CA Foundation · Business Laws

The Limited Liability Partnership Act, 2008: formula sheet

Full chapter guide

Key formulas

Definition of LLP: LLP = a partnership formed and registered under the LLP Act, 2008; Registration is compulsory. Without it, there is no LLP.
Name rule (Section 15): Last words of name = "Limited Liability Partnership" or "LLP"; The Central Government can refuse a name it considers undesirable, or one identical to or too nearly resembling another LLP, a company or a registered trade mark.
Penalty for misuse of name (Section 20): Fine: minimum ₹50,000, maximum ₹5,00,000; Applies to persons who carry on business under a name ending in "LLP" or "Limited Liability Partnership" (or a contraction or imitation) without being duly incorporated as an LLP.
Rectification of name (Section 17): Direction to change name within 3 months; notice to Registrar within 15 days of the change; Applies where the name is identical with or too nearly resembles another LLP, a company or a registered trade mark. A trade mark proprietor must apply within 3 years of the LLP's incorporation, registration or name change.
Conversion (Sections 55 to 57): Firm (Second Schedule); private company (Third Schedule); unlisted public company (Fourth Schedule); A listed public company cannot convert under these sections. Only the three types named can.
Effect of conversion (Section 58): Property, rights and liabilities vest in the LLP; the firm or company is deemed dissolved; The LLP must inform the Registrar of Firms or Registrar of Companies within 15 days of registration.
Small LLP (Section 2(1)(ta)): Contribution ≤ ₹25 lakh and turnover ≤ ₹40 lakh (or higher prescribed limits); Higher limits can be prescribed, up to ₹5 crore for contribution and ₹50 crore for turnover.

Quick revision

An LLP is a body corporate formed under the Limited Liability Partnership Act, 2008.
An LLP is a separate legal entity, distinct from its partners.
An LLP has perpetual succession, so changes in partners do not end it.
Partners of an LLP have limited liability, generally limited to their agreed contribution.
An LLP is run by its partners under an LLP agreement.
An ordinary partnership firm has no separate legal entity under the Partnership Act, 1932.
A partner's wrongful act does not make other partners personally liable for it, but the partner who acts wrongly stays liable.
An LLP can own property and can sue and be sued in its own name.
An LLP combines the flexibility of a partnership with the corporate status of a company.
Always write the rule, apply the facts, and end with a clear conclusion.

Common mistakes

Saying an LLP is just a partnership under the Indian Partnership Act, 1932. Fix: An LLP is governed by the LLP Act, 2008. It is a separate legal entity, unlike a traditional firm.
Saying no partner of an LLP is ever personally liable. Fix: Say that a partner's liability is limited as provided in the Act. Do not claim absolute immunity, for example for the partner's own wrongful acts.

Exam tips

Write the definition first. It earns marks even if the rest is incomplete.
For comparison questions, use 4 to 6 clear heads and give both sides on each head. Examiners look for balance.
Quote Section 15, 20 and 58 only when you are sure. A wrong number costs more than leaving it out.
Practise one fact-based question on the name rule and one on conversion. Both are easy to set in case-study form.
Keep each feature to one line plus a reason. Long paragraphs waste time in a 3-hour paper.