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

Neha, a chartered accountant, plans to start a professional practice in Delhi with two colleagues and wants a vehicle that gives a separate legal entity with perpetual succession and some limited liability. Which feature of an LLP supports her objective of continuity?

Perpetual succession means an LLP's existence is unaffected by any change in its partners, whether through death, retirement, insolvency or admission of new partners. Because it is a separate body corporate, it continues until it is wound up as per law.

  1. AIts existence is unaffected by a change in partners, including death or retirementCorrect
  2. BIt dissolves automatically whenever any partner leaves
  3. CIt must be wound up after a fixed term of ten years
  4. DIt ceases to exist if the number of partners falls below seven

Explanation

An LLP has perpetual succession, so changes in its partners do not affect its existence, rights or liabilities. Option B describes the position of a traditional firm in the absence of contrary agreement. No fixed life of ten years applies, and seven is a public company member figure, not an LLP rule.

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