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Chapter LLP

Mohan and Rakul plan to form an LLP named Mohan John LLP with Mr. John and Ms. Kate as designated partners, but this violates the Limited Liability Partnership Act, 2008, which requires at least one designated partner to be a resident of India. The LLP structure offers limited liability similar to a company while allowing flexibility akin to a partnership. Additionally, advice is sought regarding designated partners for another LLP involving Mr. Prateek and two companies, Brown Limited and Picture Limited.

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Hiteshi gupta
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30 views2 pages

Chapter LLP

Mohan and Rakul plan to form an LLP named Mohan John LLP with Mr. John and Ms. Kate as designated partners, but this violates the Limited Liability Partnership Act, 2008, which requires at least one designated partner to be a resident of India. The LLP structure offers limited liability similar to a company while allowing flexibility akin to a partnership. Additionally, advice is sought regarding designated partners for another LLP involving Mr. Prateek and two companies, Brown Limited and Picture Limited.

Uploaded by

Hiteshi gupta
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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4(b):-Mohan and Rakul are college friends and intend to do trading in musical instruments.

They have met Mr. John and Ms. Kate who are non-resident Indian and they all have decided
to form a Limited Liability Partnership (LLP) under the name and style of Mohan John LLP
with an initial capital contribution of ` 1,00,000 each. The LLP was incorporated on
October 15, 2020. The LLP intends to appoint Mr. John and Ms. Kate as designated partners
and consults same with its Company Secretary. You as the Company Secretary advise the
LLP on the appointment of Mr. John and Ms. Kate as the only designated partners of the
LLP.

(5 Marks)

Ans(b):- According to section 7 of the Limited Liability Partnership Act, 2008, every Limited
Liability Partnership shall have at least two designated partners who are individuals and at
least one of them shall be a resident in India.

In the given case, Mohan John LLP intends to appoint Mr. John and Ms. Kate (both are non-
resident Indians) as the only designated partners. This is not in consonance with provisions
of the Limited Liability Partnership Act, 2008, as at least one of the designated partners
should be a resident in India.

5. (a) “LLP is an alternative corporate business form that gives the benefits of limited
liability of a company and the flexibility of a partnership”. Explain.

(5 Marks)

Answer 5a):- Limited Liability Partnership (LLP) is an alternative corporate business form
that gives the benefits of limited liability of a company and the flexibility of a partnership
Limited Liability: Every partner of a LLP is, for the purpose of the business of LLP, the agent
of the LLP, but not of other partners (Section 26 of the LLP Act, 2008). The liability of the
partners will be limited to their agreed contribution in the LLP, while the LLP it self will be
liable for the full extent of its assets. Flexibility of a partnership: The LLP
allows its members the flexibility of organizing their internal structure as a partnership
based on a mutually arrived agreement. The LLP form enables entrepreneurs, professionals
and enterprises providing services of any kind or engaged in scientific and technical
disciplines, to form commercially efficient vehicles suited to their Requirements. Owing to
flexibility in its structure and operation, the LLP is a suitable vehicle for Small enterprises
and for investment by venture capital
Q4(b):- Mr. Prateek (an individual) has started a Limited Liability Partnership firm along with
Brown Limited and Picture Limited. As per the provisions of the Limited Liability Partnership
Act, 2008, advise Limited Liability Partnership firm, about who can be the designated
partners of the firm.

(5 Marks)

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