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CA Foundation · Accounting · Partnership and LLP Accounts

In an LLP, a partner's liability for the LLP's debts is limited to the extent of their agreed contribution. Sharma and Verma contributed ₹2,00,000 and ₹3,00,000 respectively. The LLP's assets fall short of its liabilities by ₹8,00,000 on winding up, and no partner acted fraudulently. What is the maximum amount Sharma can be required to pay towards this shortfall from his personal assets, apart from his contribution already made?

The maximum further amount is nil. An LLP partner's liability is limited to the agreed contribution, which Sharma has already made. Without fraud or personal wrongdoing, his personal assets cannot be reached for the LLP's shortfall, unlike in an ordinary partnership with unlimited liability.

  1. A₹8,00,000
  2. B₹3,20,000
  3. C₹4,00,000
  4. DNilCorrect

Explanation

Liability of an LLP partner is limited to the agreed contribution, which has already been brought in. In the absence of fraud or wrongful acts by him, nothing further can be recovered from his personal assets. Choosing ₹4,00,000 or ₹8,00,000 wrongly applies unlimited liability as in a general partnership.

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