ISLAMABAD - The Senate Standing Committee on Finance on Thursday approved the Limited Liability Partnership (LLP) Bill, 2017.

The proposed LLP framework possesses limited liability, active member management, simplicity and ease of doing business. The LLP Bill provides for establishment of new corporate vehicle to enable professional expertise and entrepreneurial initiative to combine, organise and operate in an innovative and efficient manner having benefit of limited liability on account of incorporation. In Pakistan, this need has long been recognised for businesses, requiring a framework that provides flexibility suited to requirements of small and medium enterprises and service sector in particular.

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 main advantage of the LLP form business is that it will not require complex legal and procedural requirement suitable for large and widely held companies. The growth of Pakistan economy is contingent upon local entrepreneurs and professionals. The introduction LLP will provide professional and entrepreneur a platform at par with other international jurisdiction to combine and organise and operate in flexible and innovative framework. The corporate entities are catalyst of growth and introduction of LLP will serve impetus for corporate growth. The LLP is an updated, dynamic and internationally acceptable business vehicle. The LLP Bill provides a new form of business structure, which would fill the gap between business firms such as sole proprietorships/partnerships, the liability of whose partners is unlimited, and the companies governed under the Companies Ordinance, 1984, whose members enjoy the benefits of limited liability.

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.

Besides, the right of a partner to a share of the profits is transferrable either wholly or partly. However, the transfer of any such rights will not cause dissolution of the LLP. The law also provides the conversion of firms (including private companies) into LLPs. The LLPs 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 whereas traditional partnership lacks such features. The promulgation of LLP will provide much needed support to the corporatisation of the economy of Pakistan and creation of business opportunities by roping in young entrepreneur and professional as incorporation of LLP does not have any requirement of minimum capital contribution among others incentives.