Legal Limitations

• LLP Act does not provide explicit borrowing limits

• Borrowing must align with objects stated in LLP agreement

• No public borrowing allowed like companies issuing debentures

• Cannot accept unsecured public deposits from individuals

• Legal action possible if borrowing violates regulations

Partner Consent

• Borrowing must be approved by all or majority partners

• Resolution must be passed before taking loans or credit

• Contribution obligations must be clear in agreement

• Unauthorized borrowing may not bind other partners

• Partner consent ensures shared responsibility and clarity

Documentation and Disclosures

• Borrowing terms must be documented in official records

• Loan agreements must be signed by designated partners

• Disclosures to RoC may be required based on amount

• Proper accounting entries must reflect liabilities

• Non-disclosure may result in compliance issues

Bank and Lender Conditions

• Financial institutions may require LLP creditworthiness

• Personal guarantees by partners may be demanded

• Lenders may ask for audited financial statements

• Banks often assess LLP agreement before lending

• Restrictive covenants may apply on borrowed amount

Foreign and Sectoral Restrictions

• Foreign borrowings subject to FEMA and RBI norms

• External loans require prior approval under ECB policy

• Certain regulated sectors may impose borrowing limits

• LLPs with foreign partners face additional scrutiny

• Sector-specific acts may override LLP borrowing freedom