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CSEET · Business Laws and Management · Elements of Law relating to Partnership and Limited Liability Partnership

Ravi and Meena carry on business under the name "Sunrise Traders LLP" without having incorporated any limited liability partnership. Under the LLP Act, 2008, what is the consequence?

Ravi and Meena are each punishable with a fine of not less than fifty thousand rupees, extending up to five lakh rupees, because they used the words LLP as the last word of their business name without being duly incorporated as a limited liability partnership.

  1. ANo consequence, since the name is only a trade name
  2. BEach of them is punishable with fine of not less than fifty thousand rupees, which may extend to five lakh rupeesCorrect
  3. CEach is punishable with imprisonment up to five years only
  4. DThey are punishable with a fine of up to ten thousand rupees in total

Explanation

Section 20 punishes persons carrying on business under a name ending in "Limited Liability Partnership" or "LLP" (or a contraction or imitation) unless duly incorporated as an LLP. Each such person is liable to a fine of at least fifty thousand rupees, extendable to five lakh rupees. The trade-name defence fails, and no imprisonment is prescribed.

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