Functions of a limited partnership
The main function of a limited liability company is to increase the chances of partners to increase their individual profits and security compared to what they would gain if they acted individually. The conclusion of a partnership agreement may also allow partners to compensate for weaknesses and take advantage of each other's strengths: one partner may bring significant financial assets, another may offer well-developed production facilities, and another may have a wide network of clients, etc.
In addition, limited liability companies do not have special functions and differ from other legal business structures primarily in the way the roles are divided between the partners. A limited liability company can conduct any type of business, including trade, services, production, etc.
Advantages of a limited liability company
There are two main advantages to a limited liability company:
Cooperation
Asset protection
In a limited liability company, partners work together to achieve more than individually, compensating for their weaknesses and combining their strengths. A limited liability company can generate larger capital investments by introducing new limited partners, significantly expanding the company's financial capabilities.
Another important aspect is the protection of partners' assets. Since they are free to control their contributions, a partnership enables them to earn profits without taking much financial risk. Moreover, since all partners have equal management rights and no single shareholder has exclusive powers, limited liability companies tend to be more democratic. Such a structure creates good conditions for sustainable management, because each party is controlled by all.
Best jurisdictions to register a limited liability company
Although the basics of limited liability companies are almost identical in all jurisdictions, local laws introduce small differences that can add up to significant differences in the standard type of company.
In Japan, for example, an LLP is functionally more a collection of contractual relationships between partners than a standalone business entity, and each partner must actively engage in the business in their own way. This gives each party more freedom and forces the LLP to be active to be effective, driving the development of business strategy.
Indian law is favorable for LLP incorporation as it does not require any minimum capital. Other types of partnerships require partners to contribute a certain amount of assets, while LLPs are not subject to such restrictions. This allows many junior partners to join the structure, with the potential to become equal partners in the future. This ensures that a limited liability company in India is able to draw initial assets from a wider range of sources than any other type of legal company