the limits of Section 40(b). The Finance (No. 2) Act, 2024 raised those limits with effect from assessment year 2025-26: remuneration of up to ₹3 lakh or 90% of the first ₹6 lakh of book profit (whichever is higher), and 60% of the balance, with interest to partners deductible up to 12% per annum. Note that since 1 April 2025, a new Section 194T requires the LLP to deduct 10% TDS on partner remuneration, interest or commission above ₹20,000 in a year.
How a private company is taxed
A domestic company’s normal rate is 30%, dropping to 25% if its turnover in the relevant prior year (financial year 2023-24, for tax year 2026-27) did not exceed ₹400 crore, plus surcharge and cess. But most companies now opt for the concessional regime under Section 115BAA: a 22% rate which, with a flat 10% surcharge and 4% cess, comes to an effective 25.17% – and gives up most exemptions and deductions in exchange. A brand-new manufacturing company could once elect an even lower 15% rate under Section 115BAB (effective 17.16%), but that window has closed for businesses that began manufacturing after 31 March 2024.
So at the entity level, a company on the 22% regime is actually taxed more lightly than an LLP on 30%. The catch is the second layer.
The dividend, and the double-taxation question
When a company pays its after-tax profit out to shareholders as a dividend, that dividend is taxed again – this time in the shareholder’s hands at their applicable slab rate, with the company deducting 10% TDS on dividends above ₹5,000 a year (Section 194). Dividend Distribution Tax, the old company-level levy, was abolished from 1 April 2020, which is why the tax now falls on the shareholder. The result is two layers: the company pays corporate tax on its profit, and the shareholder pays again on the slice they receive.
This is the heart of the tax comparison. A business that earns profit and pays it all out to its owners is taxed once in an LLP and twice in a company, so the LLP is more efficient. A business that earns profit and reinvests it to grow pays only the entity-level tax in both – and there the company’s 22% can beat the LLP’s 30%. The blunt rule of thumb: pay-out businesses lean LLP, reinvest-and-grow businesses lean company. iPleaders looks at the LLP side of this in more depth in its note on double taxation in an LLP.
What the Income-tax Act, 2025 changes (and does not)
From 1 April 2026, the Income-tax Act, 2025 replaces the 1961 Act. For entity choice, the headline is reassuring: the new Act is a drafting and simplification exercise, not a rate change. It replaces the twin concepts of “previous year” and “assessment year” with a single “tax year“, renumbers provisions, and leaves the actual rates to be fixed each year by the Finance Act. The 30% LLP rate, the 22% and 25% company rates, the treatment of dividends and of partners’ profit share – all carry over unchanged. The maths of the LLP-versus-company decision is the same in 2026 as it was; only the section numbers and some terminology move.
Compliance burden and annual running cost
If tax is a close call, compliance is not. This is where the LLP’s design advantage is clearest, and for many small businesses it is the single biggest reason to prefer it.
What an LLP must file
An LLP’s annual compliance is short. It files Form 11 (an annual return of partners) by 30 May, and Form 8 (a statement of account and solvency) by 30 October. Its accounts need to be audited only if turnover exceeds ₹40 lakh or partner contribution exceeds ₹25 lakh – below both thresholds, no statutory audit is required at all. Designated partners file their DIR-3 KYC by 30 September. And critically, an LLP is not required to hold board meetings or an annual general meeting – there is no board, and partner meetings happen only if the LLP agreement calls for them.
The one sharp edge is the penalty for late filing: an overdue Form 8 or Form 11 attracts ₹100 per day, per form, with no upper limit, so a forgotten filing can quietly balloon.
What a private company must file
A company’s calendar is considerably fuller. Every company must have its accounts statutorily audited every year, regardless of turnover or size – there is no small-business exemption, which is the biggest single difference from an LLP. On top of that it must hold an annual general meeting within six months of the financial year-end, hold a minimum of four board meetings a year (with no more than 120 days between two), and file its financial statements in Form AOC-4 (within 30 days of the AGM) and its annual return in Form MGT-7 (within 60 days). Add the auditor-appointment filing (ADT-1), director KYC (DIR-3 KYC), the return of deposits (DPT-3), the half-yearly MSME return, and a set of statutory registers to maintain.
A company that qualifies as a small company gets meaningful relief here: only two board meetings a year, an abridged annual return in Form MGT-7A, no mandatory auditor rotation, no cash-flow statement, and lower penalties for certain defaults. But even a small company must still be audited every year.
