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

Ishaan wants to start a business with two friends and is comparing an LLP with an ordinary partnership firm under the Indian Partnership Act, 1932. Which feature is true only of an LLP and NOT of an ordinary partnership firm?

Perpetual succession is the feature found only in an LLP. Because the LLP is a separate body corporate, its existence continues despite any change in partners, whereas an ordinary partnership firm is not a separate entity and is affected by such changes.

  1. APartners can be held to account for acts done in the course of business
  2. BThe business is carried on with a view to profit
  3. CPartners may agree their mutual rights and duties by a written agreement
  4. DPerpetual succession, so changes in partners do not affect the existence of the business entityCorrect

Explanation

An LLP has perpetual succession: death, retirement, insolvency or change of partners does not affect its existence. An ordinary firm does not have this feature because it is not a separate entity and its constitution changes with its partners. The other three features are common to both forms.

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