CMA Laws and Ethics Limited Liability Partnership Act 2008 Question and Answers

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Limited Liability Partnership Act 2008

Question 1. Meaning of LLP
Answer:

Any two or more persons associated with carrying on a lawful business to earn profit may form a limited liability partnership by subscribing their names to an incorporation document and registration with the registrar of companies.

Question 2.Mutual Rights and duties of partners
Answer: Mutual rights and duties of partners of a Limited Liability Partnership inter- se and those of the Limited Liability Partnership and its partners shall be governed by an agreement between the partners.

Question 3. No. of Partner
Answer: Every Limited Liability Partnership shall have at least two designated partners who are individuals and at least one of them shall be a resident of India.

Question 4. LLP Agreement
Answer:

The mutual rights and duties of the partners of a limited liability partnership and the mutual rights and duties of a limited liability partnership and its partners shall be governed by the limited liability partnership agreement between the partners or between the limited liability partnership and its partners.

Question 5. Solvency
Answer:

  • Every felted Dabinty partnership shall file the Statement of Account and Seventy in Form S with the Registrar, within thirty days from the end c:
  • six months of the financial year to which the Statement of Account is Solvency relates.
  • A limited liability partnership’s Statement of Account and Solvency shall be signed on behalf of the limited liability partnership by fits designated partners.

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Question 6. Accounts Audited
Answer:

A felted liability partnership whose turnover exceeds forty lakh rupees, in any financial year or whose contribution exceeds twenty-five lakh rupees (should be required to cst its accounts audited.

Question 7. Annual Return
Answer: Every feted BabTetypartnership shall file an annual return with the Registrar in Form 11.

Question 8. Foreign LLP
Answer:

As per rule 34(1) of the LLP Rules, a foreign limited liability partnership srs. l when thirty days of establishing a place of business in India, file with the Registrar in Form 27

  1. A copy of the certificate of incorporation;
  2. The full address of the registered or principal office of the limited liability. I partner with the country of its incorporation;
  3. The full address of the office of the limited liability partnership in India which is to be deemed as its principal place of business in India;
  4. Cst of partners and designated partners, if any, and the names and addresses of two or more persons resident in India, authorized to accept on behalf of the limited liability partnership, service of process, and any notices.

Limited Liability Partnership Act 2008 Short Note Question And Answers

Question 1. Write a short note about unlimited Liability Partnership
Answer:

Limited Liability Partnership is formed under the Limited Liability Partnership Act,

Its essential features are:

  1. A limited liability partnership is a body corporate formed and incorporated under this Act and is a legal entity separate from that of its partners and the liability of partners is limited.
  2. A limited liability partnership shall have perpetual succession.
  3. Any change in the partners of a limited liability partnership shall not affect the existence, rights, or liabilities of the limited liability partnership.
  4. The provisions of the Indian Partnership Act, of 1932 shall not apply to a
    limited liability partnership. ,
  5. Any individual or body corporate may be a partner of LLP.
  6. Every limited liability partnership shall have at least two partners.
  7. Every limited liability partnership shall have at least two designated partners who are individuals and at least one of them shall be a resident in India.
  8. Every limited liability partnership shall have a registered office to which all communications and notices may be addressed and where they shall be received.
  9. Every limited liability partnership shall have either the words “limited liability partnership” or the acronym “LLP” as the last words of its name.

Question 2. Write a short note on the Annual Return (limited liability partnership)
Answer:

  • Annual return: (Section 35): As per Section 35 of the LLP Act, every LLP shall file an annual return within sixty days of its financial year in such form and manner as may be prescribed.
  • Such return should be accompanied by prescribed fees
  • If the LLP fails to comply with the provisions of Section 35 regarding filing of annual return, the LLP will be punishable with a fine which shall not be less than twenty-five thousand rupees but which may extend to five lakh rupees and every designated partner of such LLP shall be punishable v/ith fine which shall not be less than ten thousand rupees but which may extend to one lakh rupees.

Limited Liability Partnership Act 2008 Descriptive Question And Answers

Question 1. Comment on the following based on legal provisions Provisions of Indian Partnership Act 1932 apply to LLPs and the Body corporate may be a partner of LLP.
Answer:

The rules and regulations relating to Limited Liability Partnership have been described in the Limited Liability Partnership Act 2008, hence provisions of the Indian Partnership Act 1932 are not at all applicable to LLP’s. As regards the second portion of the question, the body corporate may be a partner in the LLP as per the LLP Act 2008.

Question 2. If the following statements are not correct, give the correct

  1. Authorized capital for the formation of a limited liability partnership (LLP) is one crore.
  2. Maximum number of partners in a LLP shall not exceed 50.
  3. Foreign nationals can also be partners in a LLP.
  4. The audit is not required in LLP in any circumstances.

Answer:

  1. Since the authorized capital is not specified in the Act.
  2. No maximum limit and no specific number are specified in the Act.
  3. Yes, foreign Nationals can also be partners.
  4. The audit is required if the contribution is above INR 25 Lakhs or if the annual turnover is above INR 40 Lakhs.

