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

Which of the following best describes the relationship between an LLP's partners and the LLP under the Limited Liability Partnership Act, 2008?

A partner in an LLP is the agent of the LLP only and not of the other partners. This contrasts with an ordinary partnership firm, where each partner acts as agent of the firm and of the other partners, and it underpins the limited personal liability feature.

  1. AA partner is an agent of the LLP only, and not an agent of the other partnersCorrect
  2. BA partner is an agent of the LLP as well as of every other partner
  3. CA partner is an employee of the LLP entitled to salary as of right
  4. DA partner is a shareholder of the LLP entitled to dividends

Explanation

Under the LLP Act, every partner is an agent of the LLP, but not of other partners. This differs from an ordinary partnership under the Partnership Act, where partners are agents of each other. Partners are not employees or shareholders by virtue of being partners.

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