The real cost gap
Put together, the difference in running cost is real. An LLP below the audit thresholds can be maintained for a few thousand rupees a year in professional fees and MCA charges. A private company – with a mandatory audit, more forms, and board and general meetings to minute – typically costs several times that, often ₹15,000 to ₹50,000 or more a year once professional fees are counted. For a bootstrapped business watching every rupee, that gap matters; for a funded company, it is a rounding error against the benefits of the company form.
Raising capital, ESOPs and FDI
For any founder who will one day raise money, this section overrides everything else. It is the reason a venture-backed startup is almost never an LLP.
Why investors prefer the private company
Venture capital and private equity investors deploy money by buying shares – usually compulsorily convertible preference shares (CCPS) or equity, sometimes convertible instruments like convertible notes or compulsorily convertible debentures. Shares let them price a round, take a defined percentage, attach rights like a liquidation preference and anti-dilution protection, sit on the board, and exit cleanly later by selling those shares or through an IPO. A company can issue all of this: equity shares, preference shares, rights issues, and private placements under Section 42 of the Companies Act, 2013. The whole architecture of a modern startup term sheet assumes a share-based cap table.
What an LLP can and cannot offer
An LLP has no shares. Ownership is expressed only as capital contribution and a profit-sharing ratio, and the only way to bring in a new investor is to admit them as a partner. There are no preference shares to carry a liquidation preference, no share classes, no priced equity round in the sense a VC expects, and – decisively – no ESOPs. A company can create an employee stock option pool and let employees earn and eventually sell equity; an LLP structurally cannot, because there is nothing to grant. iPleaders explains the mechanics of an ESOP scheme that only the company form can run. For a startup that needs to attract talent it cannot yet pay in cash, that alone often settles the question.
Foreign investment (FDI) in each
Foreign investment is easier in a company. Foreign direct investment into an LLP is allowed 100% under the automatic route, but only in sectors where 100% FDI is already permitted under the automatic route and there are no FDI-linked performance conditions – both limbs must be satisfied. Investment into an LLP can come only as capital contribution, and foreign portfolio and foreign venture-capital investors are not eligible to invest in one at all. A private company, by contrast, can take foreign investment across a far wider range of sectors and can issue equity, CCPS and convertible debentures to foreign investors at a priced valuation, which is what cross-border venture and private-equity deals require. If foreign money is anywhere in your plans, the company is the safer structure; iPleaders has a primer on the FDI regime in India for the sector detail.
Incorporation: process, cost and timeline
Both forms are registered online with the Ministry of Corporate Affairs, and both are faster than they used to be on the MCA’s V3 portal. The LLP is the lighter and cheaper of the two to set up.
Registering an LLP
An LLP is incorporated through the FiLLiP form (Form for Incorporation of Limited Liability Partnership), which also reserves the name and allots DPINs to the designated partners; a name can alternatively be reserved first through RUN-LLP for ₹200. Designated partners need digital signatures. Once the certificate of incorporation is issued, the LLP agreement must be filed in Form 3 within 30 days. Government filing fees run on a contribution-based slab, from ₹500 for small LLPs up to ₹5,000, and a typical all-in cost with professional fees is around ₹5,000 to ₹15,000. Approval often comes within a few working days.
Registering a private company
A private company is incorporated through SPICe+ (INC-32), an integrated web form that bundles name reservation, incorporation, the electronic memorandum and articles of association (INC-33 and INC-34), DIN allotment, PAN and TAN, and – through the linked AGILE-PRO-S form – GST, EPFO, ESIC and even a bank account. It is remarkably streamlined, but it is doing more, so it involves more documents. The MCA filing fee is nil for authorised capital up to ₹15 lakh, though state stamp duty on the memorandum and articles applies. A step-by-step account is in iPleaders’ guide on how to register a private limited company.
Cost and time compared
A private company typically costs ₹7,000 to ₹25,000 all-in and takes around 10 to 20 working days once documents are in order – more than an LLP on both counts, though neither is expensive in absolute terms. The setup cost is rarely the deciding factor; it is the annual running cost and the fundraising ability that should drive the choice, not the one-time registration bill.
Converting from one to the other
Founders often ask whether they can simply “start as an LLP and convert to a company later.” It is possible, but it is not free, and the tax rules make the reverse direction – company to LLP – the one to watch.
An LLP can be converted into a private company under Section 366 of the Companies Act, 2013 read with the relevant rules, and a private company can be converted into an LLP under Sections 56 and 57 of the LLP Act, 2008. Both are formal processes involving fresh filings, member and partner consents, and creditor protections.
