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CS Executive · Setting Up of Business, Industrial and Labour Laws · Limited Liability Partnership

Kiran Traders LLP has two partners, both Indian individuals. The LLP agreement is silent on how profits are shared and on the partners' mutual rights in a certain matter. Which governs that matter?

The First Schedule to the LLP Act governs. Mutual rights and duties are primarily set by the LLP agreement, but where the agreement is silent on a matter, the default provisions for that matter in the First Schedule determine the rights and duties of partners and the LLP.

  1. AThe provisions on that matter set out in the First Schedule to the LLP ActCorrect
  2. BThe Indian Partnership Act, 1932, automatically
  3. CWhatever the Registrar decides in each case
  4. DThe Companies Act, 2013, Table F

Explanation

Section 23(1) makes the LLP agreement the primary source of mutual rights and duties. Under Section 23(4), where there is no agreement on a matter, the First Schedule provisions on that matter apply. The Partnership Act and Table F are not the default source.

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