Question 3. What are the circumstances in which a Limited Liability Partnership may be wound up by the Tribunal?
Answer:

The circumstances in which a limited liability partnership may be dissolved by the Tribunal are provided in Section 64 of the Limited Liability Partnership Act, 2008 A limited liability partnership may be wound up by the Tribunal in the following ways:

  1. The limited liability partnership decides that the limited liability partnership be wound up by the Tribunal;
  2. if, for more than six months, the number of partners of the limited liability partnership is reduced below two;
  3. if the limited liability partnership has acted against the interests of the sovereignty and integrity of India, the security of the state, or public order;
  4. if the limited liability partnership has made a default in filling with the Registrar the statement of account and solvency or annual return for any five consecutive financial years; or
  5. if the Tribunal thinks that it is just and equitable that the limited liability partnership be wound up.
  6. If the limited liability partnership is unable to pay its debts.

Question 4. Explain the concept of ‘whistle-blowing’ concerning the Limited Liability Partnership Act, 2008.
Answer:

A whistleblowing policy is a policy in which a mechanism is established to listen and take action against any wrong practice anywhere in the company. The concept has been discussed in Section 31 of the Limited Liability Partnership Act, 2008. As per the Section:

  1. The Court or Tribunal may reduce or waive any penalty leviable against any partner or employee of a limited liability partnership if it is satisfied that:
    • such partner or employee of a limited liability partnership has provided useful information during an investigation of such limited liability partnership; or
    • when any information given by any partner or employee (whether or, not during the investigation) leads to a limited liability partnership or any partner or employee of such a limited liability partnership being convicted under this Act or any other Act.
  2. No partner or employee of any limited liability partnership may be discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against the terms and conditions of his limited liability partnership or employment merely because of his providing information or causing information to be provided under sub-Section(l).

Question 5. A Limited Liability Partnership is not bound by any act of its member. Justify.
Answer:

  • If the member has no authority to act on behalf of the LLP, the LLP is not bound by his act.
  • A limited liability partnership is not bound by any act of a member in dealing with persons if:
  • The member has no authority to act for the limited liability partnership by doing that thing.
  • The person knows that the member has no authority or does not know or believe him to be a member of the limited partnership.

Question 6. A limited liability partnership wants to shift its registered lice from Udaipur in the State of Rajasthan to Gurgaon in the State of Haryana. What procedure the corporation has to follow
Answer:

  • Sec . 13 of the LLP Act states that a limited liability partnership may change the place of its registered office and file the notice of such change with the register from 15 within 30 days
  • The registered office can be changed from one place to another place in the manner provided in the partnership Agreement if the agreement is silent then the consent of all partners shall be required to change the place of the registered office of the limited liability partnership to another place.
  • where the Change in place of register the limited liability partnership consent of such secured on Where the change in place another state, a general notice with Registrar, is ret published in English and in the registered office of the circulating in that district.
  • However, there is just the jurisdiction of another Reg the notice in Form 15 with partnership proposes to send the information to the Reg office is proposed to be sf Failure to comply with the partnership and its every p shall not be less than two twenty-five thousand rupees.

Question 7. Explain the extent c Section 26 of LLP Ac
Answer:

  • The extent of liability of a limited partnership is contained in Section 27 which is as under:
  • A limited liability partnership is not bound by anything done by a partner in dealing with a person if:
  • The partner in fat has no authority to act for the limited liability partnership in doing a particular act: and
  • The person knows that he has no authority or does not know or believe him to be a partner of the limited liability partnership.
  • An obligation of the limited liability partnership whether arising in contract or otherwise, shall be solely the obligation of the limited liability partnership.
  • The liabilities of the limited liability partnership shall be met out of the property of the limited liability partnership.

Question 8. For any contravention of provisions of the LLP Act or LLP agreement, all the partners of the LLP are liable for all penalties. Offer your views based on the Limited Liability Partnership Act, of 2008.
Answer:

  • False, it is the designated partner who is responsible for doing all acts matters, and things as are required to be done by LLP as per the Act or as specified in the LLP agreement.
  • Unless expressly provided otherwise in this Act, a designated partner shall be responsible for doing all acts, matters, and things as are required to be done
  • The limited liability partnership in respect of compliance with the provisions of this Act including the filing of any document, return, statement, and the like report under the provisions of this Act and as may be specified in the limited liability partnership agreement and liable to all penalties imposed on the limited liability partnership for any contravention of those provisions.

Question 9. Limited Liability Partnerships are body corporate. Do you agree? Justify.
Answer:

  • Limited liability partnership to be body corporate:
  • A limited liability partnership is a body corporate formed and incorporated under this Act and is a legal entity separate from that of its partners.
  • A limited liability partnership shall have perpetual succession.
  • Any change in the partners of a limited liability partnership shall not affect the existence, rights, or liabilities of the limited liability partnership.

