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

Which of the following statements about the nature of an LLP under the Limited Liability Partnership Act, 2008 is correct?

An LLP is a hybrid with the limited liability of a company and the internal flexibility of a partnership, yet the Indian Partnership Act, 1932 does not apply to it. Its internal affairs are governed by the LLP agreement and the LLP Act.

  1. AThe rights and duties of partners between themselves are governed by the Indian Partnership Act, 1932 as a matter of course
  2. BAn LLP is a hybrid combining the limited liability of a company with the flexibility of a partnership in its internal management, but the Partnership Act, 1932 does not apply to itCorrect
  3. CAn LLP cannot own property in its own name and must hold it in the names of its partners
  4. DAn LLP must have a minimum paid-up share capital before commencing business

Explanation

The LLP Act states that the Indian Partnership Act, 1932 does not apply to LLPs. An LLP combines corporate features such as separate legal entity and limited liability with partnership-like internal flexibility based on the LLP agreement. It can hold property in its own name, and it has contributions from partners, not share capital.

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