ISLAMABAD: The Senate Standing Committee on Finance and Revenue has passed the Limited Liability Partnership (LLP) Bill 2017, which is an updated, dynamic and internationally acceptable business vehicle.

The committee, headed by Senator Saleem Mandviwalla, was informed that the proposed law provides for establishment of new corporate vehicle to enable professional expertise and entrepreneurial initiative to combine, organise and work in an innovative and efficient manner having benefit of limited liability on account of incorporation.

Sec­urities and Exchange Commission of Pakistan (SECP) Chairman Zafar Hijazi briefing the committee said it has long been recognised that businesses need a framework which provides flexibility suited to requirements for small and medium enterprises and the service sector in particular.

He said that the services sector was playing a major role in the national economy and there is a growing diversity in the range of services being offered.

“The main benefit of the LLP for business is that it will not require complex legal and procedural requirements for large and widely held companies,” he added.

The committee was informed that growth of Pakistan’s economy is dependent upon local entrepreneurs and professionals, and the introduction of LLP will provide professionals’ and entrepreneurs’ a platform at par with other international jurisdiction to operate in flexible and innovative framework.

It was further informed that LLP will be a corporate body, 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 transferable 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.

Once LLP is set forth, it will provide the much needed support towards the corporatisation of the economy of Pakistan and the creation of business opportunities by roping in young entrepreneurs’ and professionals’ as incorporation of LLP does not have any requirements of minimum capital contribution among others incentives.