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CS Executive · Setting Up of Business, Industrial and Labour Laws · Selection of Business Organization

Under the LLP Act, 2008, Anil is a partner in an LLP. He lends Rs 5 lakh to the LLP. How is his position in respect of this loan treated?

Anil may lend to the LLP, and he has the same rights and obligations on that loan as a person who is not a partner. The Act expressly permits partners to lend money and transact other business with the LLP on that footing.

  1. AHe cannot lend to the LLP since he is a partner
  2. BHe has the same rights and obligations on the loan as a person who is not a partnerCorrect
  3. CHis loan is treated as capital contribution automatically
  4. DHe ranks below all other creditors because he is a partner

Explanation

The Act states that a partner may lend money to and transact other business with the LLP and has the same rights and obligations regarding the loan or transaction as a non-partner. Hence he is not barred, nor is the loan treated as capital or subordinated.

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