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CMA Intermediate · Financial Accounting · Accounting of Limited Liability Partnership

Anil, Bhavna and Chetan are partners of an LLP; Chetan is not a designated partner. The LLP fails to file a statutory return and is penalised. The offence is proved to be attributable to neglect on the part of Bhavna, a designated partner, and no wrongdoing by Anil is shown. Which statement is correct under the LLP Act, 2008?

The LLP and Bhavna are guilty and may be proceeded against, because the offence is attributable to her neglect as a designated partner. Anil and Chetan are not made liable on these facts, since nothing is proved against them.

  1. AOnly the LLP is liable, because partners are never personally liable for offences
  2. BThe LLP and Bhavna are guilty and liable to be proceeded against; Anil is not made liable merely on these factsCorrect
  3. CAll three partners are guilty equally, regardless of neglect
  4. DChetan alone is liable because he is not a designated partner

Explanation

Section 76 makes the partner or designated partner concerned, as well as the LLP, guilty where the offence is attributable to their neglect or consent or connivance. Section 8 also makes designated partners responsible for compliance and liable to penalties imposed on the LLP. Nothing is proved against Anil, and Chetan is not a designated partner, so neither is liable on these facts. The first option wrongly says partners are never liable.

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