LLP and Private Limited Company

Compliance thresholds and requirements are periodically revised. This article is for general information and does not constitute tax advice.

LLP: Structure and Compliance

Governed by the LLP Act, 2008, an LLP is a separate legal entity needing a minimum of 2 designated partners, one resident in India, no maximum limit, and no minimum capital requirement. Audit is mandatory only once turnover exceeds ₹40 lakh or partner capital contribution exceeds ₹25 lakh. Two annual filings anchor compliance: Form 8 (Statement of Account and Solvency, always CA/CS/CMA-certified) and Form 11 (annual return, needing additional CS certification once turnover crosses ₹5 crore or contribution crosses ₹50 lakh, independently). An LLP must file ITR-5 every year regardless of activity; persistent non-filing can lead to strike-off and a 5-year disqualification for designated partners.

Private Limited Company: Structure and Compliance

Governed by the Companies Act, 2013 (recently amended by the Companies (Amendment) Act, 2025), needing 2-200 shareholders and 2-15 directors, with no minimum paid-up capital. Compliance runs noticeably heavier: 4 board meetings a year, an AGM, annual Form AOC-4 and MGT-7/MGT-7A filings, and statutory registers. The 2025 amendments expanded director disqualification grounds under Section 164 and revised the “small company” thresholds under Section 2(85).

Why Founders Often Choose the Heavier Compliance Anyway

VCs, angel networks, and institutional investors overwhelmingly prefer the Companies Act structure for issuing equity, preference shares, convertibles, and ESOPs, and directors’ fiduciary duties under Sections 166 and 170 give investors enforceable governance protections an LLP agreement can’t replicate.