What is the difference between an LLP and a general partnership?

A Limited Liability Partnership (“LLP”) allows the partners to retain the flexibility of a partnership agreement but is not regulated by an identical set of legal principles governing partnerships. In addition, compared to a partnership, an LLP must keep up its financial records and report its financial status of solvency or insolvency annually. Also, as the partners enjoy limited liability, it cannot be terminated as easily as a general partnership. The law provides a comprehensive set of rules to govern the winding up of LLPS to ensure protection to the creditors. However, as the LLP is a novel concept, we think financial institutions and potential business partners may be more reserved when dealing with it than a company or general partnership. The law also restricts certain categories of persons (see sections 33 to 37 of the Limited Liability Partnerships Act) who can manage an LLP. An LLP has different advantages and disadvantages compared to a company and a general partnership. Parties concerned should consider the pros and cons of each type of vehicle to decide which suits them the most.