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

Mehul wants to start a professional services firm with two friends in Ahmedabad. He is told that an LLP has perpetual succession. What does this mean in practice?

Perpetual succession means the LLP continues to exist irrespective of changes in its partners. Death, retirement or insolvency of a partner does not end the LLP; it ends only through the winding up and dissolution process under the Act.

  1. AThe LLP continues to exist despite changes in its partners, such as death, retirement or insolvency of a partnerCorrect
  2. BThe LLP must be wound up when any partner dies
  3. CThe LLP can exist only for the lifetime of its oldest partner
  4. DThe LLP continues only if each partner's heirs become partners

Explanation

Perpetual succession means the LLP's existence is not affected by a change in partners, including death, retirement, or insolvency. Only the legal process of winding up ends its existence. Hence wrongly stating that death of a partner dissolves the LLP confuses it with a general partnership.

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