Skip to content

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

Orbit Services LLP has two partners, Tara and Uday, both resident in India and both designated partners. Tara dies, leaving only Uday as the sole partner. The LLP continues business for more than six months with a single partner. Under the LLP Act, 2008, which statement is correct?

If an LLP carries on business for more than six months with fewer than two partners, the sole partner who knows of this is personally liable for obligations incurred after that period. Death of one partner does not automatically dissolve the LLP or turn it into a proprietorship.

  1. AThe LLP continues indefinitely since a sole partner may carry on the business
  2. BUday alone becomes liable and the LLP is converted into a sole proprietorship automatically
  3. CIf the LLP carries on business for more than six months with fewer than two partners, a partner who knows this is liable personally for the LLP's obligations incurred after that periodCorrect
  4. DThe LLP is immediately dissolved on Tara's death and the Registrar strikes off the name

Explanation

An LLP must have at least two partners. If it carries on business for more than six months with fewer than two partners, a person who is the only partner during that time and knows of it is personally liable for obligations incurred after the six months. Death does not instantly dissolve the LLP, nor does it convert into a proprietorship. The LLP also needs to have the minimum partners restored.

Did you get it right without looking?

One question tells you little. A timed set on The Limited Liability Partnership Act, 2008 shows your real accuracy, how long you take and where you lose marks.

Practise The Limited Liability Partnership Act, 2008Free diagnostic mock

More The Limited Liability Partnership Act, 2008 questions