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CA Intermediate · Corporate and Other Laws · The Limited Liability Partnership Act, 2008

Nisha LLP has two partners, Om and Pia. Their LLP Agreement is silent on the sharing of profits and on interest on capital contributed. Om contributed Rs 8 lakh and Pia contributed Rs 2 lakh. Under the First Schedule default provisions, how will profits be shared?

Profits are shared equally, because in the absence of an LLP Agreement provision the First Schedule makes all partners entitled to share equally in profits. Unequal capital contributions of Rs 8 lakh and Rs 2 lakh do not change the equal sharing.

  1. AIn proportion to capital, 80:20
  2. BEqually between the partnersCorrect
  3. CIn the ratio of the LLP's turnover contribution by each
  4. DAs the Registrar decides

Explanation

Where the LLP Agreement is silent, the First Schedule provides that all partners are entitled to share equally in the capital and profits of the LLP. Capital contribution does not affect the ratio, so 80:20 is wrong. No role for the Registrar exists here.

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