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

Sharma Traders, a firm, converts into an LLP and the Registrar issues the certificate of registration. Which is an effect from the date specified in the certificate?

The firm's property, assets, rights, liabilities and obligations, and its whole undertaking, are transferred to and vest in the LLP without further assurance, act or deed. The firm is deemed dissolved and removed from the Registrar of Firms' records from the registration date.

  1. AThe firm's assets and liabilities vest in the LLP without further assurance, act or deedCorrect
  2. BThe firm continues to exist alongside the LLP until its debts are cleared
  3. CThe firm's assets remain with the former partners until separately transferred by deed
  4. DThe firm's liabilities stay with the old partners and do not pass to the LLP

Explanation

Under Section 58(4), on and from the registration date all property, assets, rights, liabilities and obligations of the firm vest in the LLP without further assurance, act or deed. The firm is deemed dissolved and removed from the Registrar of Firms' records, so the idea that it continues is wrong.

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