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

Nandini and Omkar registered Zenith Crafts LLP. A supplier, Mr. Rao, wrongly assumes that the LLP is merely a name for the two individuals and that it cannot own property. Which statement about the legal position of an LLP under the LLP Act, 2008 is correct?

An LLP is a body corporate and a separate legal entity from its partners. It can therefore own and hold property, including immovable property, in its own name, and sue or be sued. The claim that it is only a name for the partners describes an ordinary partnership firm.

  1. AAn LLP is a body corporate and a legal entity separate from its partners, and it can hold property in its own nameCorrect
  2. BAn LLP is not a separate legal entity, and its property is held by the partners as joint owners
  3. CAn LLP becomes a separate legal entity only after its turnover crosses a prescribed limit
  4. DAn LLP is a legal entity separate from its partners but cannot own immovable property

Explanation

Under the LLP Act, 2008, an LLP is a body corporate formed and incorporated under the Act and is a legal entity separate from its partners. It has perpetual succession and can own property in its own name. The option saying it is not a separate entity describes an ordinary partnership, not an LLP.

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