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

Nisha and Omkar form Zenith Ventures LLP. Their friend Pooja says the LLP will cease to exist if Nisha, one of the partners, goes insolvent. Which statement about the LLP is correct under the Act?

The LLP continues to exist. An LLP enjoys perpetual succession, so death, retirement, insolvency or change of partners does not affect its existence, rights or liabilities. This differs from a general partnership, where such events can lead to dissolution.

  1. AThe LLP is dissolved automatically as soon as any partner becomes insolvent
  2. BThe LLP continues to exist, because it has perpetual succession and changes in partners do not affect its existenceCorrect
  3. CThe LLP continues only if the Registrar gives written permission to the remaining partner
  4. DThe LLP becomes an ordinary partnership firm governed by the Partnership Act, 1932

Explanation

An LLP has perpetual succession, so its existence is not affected by a change in partners, including death, retirement or insolvency of a partner. The first option describes the position in a general partnership, where dissolution may follow such events. No Registrar permission is needed for the LLP to continue.

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