Question 10. List the circumstances under which a LLP formed under the LimitedLiability Partnership Act, 2008 may be wound up by a tribunal.
Answer:

  1. A limited liability partnership may be wound up by the Tribunal, if:
  2. The limited liability partnership decides that the limited liability partnership be wound up by the Tribunal;
  3. If, for more than six months, the number of partners of the. limited liability partnership is reduced below two;
  4. If the limited liability partnership is unable to pay its debts;
  5. If the limited liability partnership has acted against the interests of the sovereignty and integrity of India, the security of the State or public order;
  6. If the limited liability partnership has made a default in filing with the Registrar the Statement of Account and Solvency or annual return for any five consecutive financial years; or
  7. If the Tribunal thinks that it is just and equitable that the limited liability partnership be wound up.

Question 11. A limited liability partnership wants to shift its registered office from Mumbai in the State of Maharashtra to Kolkata in the State of West Bengal. What procedure does the corporation have to follow under the Limited Liability Partnership Act, of 2008?
Answer:

According to Sec. 13 of the LLP Act Provides that a limited liability partnership may change the place of its registered office and file the notice of such change with the Registrar in form 15 within 30 days.

  • The registered office can be changed from one place to another place in the manner provided in the Partnership Agreement, if the agreement is silent then the consent of all partners shall be needed to change the place of the registered office of the limited liability partnership to another place, where the change in place of the registered office is from one State to another State, the limited liability partnership having secured creditors shall also obtain the consent of such secured creditors.
  • Where the change in place of the registered office is from one State to another State, a general notice, not less than 21 days before filing any notice with the Registrar, is needed- to be published in a daily newspaper published in English and in the principal language of the district in which the registered office of the limited liability partnership is situated and circulating in that district giving notice of change of registered office.
  • Although, there is just a change in the jurisdiction of one Registrar to the jurisdiction of another Registrar; the limited liability Partnership shall file the notice in Form 15 with the Registrar from where the Limited liability partnership proposes to shift its registered office with a copy thereof for the information to the Registrar under whose Jurisdiction the registered office is proposed to be shifted.
  • Failure to comply with the provision of this section the limited liability partnership and its every partner is liable to be punishable with a fine which shall not be less than two thousand rupees but which may extend to twenty-five thousand rupees.

Alternate Answer:

Change of LLP Office from one State to another (in the given problem, it is from Mumbai, Maharashtra to Kolkata, West Bengal)

  1. Resolution for Change of Address: It should be done as per LLP Agreement. If where the Limited LLP doesn’t provide for any such procedure, consent of all partners shall be required for changing the place of the Registered Office of Limited LLP to another place.
  2. Secured Creditors: Consent of Secured Creditors is required for such a change of address.
  3. Form to be filed: Form-15 is to be filed with the Registrar from where (here it is Mumbai) the LLP proposes to shift its registered office with a copy thereof for the information to the Registrar under whose jurisdiction (Kolkata) the registered office is proposed to be shifted within 30 days of such change.
  4. Public Notice: Publish a general notice, not less than 21 days before filing any notice with the Registrar, in a daily newspaper published in English and another regional language where the registered office of the LLP is situated (Mumbai, Maharashtra) and circulated in that district giving notice of change of registered office.
  5. From when to be filed: Within 30 days of publishing of notice.
  6. Penalty: Failure to comply with these provisions, the LLP and its every partner is liable to be punishable with a fine which shall not be less than two thousand rupees but which may extend to twenty-five thousand rupees

Question 12. Discuss the procedure of conversion from a private limited company into a limited liability partnership.
Answer:

The procedure of conversion from a private limited company into a Limited Liability Partnership is examined below:

Para 1 (b) of the third schedule defines the term ’convert’ about a private company converting into an LLP, as a transfer of the property, assets, interests rights privileges, liabilities, obligations, and the undertaking of the private company to the LLP by the third schedule.

A company may apply to convert itself into a LLP if and only if

  • There is no security interest in its assets subsisting or in force at the time of application; and
  • The partners of the LLP to which it converts comprise all the shareholders of the company and no one else.

Upon the conversion of a private company into an LLP, the company and its shareholders, the LLP, and the partners of the LLP shall be bound by the provisions of this schedule that apply to them.

The company has to apply with the Registrar by filing the different documents:

  1. A statement by all its shareholders in Form No. 18 and fees containing the following particulars
    • The name and registration number of the company;
    • The date on which the company was incorporated; and
  2. Incorporation document and statement; On the receipt of the above said documents, the Registrar shall register the documents subject to the provisions of the Act and the rules made there under. The Registrar may require the documents to be verified as he considers fit. The Registrar shall issue a certificate of registration in Form No. 19 as the Registrar may determine stating that the LLP is, on and from the date specified in the certificate.
  • The LLP shall inform the concerned Registrar of Companies (ROC) within 15 days of the date of registration about the conversion and of the particulars of the LLP in the Form along with the fees.
  • If the Registrar is not satisfied with the particulars or other information furnished the Registrar may refuse to register. Against this order, an appeal may be made before the Tribunal.

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