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CS Executive · Setting Up of Business, Industrial and Labour Laws · Limited Liability Partnership

Anita, a partner in Lotus Consultants LLP, transfers her entire share of profits and her right to distributions to her brother Karan under the LLP agreement. What is the effect under the LLP Act, 2008?

Transfer of a partner's right to profits and distributions does not by itself disassociate the partner or dissolve and wind up the LLP. The transferee also gets no right to participate in management or to access information on the LLP's transactions.

  1. AThe LLP is dissolved and wound up automatically
  2. BAnita is disassociated and Karan becomes a full partner
  3. CKaran may inspect all transaction records of the LLP as of right
  4. DThe transfer does not by itself cause Anita's disassociation or the LLP's dissolution and winding up, and Karan gets no management rightCorrect

Explanation

Section 42 allows transfer of profit-share and distribution rights wholly or partly. The transfer does not by itself cause disassociation or dissolution and winding up. It also does not entitle the transferee to manage the LLP or to access information on its transactions, so the inspection option is wrong.

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