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

Sharma & Co., a partnership firm, converts into Sharma Associates LLP. On and from the date specified in the certificate of registration, what is the effect on the firm's property and the firm itself?

On conversion, all tangible and intangible property, liabilities and the whole undertaking vest in the LLP without further assurance, act or deed, and the firm is deemed dissolved and removed from the Registrar of Firms' records from the registration date.

  1. AProperty remains with the old partners until a separate deed of transfer is executed, and the firm continues alongside the LLP
  2. BProperty vests in the LLP without further assurance, act or deed, and the firm is deemed dissolved and removed from the Registrar of Firms' recordsCorrect
  3. CProperty vests in the LLP only after the creditors give consent, and the firm is dissolved after one year
  4. DOnly tangible property vests in the LLP, while intangible property stays with the partners

Explanation

Section 58(4) states that all tangible and intangible property, assets, rights, liabilities and the whole undertaking transfer to and vest in the LLP without further assurance, act or deed. The firm is deemed dissolved and removed from the records. Option D is wrong because both tangible and intangible property vest.

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