Business Laws · Indian Regulatory Framework

Limited Liability Partnership Act 2008: CA Foundation Notes

Updated 4 October 2026

A Limited Liability Partnership (LLP) is a body corporate under the LLP Act 2008. It is a separate legal entity with perpetual succession, and its partners have limited liability. It is formed by registration with the Registrar. You solve questions by identifying the feature, the rule, and then the conclusion.

Understand Limited Liability Partnership Act 2008

A Limited Liability Partnership (LLP) combines features of a partnership and a company. It is run flexibly by its partners, like a partnership. But it is a separate legal person, and partners are protected by limited liability, like shareholders of a company.

An LLP is a body corporate formed and registered under the Limited Liability Partnership Act, 2008. It is a legal entity separate from its partners. It has perpetual succession, so death, retirement or insolvency of a partner does not end it. It can own property and sue or be sued in its own name.

The liability of a partner is limited to their agreed contribution to the LLP. A partner is not personally liable for the LLP's debts just because they are a partner. Also, a partner is not liable for the wrongful act or omission of another partner. But a partner remains liable for their own wrongful acts. Liability for fraud is not protected: where the LLP's business is carried on with intent to defraud, those knowingly involved can be personally liable without limit.

An LLP needs at least two partners. Every LLP must have at least two designated partners. Each must be an individual, either a partner or the nominee of a body corporate partner. At least one of them must be resident in India. Designated partners are responsible for compliance with the Act, such as filing documents and returns. A body corporate can be a partner, but then it acts through a nominee who is an individual. A body corporate itself cannot be a designated partner, but its nominee can.

The mutual rights and duties of partners are governed by the LLP agreement. If there is no agreement, the First Schedule of the Act applies as default rules. Unlike a general partnership, an LLP must be registered to exist at all. Its name must end with "LLP" or "Limited Liability Partnership".

Key rules to remember

Legal status: LLP = body corporate + separate legal entity + perpetual succession; Say this first in any answer on nature of an LLP.
Minimum partners: At least 2 partners; no maximum limit; If the LLP carries on business with fewer than two partners for more than six months, a person who knowingly carries on the business during that time is personally liable for the LLP's obligations incurred during that period.
Designated partners: At least 2 individuals (partners or nominees of body corporate partners); at least 1 resident in India; A body corporate cannot itself be a designated partner, but its nominee, who is an individual, can be.
Residency meaning: Resident in India = stayed in India for at least 120 days during the financial year; This is the test applied to the resident designated partner.
Partner liability: Liability of partner = limited to agreed contribution (except for own wrongful act or fraud); A partner is not liable for the independent acts of other partners.
Governing agreement: LLP agreement; if none, First Schedule applies; Agreement can be changed by consent of all partners.
Name ending: Name must end with "LLP" or "Limited Liability Partnership"; Name must not be undesirable or identical to an existing name.

How to solve Limited Liability Partnership Act 2008 questions

Use this method for any LLP question, whether it asks for a difference, a feature, or a fact-based problem.

1Read the question and mark what is asked: nature, incorporation, partners, liability, or comparison.
2State the basic rule in one line, for example that an LLP is a body corporate and a separate legal entity.
3For comparison questions, pick 4 to 6 clear points: legal status, registration, liability, number of members, succession, governing document.
4For fact-based problems, list the facts that matter: number of partners, who is designated, who committed the act, and whether there was fraud.
5Apply the rule to the facts. Ask whose act it was, and whether the act was within the LLP's business.
6Write the conclusion in one clear line, such as who is liable and to what extent.
7Check that you used the right terms: LLP agreement, designated partner, contribution, Registrar.

Quickest way: Provision-Facts-Conclusion with a comparison grid

When to use it: Use it when time is short and the question asks for differences or a short fact-based answer.

Memorise the grid: status, registration, liability, members, succession, agreement, management.
For a difference question, write the points in two columns or two labelled lines, one per point. Do not write long paragraphs.
Use the memory aid "SLICE": Status, Liability, Incorporation, Continuity, Eligible members.
For a problem, write three labelled lines: Provision, Facts, Conclusion.
Spend about one mark's worth of time per point. Avoid copying the whole question.

