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

Mehta Brothers, a partnership firm in Ahmedabad, is registered under the Indian Partnership Act, 1932. Its partners now wish to carry on the same business as a limited liability partnership. Which statement is correct under the LLP Act, 2008?

An existing partnership firm may convert into an LLP by following the procedure laid down in the LLP Act, 2008. After conversion, the LLP is a body corporate with a legal identity separate from its partners, so no prior winding up or company status is needed.

  1. AA firm cannot ever become an LLP and must be wound up first
  2. BA firm may convert into an LLP in accordance with the Act, and on conversion the LLP becomes a separate legal entityCorrect
  3. CA firm becomes an LLP automatically after five years of registration
  4. DA firm can convert only if it first becomes a private company

Explanation

The LLP Act, 2008 provides for conversion of an existing partnership firm into an LLP by following the prescribed procedure. After conversion the LLP is a body corporate with its own legal identity, distinct from its partners. The other options invent conditions that the Act does not impose.

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