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CSEET · Business Laws and Management · Elements of Law relating to Partnership and Limited Liability Partnership

A trading firm registered under the Indian Partnership Act, 1932 converts into a limited liability partnership. Under the LLP Act, 2008, what is the legal effect on and from the date specified in the certificate of registration issued by the Registrar?

On conversion, the firm is deemed dissolved and removed from the Registrar of Firms' records, while all its property, assets, rights, liabilities and undertaking vest in the LLP automatically, without any further assurance, act or deed, from the date in the registration certificate.

  1. AThe firm continues to exist alongside the LLP as a separate entity
  2. BThe firm's property stays with the old partners until they transfer it by a fresh deed
  3. CThe firm is deemed dissolved and its property, rights and liabilities vest in the LLP without further assurance, act or deedCorrect
  4. DThe firm's liabilities remain with the partners and do not pass to the LLP

Explanation

Section 58(4) provides that from the date of registration there is an LLP by the name in the certificate. All tangible and intangible property, assets, rights, liabilities and the undertaking of the firm vest in the LLP without further assurance, act or deed. The firm is deemed dissolved and removed from the records of the Registrar of Firms. The option requiring a fresh deed is wrong because vesting is automatic.

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