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

Consider the statements about partners in an LLP under the Limited Liability Partnership Act, 2008. (I) A change in the partners of an LLP does not affect its existence, rights or liabilities. (II) The mutual rights and duties of partners are governed by the LLP agreement, and in its absence by the First Schedule. Which is correct?

Both statements are correct. Under the LLP Act, a change in partners does not affect the LLP's existence, rights or liabilities, and mutual rights and duties are governed by the LLP agreement, or by the First Schedule where the agreement is silent.

  1. AOnly I is correct
  2. BOnly II is correct
  3. CBoth I and II are correctCorrect
  4. DNeither I nor II is correct

Explanation

Section 3(3) provides that any change in the partners does not affect the existence, rights or liabilities of the LLP. Section 23(1) makes the LLP agreement govern mutual rights and duties, and section 23(4) applies the First Schedule when the agreement is silent. Both statements are therefore correct.

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