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CSEET · Fundamentals of Accounting · Partnership and LLP Accounts

Mehta & Rao Associates, not incorporated as an LLP, carries on business under the name "Mehta & Rao Associates LLP". Under the LLP Act, 2008, what is the consequence?

Each person carrying on business under the name is punishable with a fine of at least fifty thousand rupees, extending up to five lakh rupees. Section 20 of the LLP Act, 2008 penalises improper use of 'LLP' as the last word of a name by an entity not duly incorporated as an LLP.

  1. ANo consequence, since the name is only a label
  2. BEach person is punishable with fine of not less than fifty thousand rupees, extending to five lakh rupeesCorrect
  3. CThe persons are punishable with fine of exactly one lakh rupees
  4. DBusiness is automatically converted into an LLP

Explanation

Section 20 punishes persons who carry on business under a name ending in 'LLP' or 'Limited Liability Partnership' without being duly incorporated. The fine is at least Rs 50,000 and may extend to Rs 5,00,000. It is a range, not a fixed sum, and no automatic conversion occurs.

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