The trap is tax. Converting a company into an LLP is capital-gains-neutral only if it satisfies every condition in Section 47(xiiib) of the Income-tax Act: among them, the company’s turnover must not have exceeded ₹60 lakh in any of the three preceding years, the total book value of its assets must not have exceeded ₹5 crore in any of those years, all shareholders must become partners in the same proportion and hold at least 50% of profits for five years, and no accumulated profit may be paid out to partners for three years. A growing company will usually breach the turnover or asset limit, and if any condition fails, the conversion is treated as a taxable transfer. iPleaders examines this in its analysis of whether conversion of a company into an LLP constitutes a transfer. The practical lesson: converting a small, young business is manageable, but a successful company that has outgrown these limits can face a real tax cost to become an LLP – so choose deliberately at the start rather than assuming a cheap switch later.
What has changed for 2026 – and what is coming
The structures themselves are stable, but the rules around them have moved recently enough that a 2026 reader should know the current position.
The LLP (Amendment) Act, 2021, in force from 1 April 2022, reshaped the LLP in three ways worth knowing. It created a category of “small LLP” (broadly, one with contribution up to ₹25 lakh and turnover up to ₹40 lakh, extendable by notification), it decriminalised 12 offences by moving them from criminal prosecution to an in-house civil-penalty mechanism, and it introduced adjudicating officers and lighter penalties for small and start-up LLPs. The effect was to make the LLP even easier and less risky to run.
On the horizon is the Corporate Laws (Amendment) Bill, 2026, introduced in the Lok Sabha in March 2026. It proposes to amend both the Companies Act, 2013 and the LLP Act, 2008, decriminalising a range of offences under each and converting them into civil penalties, and it would double the small-company thresholds to ₹20 crore paid-up capital and ₹200 crore turnover. As of mid-2026 it has been referred to a Joint Committee and is not yet law, so it should be read as a proposal; its progress can be tracked through PRS Legislative Research. Alongside the legislation, LLP registrations have been rising sharply – the MCA has reported record LLP incorporations in recent years – as more small businesses pick the lighter form.
Which one should you choose?
Strip away the detail and the decision comes down to what your business will need money and people to look like.
Choose an LLP if…
You are bootstrapped and intend to stay that way; you run a professional practice or a service or consulting business; ownership will stay with a small, known group; you want the lowest possible compliance and running cost; and you will distribute most of your profit to yourselves rather than reinvest it. For a law firm, a design studio, a family trading business, or a two-founder agency, the LLP is usually the right call. It gives limited liability, single-layer tax on distributed profit, and a compliance calendar you can almost keep in your head.
Choose a private company if…
You will raise money from angels, venture capital or private equity; you want to grant ESOPs to hire ahead of your cash; you expect to scale, bring in institutional investors, or exit through a sale or IPO; you need credibility with large customers, banks and investors; or foreign investment is in your plans. The extra compliance and the mandatory audit are the price of admission to all of that, and for a business on a growth path they are worth paying. A solo founder who wants the company form can start with a one person company and convert to a private company as they add shareholders.
Still unsure? One question that decides it
Ask this: will anyone ever buy equity in this business – an investor, a co-founder, or an employee through options? If the honest answer is yes, or even probably, choose a private limited company, because only it can issue the shares that make that possible, and converting later can be slow and taxable. If the answer is a confident no, the LLP will save you money and effort for years. Most founders who are genuinely undecided are building something they hope will raise capital – and for them, the company is the safer default.
Frequently asked questions
Which is better for a startup – an LLP or a private limited company?
For a startup that will raise external funding or grant ESOPs, a private limited company is almost always better, because only a company can issue shares to investors and stock options to employees. An LLP suits a bootstrapped, self-funded startup that will not sell equity – a services or consulting business, for instance. The deciding question is whether you will ever raise money.
Which has lower compliance and is cheaper to maintain?
The LLP, clearly. It files only two main annual forms (Form 8 and Form 11), needs an audit only above ₹40 lakh turnover or ₹25 lakh contribution, and holds no board meetings or AGM. A company must be audited every year regardless of size and must hold board meetings and an annual general meeting, so it costs several times more to run.
Can an LLP raise funding from VCs or angel investors?
In practice, rarely. Venture capital and angel investors invest by buying shares with attached rights (preference, anti-dilution, board seats, a clean exit), and an LLP has no shares to offer – only partner capital contributions. Investors almost always require the business to be a private limited company before they will invest.
Can an LLP issue shares or grant ESOPs?
No. An LLP has no share capital, so it cannot issue equity or preference shares and cannot create an employee stock option plan. Ownership can only be shared by admitting someone as a partner. If granting equity to employees or investors matters to you, you need a company.
Which is more tax-efficient in 2026?
