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

Rohan and Smita, partners in Vertex Consulting LLP, learn that the LLP will be governed by the LLP Act, 2008, and wonder how mutual rights and duties of the partners are determined. Which is correct?

Mutual rights and duties of the partners, and of the LLP and its partners, are governed by the LLP agreement, subject to the provisions of the LLP Act, 2008. Flexibility through the agreement is a key feature, with the Act's default rules applying where the agreement is silent.

  1. AThey are fixed only by the Act, and no agreement can alter them
  2. BThey are governed by the LLP agreement between the partners, or between the LLP and partners, subject to the ActCorrect
  3. CThey are governed solely by the Indian Partnership Act, 1932
  4. DThey are determined by the Registrar of Companies at registration

Explanation

Under the LLP Act, mutual rights and duties of partners, and of the LLP and its partners, are governed by the LLP agreement, subject to the Act. The Act itself does not fix all rights rigidly, so option A is wrong. The Partnership Act, 1932 does not apply to LLPs unless the Act provides, and the Registrar does not set these rights.

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