Analysis of the Limited Liability Partnership Act 2017

Analysis of the Limited Liability Partnership Act 2017

Salient features

Initially, there were only three forms of incorporating a company in Pakistan which included partnership, sole proprietorship and a limited liability company. However, what was always lacking was the presence of Limited Liability Partnerships (LLPs). To bridge this gap, the Limited Liability Partnership Bill 2016 was put forward by the National Assembly of Pakistan which, after considerable discussion, has been finally passed by the upper legislative chamber of Pakistan, the Senate.

The LLP law provides a new initiation of a flexible corporate medium to enable professionals and entrepreneurs to amalgamate, arrange and utilize their competence in an unconventional and systematic manner. In Pakistan, this need has always been recognized for businesses, however, the same has been made applicable for the service sector only recently.

The service sector has always played a supreme role in the national economy, and diversity in the range of services is never ending. The trump card of the LLP form of business is that it will not require complicated legal and procedural pre-requisites otherwise acceptable for enormous and universally held companies. The growth of Pakistan’s economy is dependent upon local innovators and professionals.

Corporate bodies are radical stimulants of growth and the introduction of LLP will serve to boost corporate development. The LLP is a revised, efficient and internationally sustainable business vehicle.

The propounded law also provides that the LLP will be a corporate body under which the right of a partner to a share of profits is transferable either wholly or partly.

However, it needs to be kept in mind that,

  1. The transfer of any such rights will not result in the dissolution of LLP.
  2. The law also provides the conversion of firms (including private companies) into LLPs.
  3. The LLPs are proposed to be taxed as partnerships but will have the benefits of being corporate, separate juristic entity, having perpetual succession but distinct from its partners, whereas traditional partnership lacks such features.

The prominent features of the draft regulations include the implementation of a suitable and proper benchmark to the majority shareholders, directors and senior management officers.

In addition, the LLP is also functional for promoting startups such as investment firms and financial service providers. The main rationale is that the compliance costs are considerably reduced for an LLP due to the less burdensome legal and procedural requirements for companies registered under the Companies Ordinance 1984.

Briefing the committee, Securities and Exchange Commission of Pakistan (SECP) Chair Zafar Hijazi said, “The main advantage of the LLP for business is that it will not require complex legal and procedural requirements suitable for large and widely held companies.”

Registration procedure

For a limited liability partnership to be registered,

1. Two or more persons associated for carrying on a lawful business with a view to profit shall have subscribed their names in an incorporation document.

The incorporation document shall:

  • (a) Be in the form as prescribed by the Commission through regulations;
  • (b) State the name of the limited liability partnership;
  • (c) State general nature of its main business and any other ancillary object thereto, which it proposes to carry on as a limited liability partnership;
  • (d) State the part of the Pakistan in which the registered office is to be situated;
  • (e) State the name and residential address of the partners of the limited liability partnership on incorporation;
  • (f) Specify designated partners;
  • (g) State that the liability of its partners shall be limited; and
  • (h) Contain other information concerning the proposed limited liability partnership as may be prescribed by the Commission through regulations.

2. There needs to be a registered office to which all communications have to be made. If the registered office is to be changed, notice must be delivered to the registrar within 15 days.

3. The document shall be filed with a prescribed fee.

4. Providing a statement/information which is false will be considered an offence. Such person may be punished with imprisonment for up to two or more years and may be fined up to one million rupees.

Provisions related to name

  1. Every partnership should have the acronym LLP as the last letters of its name. The registered name of the LLP should not be undesirable or inappropriate, deceptive or one which designed to exploit or affect the religious susceptibility of people.
  2. It should not be identical to any already existing LLP.
  3. Unless approved in writing by the Commission, no limited liability partnership shall be registered by a name which contains any words suggesting the patronage of any past or present Pakistani or foreign head of state, provincial or federal laws or international organization, etc.
  4. Every LLP should have its name outside every office or place where its business is carried out in legible English or Urdu letters. If this is not done, there shall be a fine of maximum Rs 10,000 per day.
  5. Any change of name or other rectification with respect to limited liability partnerships can be requested to the Commission which may, through regulations prescribed for such provisions and subject to the fee, make such amendments.


The views expressed in this article are those of the authors and do not necessarily represent the views of or any other organization with which they might be associated.

Noor Ul Ain Iftikhar

Author: Noor Ul Ain Iftikhar

The writer is an LLB student at LGS and has served as an intern at Courting The Law.

Gulmeena Roghani

Author: Gulmeena Roghani

The writer is an LLB student at LGS and has served as an intern at Courting The Law.

Mahroo Rashed

Author: Mahroo Rashed

The writer is an LLB student at LGS and has served as an intern at Courting The Law.