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

Rahul and Sameera intend to start Pinnacle Foods LLP with a contribution of only ₹10,000 in total. A friend warns that a high minimum capital is mandatory. What is the correct position under the LLP Act, 2008?

The LLP Act prescribes no minimum contribution. Partners decide the amount and form of their contribution, whether cash, property or other benefits, and record it in the LLP agreement. So a total contribution of ₹10,000 does not prevent registration.

  1. AA minimum contribution of ₹1 lakh is mandatory for registration
  2. BA minimum contribution of ₹5 lakh is mandatory for registration
  3. CThe Act prescribes no minimum contribution; partners decide the amount in the LLP agreementCorrect
  4. DContribution must be at least ₹10 lakh if the LLP has more than two partners

Explanation

The LLP Act does not fix any minimum capital contribution. Partners may contribute in cash or other property, tangible or intangible, and the amount is as agreed between them. The other options invent thresholds that do not exist in the Act.

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