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

Kapoor Sons, an existing partnership firm under the Partnership Act, 1932, wishes to become Kapoor Sons LLP. Which statement is correct regarding the nature of the LLP Act and such conversion?

A partnership firm can convert into an LLP as provided in the LLP Act, 2008. After conversion the LLP is governed by that Act, and the Indian Partnership Act, 1932 does not apply to it. Conversion is not limited to companies.

  1. AA partnership firm cannot convert into an LLP under any circumstances
  2. BA firm can convert into an LLP in accordance with the Act, and the LLP is then governed by the LLP Act, while the Partnership Act does not apply to an LLPCorrect
  3. CAfter conversion, the Partnership Act, 1932 applies to the LLP in addition to the LLP Act
  4. DConversion is allowed only for private companies and not for firms

Explanation

The LLP Act provides for conversion of a firm, a private company or an unlisted public company into an LLP. The Partnership Act, 1932 expressly does not apply to an LLP. Option C is wrong because the two Acts do not apply together.

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