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CA Foundation · Business Laws · The Limited Liability Partnership Act, 2008

Farhan says that because an LLP is a body corporate, it is governed by the Companies Act, 2013 in the same way as a private company. Which of the following is the correct position?

An LLP is governed by the LLP Act, 2008, with partners' mutual rights and duties mainly determined by the LLP agreement. Although it is a body corporate, it is not governed generally by the Companies Act, 2013 or the Indian Partnership Act, 1932.

  1. AAn LLP is governed by the Companies Act, 2013 in all matters
  2. BAn LLP is governed by the LLP Act, 2008, and its internal relationships are mainly governed by the LLP agreementCorrect
  3. CAn LLP is governed only by the Indian Partnership Act, 1932
  4. DAn LLP has no governing statute and operates only by contract

Explanation

An LLP is a body corporate, but it is a separate form of organisation from a company. It is governed by the LLP Act, 2008. Mutual rights and duties of partners are determined mainly by the LLP agreement. The Indian Partnership Act, 1932 does not apply to LLPs, and the Companies Act, 2013 does not govern LLPs generally.

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