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CA Intermediate · Corporate and Other Laws · The Limited Liability Partnership Act, 2008

Kiran LLP has a registered office in Jaipur. The LLP agreement is silent about the rights of partners to receive interest on capital contributions and about the ratio of profit sharing. Which statement correctly reflects the LLP Act, 2008?

Profits are shared equally and no partner gets interest on capital. When the LLP agreement is silent, the default provisions of the LLP Act apply, under which all partners share capital and profits equally and no interest is payable on contributed capital.

  1. AProfits are shared in proportion to capital contributions, and interest on capital is payable at 6% per annum
  2. BProfits are shared equally, and no partner is entitled to interest on capital contributedCorrect
  3. CProfits are shared equally, and each partner gets interest on capital at 12% per annum
  4. DProfits are shared as the Registrar decides, with interest on capital at 9% per annum

Explanation

Where the LLP agreement is silent, the Act's default rules in the Schedule apply: all partners are equally entitled to share capital and profits equally, and no partner is entitled to interest on capital. Option A and C borrow from the Partnership Act style rules, which do not apply here. Option D has no basis in the Act.

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