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

Nandini wants to understand how an LLP differs from a company in its internal management. Which statement correctly describes an LLP's internal governance?

In an LLP, the mutual rights and duties of the partners, and of the LLP and its partners, are governed by the LLP agreement. Partners have flexibility to design it. Articles of Association and boards are features of companies, not LLPs.

  1. AThe mutual rights and duties of partners are governed by the LLP agreementCorrect
  2. BThey are governed by Articles of Association filed with the Registrar
  3. CThey are decided only by a board of directors elected by shareholders
  4. DThey are fixed entirely by the Registrar and cannot be varied

Explanation

The mutual rights and duties of the partners, and those between the LLP and its partners, are governed by the LLP agreement. Partners may freely design them, subject to the Act. Articles of Association and boards of directors belong to companies, not LLPs.

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