It depends on whether you distribute or reinvest profits. An LLP is taxed once (a flat 30% plus surcharge and cess), and the partners’ profit share is exempt, so a business that pays out its profit is more efficient as an LLP. A company can be taxed twice – corporate tax plus tax on dividends in shareholders’ hands – but its 22% concessional rate can beat the LLP’s 30% for profits that are reinvested rather than distributed.
Is there double taxation in a private limited company?
There can be. The company pays corporate tax on its profit, and when it distributes that profit as a dividend, the shareholder pays tax again at their slab rate. There is no such second layer in an LLP, where the partners’ profit share is exempt in their hands. Double taxation only bites when profits are actually distributed, not when they are retained in the company.
Can I convert an LLP into a private limited company, or vice versa?
Yes, both conversions are permitted – an LLP into a company under Section 366 of the Companies Act, 2013, and a company into an LLP under Sections 56-57 of the LLP Act, 2008. The catch is tax: converting a company into an LLP is capital-gains-neutral only if it meets all the conditions of Section 47(xiiib), including a ₹60 lakh turnover limit and a ₹5 crore asset limit, which a grown business often fails.
Which is cheaper and faster to register?
An LLP. It is incorporated through the FiLLiP form for roughly ₹5,000 to ₹15,000 all-in and is often approved within a few working days. A private company, registered through SPICe+, typically costs ₹7,000 to ₹25,000 and takes around 10 to 20 working days, because the process bundles in more registrations.
Is FDI allowed in an LLP? Can NRIs invest in one?
Foreign direct investment in an LLP is allowed 100% under the automatic route, but only in sectors where 100% FDI is permitted automatically and there are no FDI-linked performance conditions, and only as capital contribution. NRIs can invest on that basis, but foreign portfolio and foreign venture-capital investors cannot invest in an LLP at all. A company allows a far wider range of foreign investment and instruments.
What are the audit requirements for an LLP vs a company?
A private company must have its accounts audited every year, without any turnover exemption. An LLP must be audited only if its turnover exceeds ₹40 lakh or its partner contribution exceeds ₹25 lakh; below both, no statutory audit is required. This is one of the biggest practical differences in running cost.
How many partners or members does each need?
An LLP needs a minimum of two partners and has no maximum. A private company needs a minimum of two members and is capped at 200 members. Both need at least two individuals to start (an LLP needs two designated partners; a company needs two directors), and each must include at least one India-resident individual.
Which has more credibility with banks, clients and investors?
The private company is generally perceived as more credible by investors and large institutional customers, largely because of its share-based structure, mandatory audit, and fuller public disclosure. An LLP is well accepted for professional and service businesses. For dealing with venture investors specifically, the company is effectively expected.
Can an LLP be listed on a stock exchange or go for an IPO?
No. An LLP has no shares, so it cannot list securities or raise money from the public through an IPO. Only a company (converted to a public company) can list. A business that aspires to an eventual IPO should be a company from the outset, or plan to convert well before it needs public capital.
References
Statutes and rules
- Limited Liability Partnership Act, 2008 – Sections 3, 6, 7, 23, 26-28 (structure, partners, designated partners, LLP agreement, liability); First Schedule (default terms).
- Limited Liability Partnership (Amendment) Act, 2021 – in force 1 April 2022 (small LLP, decriminalisation of 12 offences, adjudicating officers).
- Companies Act, 2013 – Sections 2(68), 2(85), 3, 42, 62, 139, 143, 149, 173, 366 (private company, small company, audit, directors, meetings, private placement, conversion).
- Companies (Amendment) Act, 2015 – removal of minimum paid-up capital.
- Companies (Specification of Definitions Details) Amendment Rules, 2022 – G.S.R. 700(E), dated 15 September 2022 (small-company thresholds ₹4 crore / ₹40 crore).
- Income-tax Act, 1961 – Sections 10(2A), 40(b), 47(xiiib), 115BAA, 115BAB, 194, 194T; and the Income-tax Act, 2025 (in force 1 April 2026, rate-neutral, “tax year”).
- Foreign Exchange Management (Non-Debt Instruments) Rules, 2019 – FDI in LLPs (automatic route conditions).
- Corporate Laws (Amendment) Bill, 2026 – PRS Legislative Research (proposed, not yet law).
Case law
- Salomon v. A. Salomon & Co. Ltd., [1897] AC 22 (House of Lords) – a company is a separate legal person distinct from its members (foundational; UK judgment, the basis for separate legal personality in both forms).
Disclaimer: This article is for informational and educational purposes only and does not constitute legal, tax or financial advice. Company law, the LLP framework, and tax rates change through amendment, notification and the annual Finance Act; readers should verify the current position and consult a qualified company secretary, chartered accountant or lawyer before making incorporation, tax or conversion decisions specific to their situation.
