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

Meera and Nikhil are the only partners of Meera Nikhil LLP. Nikhil dies. The LLP agreement says nothing about death of a partner. The LLP continues to have only Meera as partner for more than six months, and she carries on the business. As per the LLP Act, 2008, what is the legal position?

If an LLP carries on business for more than six months with fewer than two partners, the sole remaining partner who knows this is personally liable, jointly and severally with the LLP, for obligations incurred after that period. Death of a partner neither dissolves the LLP automatically nor protects her.

  1. AMeera becomes personally liable for the obligations of the LLP incurred after six months, jointly and severally, if she carries on business with knowledge of the shortfallCorrect
  2. BThe LLP is automatically converted into a sole proprietorship after six months
  3. CThe LLP continues, and Meera has only limited liability irrespective of the shortfall
  4. DThe LLP is dissolved immediately on Nikhil's death with no further liability on Meera

Explanation

An LLP must have at least two partners. If the number falls below two and the LLP carries on business for more than six months, the only remaining partner who knows this fact is personally liable for obligations incurred after the six months. Death of a partner does not by itself dissolve the LLP or convert it into a proprietorship. Hence the option giving her limited liability is wrong.

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