ISLAMABAD: The National Assembly Standing Committee is scheduled to take up the Limited Liability Partnership (LLP) Bill 2016 on Wednesday, which is a new concept of business as under this law one partner of the business is not responsible or liable for another partner’s misconduct or negligence.
The Securities and Exchange Commission of Pakistan (SECP) has said that the bill would help corporatisation of the economy.
The LLP bill was presented in the National Assembly by Parliamentary Secretary Rana Muhammad Afzal Khan on behalf of Finance Minister Ishaq Dar.
The SECP has prepared the bill after extensive consultation sessions with all the stakeholders and believes that the need for such laws has been required for businesses which require a framework that provides flexibility suited to requirements of small and medium enterprises and service sector.
The proposed law requires that any legal business can be established with a minimum of two partners as limited liability partnership and they will be required to add ‘LLP’ at the end of the firm’s name.
“The advantage of the LLP is that the firm would enjoy benefits of a company, easing its access to financing and loans,” said an official of the SECP. “However the stringent requirements of establishing a company are not attached with the LLP laws.”
The official said that since small partnership businesses have an average of 2-4 partners, therefore the mandatory requirements of holding board meetings or AGMs have not been incorporated in the proposed LLP law.
“Besides the high corporate taxes would not be applicable on the LLPs as they are usually small and micro businesses,” the official added.
The SECP has said that the services sector is playing a major role in the national economy and there is a growing diversity in the range of services being offered, the LLP would be beneficial for establishment of service industry firms in formal sector.
Currently the joint businesses are either established under the Partnership Act 1932, but that does not fulfil the modern requirements, while establishing a ‘company’ is difficult for a small business entity managed by two or more persons. The proposed law also allows provisions for foreign LLP to operate in Pakistan.
Published in Dawn, August 24th, 2016
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