Common mistakes in Limited Liability Partnership Act 2008

Saying an LLP is not a separate legal entity because it is a type of partnership.
The word partnership suggests a firm, which has no separate existence under the Partnership Act.
Fix: Remember that an LLP is a body corporate with its own legal identity and perpetual succession.
Stating that partners of an LLP have unlimited liability for each other's acts.
Students carry over the rule of mutual agency from general partnership.
Fix: Write that a partner is not liable for another partner's independent wrongful act. Their liability is limited to their contribution, except for their own act or fraud.
Saying a minimum of one designated partner is enough, or that any designated partner may be non-resident.
Students mix up designated partners with the minimum number of partners.
Fix: Write: at least two designated partners who are individuals (partners or nominees), with at least one resident in India.
Writing that an LLP can be formed by oral agreement or without registration.
A general partnership can arise from an oral agreement, and students mix the two.
Fix: State that an LLP comes into existence only on registration with the Registrar and issue of the certificate of incorporation.
Saying an LLP must have a maximum of 20 partners.
Students confuse it with older partnership limits.
Fix: Say there is a minimum of two partners and no maximum limit.
Treating LLP and company as identical because both are body corporates.
Both offer limited liability, so differences get ignored.
Fix: Compare management, governing document, and share capital. An LLP is run by its partners under an LLP agreement and has no share capital in the company sense, only contributions.

Worked examples

Example 1

Distinguish between a Limited Liability Partnership and a general partnership under the Partnership Act, 1932. (Give any four points.)

Show the solution

Provision: an LLP is governed by the LLP Act 2008, while a general firm is governed by the Indian Partnership Act 1932.
Status: an LLP is a body corporate and a separate legal entity. A firm is not a separate legal entity from its partners.
Registration: an LLP must be registered to exist. Registration of a firm is optional.
Liability: in an LLP, a partner's liability is limited to their contribution, except for their own wrongful act or fraud. In a firm, partners are jointly and severally liable without limit.
Continuity: an LLP has perpetual succession. A firm is generally affected by the death or retirement of a partner, depending on the agreement.

Answer: An LLP differs from a firm on legal status (separate entity vs none), registration (compulsory vs optional), liability (limited to contribution, except for own wrongful act or fraud, vs unlimited) and continuity (perpetual succession vs dependence on partners).

Example 2

A, B and C are partners in an LLP. B, acting in the LLP's business, commits a wrongful act that causes loss to a customer, without the knowledge or authority of A and C, and with no fraud. Can the customer recover the loss from A and C personally?

Show the solution

Provision: an LLP is a separate legal entity, and a partner is not personally liable for the wrongful act or omission of another partner.
Facts: the act was done by B in the LLP's business. A and C did not know of it or authorise it. There was no intent to defraud.
Application: the LLP is liable for B's act done in the course of its business. B is liable for their own wrongful act. A and C are not liable personally just because they are partners.
Limit: A and C risk only their agreed contribution in the LLP.

Answer: The customer can claim from the LLP, and from B for B's own act, but not from A and C personally. Their liability is limited to their contribution, as the exceptions for their own wrongful act or fraud do not apply here.

Exam tips

Expect a difference question: LLP vs partnership or LLP vs company. Prepare a short grid of 5 to 6 points for each.
For fact-based questions, write Provision, Facts and Conclusion in separate lines. This helps you earn step marks.
Learn the exact numbers: two partners, two designated partners, one resident in India, 120 days.
Use the proper terms: body corporate, perpetual succession, LLP agreement, Registrar, contribution.
Do not quote section numbers unless you are certain. A correct rule in plain words earns marks.

Practice questions from Indian Regulatory Framework

Limited Liability Partnership Act 2008: frequently asked questions

What is the difference between an LLP and a partnership?

An LLP is a registered body corporate with a separate legal identity and limited liability for partners. A general partnership under the Partnership Act 1932 is not a separate entity, and its partners have unlimited liability. Registration is compulsory for an LLP but optional for a firm.

Who is a designated partner in an LLP?

A designated partner is an individual who is a partner, or the nominee of a body corporate partner, and who is responsible for compliance with the Act. Every LLP needs at least two, and at least one must be resident in India. Residence means staying in India for at least 120 days in the financial year.

How is an LLP different from a company?

Both are body corporates with limited liability. An LLP is managed by its partners under an LLP agreement and has no share capital, only contributions. A company is run by its board and governed by its memorandum and articles.

Can a company be a partner in an LLP?

Yes, any individual or body corporate can become a partner. A body corporate acts through a nominee who is an individual. It cannot itself be a designated partner, because designated partners must be individuals, but its nominee can be one.

What happens if there is no LLP agreement?

The mutual rights and duties of the partners are then governed by the First Schedule of the Act. This schedule gives default rules, such as equal sharing of profits. So the LLP can still function without a written agreement.