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

Under Section 58 of the Limited Liability Partnership Act, 2008, what is the effect on a firm on and from the date of registration specified in the certificate when it converts into an LLP?

The firm's property, assets, rights, liabilities and 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. Liabilities are transferred to the LLP, not extinguished, under Section 58(4).

  1. AThe firm continues to exist alongside the LLP and keeps its separate assets
  2. BThe firm's property stays with the former partners until they transfer it by a deed
  3. CThe firm's assets and liabilities vest in the LLP without further assurance, act or deed, and the firm is deemed dissolvedCorrect
  4. DThe firm is dissolved but its liabilities are extinguished

Explanation

Section 58(4) provides that from the date of registration, all property, assets, interests, rights, liabilities and obligations of the firm, 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 records of the Registrar of Firms. Liabilities are therefore transferred, not extinguished.

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