The Securities and Exchange Commission of Pakistan (SECP) is introducing the concept of limited liability partnership (LLP) in Pakistan in collaboration with other stakeholders.
Initially, the SECP has approved a concept paper in this regard, which has been placed on its website to help raise awareness and solicit public and stakeholders’ comments.
An LLP is a partnership in which some or all partners have limited liabilities, which means that one partner is not responsible or liable for another partner’s misconduct or negligence.
Introducing LLP as a new business structure will fill the gap between business firms — such as sole proprietorships and partnerships, which are generally unregulated — and limited liability companies that are governed by the Companies Ordinance, 1984.
Good initiative by Security exchange commission of Pakistan, as if a business owner has “limited liability,” it means that he or she is not personally responsible for business debts and obligations of the corporation. In other words, if the corporation is sued, only the assets of the business are at risk, not the owners’ (shareholders) personal assets, such as their houses or cars. The corporation’s owners must comply with certain corporate formalities, keep up with paperwork requirements, and adequately fund (“capitalize”) their business to maintain this limited liability privilege. For more information, see Nolo’s article Corporation Basics.
Limited liability, traditionally associated with corporations, is the main reason most people consider incorporating.
However, other business structures, such as limited liability companies (LLCs), now offer this limited personal liability to business owners. Sole proprietorships and general partnerships do not.