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CS Executive · Setting Up of Business, Industrial and Labour Laws · Limited Liability Partnership

Ravi and Meena run a trading firm under the name "Sai Traders LLP" but have never incorporated it as a limited liability partnership under the LLP Act, 2008. What is the legal position?

Carrying on business under a name ending in LLP without incorporation as a limited liability partnership attracts a fine of not less than fifty thousand rupees, extendable to five lakh rupees. Registration as an ordinary partnership firm gives no protection, and the penalty is a range, not a fixed amount.

  1. AThey are punishable with a fine of at least fifty thousand rupees, extending to five lakh rupeesCorrect
  2. BThey are exempt from penalty because the firm is a registered partnership
  3. CThey face only a warning from the Registrar, with no fine
  4. DThey are punishable with a fixed fine of one lakh rupees

Explanation

Under the Act, anyone carrying on business under a name ending in "LLP" or "Limited Liability Partnership" without being duly incorporated as an LLP is punishable with a fine of not less than Rs 50,000 that may extend to Rs 5 lakh. A partnership firm registration does not cure this. The fine is a range, not a fixed sum, so the one-lakh option is wrong.

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