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

Mehta Brothers LLP, Ahmedabad, was registered under the LLP Act, 2008. A creditor says the firm is not a legal person because it is a 'partnership'. Which statement about the legal status of an LLP is correct?

An LLP is a body corporate and a legal entity separate from its partners. It exists once incorporated under the LLP Act, 2008, and does not depend on an audit or on the partners' personal status. This separates it from an ordinary partnership firm.

  1. AIt is a body corporate with a legal personality separate from its partnersCorrect
  2. BIt has no separate legal existence and is merely a group of partners
  3. CIt is a branch of the partners' individual proprietorships
  4. DIt becomes a separate legal person only after its first audit

Explanation

An LLP is a body corporate formed and incorporated under the Act and is a legal entity separate from its partners. Hence the creditor's view is wrong. Option B describes an ordinary partnership firm under the Partnership Act, which has no separate legal personality.

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