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With reference to Limited Liability Partnership (LLP), consider the following statements:
Under LLP structure, every partner is liable, jointly with all the other partners for all acts of the firm done while he is a partner.
LLP will have lesser flexibility as compared to a company regulated under Companies Act 2013.
Which of the statements given above is/are correct?
- a)1 Only
- b)2 Only
- c)Both 1 and 2
- d)Neither 1 nor 2
Correct answer is option 'B'. Can you explain this answer?
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With reference to Limited Liability Partnership (LLP), consider the f...
- A limited liability partnership (LLP) is a partnership in which some or all partners (depending on the jurisdiction) have limited liabilities. It therefore can exhibit elements of partnerships and corporations.
- LLP is an alternative corporate business form that gives the benefits of limited liability of a company and the flexibility of a partnership. The LLP can continue its existence irrespective of changes in partners. It is capable of entering into contracts and holding property in its own name.
- The LLP is a separate legal entity, is liable to the full extent of its assets but the liability of the partners is limited to their agreed contribution in the LLP.
- Further, no partner is liable on account of the independent or un-authorized actions of other partners, thus individual partners are shielded from joint liability created by another partner’s wrongful business decisions or misconduct.
- Advantages of LLP: LLP form is a form of business model which:
- is organized and operates on the basis of an agreement.
- provides flexibility without imposing detailed legal and procedural requirements.
- enables professional/technical expertise and initiative to combine with financial risk-taking capacity in an innovative and efficient manner
- Under “traditional partnership firm”, every partner is liable, jointly with all the other partners and also severally for all acts of the firm done while he is a partner.
- Under LLP structure, the liability of the partner is limited to his agreed contribution. Further, no partner is liable on account of the independent or un-authorized acts of other partners, thus allowing individual partners to be shielded from joint liability created by another partner’s wrongful acts or misconduct. Hence, statement 1 is not correct.
- A basic difference between an LLP and a joint-stock company lies in that the internal governance structure of a company is regulated by statute (i.e. Companies Act, 1956) whereas for an LLP it would be by a contractual agreement between partners.
- The management-ownership divide inherent in a company is not there in a limited liability partnership.
- The greatest advantage which LLP offers is the flexibility to do business. Instead of being bound by legal provisions, LLP's are free to create their own rules of management, which was not possible in case of companies. Thus LLP will have more flexibility as compared to a company. LLP will have lesser compliance requirements as compared to a company. Hence, statement 2 is correct.
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With reference to Limited Liability Partnership (LLP), consider the following statements: Under LLP structure, every partner is liable, jointly with all the other partners for all acts of the firm done while he is a partner. LLP will have lesser flexibility as compared to a company regulated under Companies Act 2013. Which of the statements given above is/are correct?a)1 Onlyb)2 Onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'B'. Can you explain this answer?
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With reference to Limited Liability Partnership (LLP), consider the following statements: Under LLP structure, every partner is liable, jointly with all the other partners for all acts of the firm done while he is a partner. LLP will have lesser flexibility as compared to a company regulated under Companies Act 2013. Which of the statements given above is/are correct?a)1 Onlyb)2 Onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'B'. Can you explain this answer? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about With reference to Limited Liability Partnership (LLP), consider the following statements: Under LLP structure, every partner is liable, jointly with all the other partners for all acts of the firm done while he is a partner. LLP will have lesser flexibility as compared to a company regulated under Companies Act 2013. Which of the statements given above is/are correct?a)1 Onlyb)2 Onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for With reference to Limited Liability Partnership (LLP), consider the following statements: Under LLP structure, every partner is liable, jointly with all the other partners for all acts of the firm done while he is a partner. LLP will have lesser flexibility as compared to a company regulated under Companies Act 2013. Which of the statements given above is/are correct?a)1 Onlyb)2 Onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'B'. Can you explain this answer?.
With reference to Limited Liability Partnership (LLP), consider the following statements: Under LLP structure, every partner is liable, jointly with all the other partners for all acts of the firm done while he is a partner. LLP will have lesser flexibility as compared to a company regulated under Companies Act 2013. Which of the statements given above is/are correct?a)1 Onlyb)2 Onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'B'. Can you explain this answer? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about With reference to Limited Liability Partnership (LLP), consider the following statements: Under LLP structure, every partner is liable, jointly with all the other partners for all acts of the firm done while he is a partner. LLP will have lesser flexibility as compared to a company regulated under Companies Act 2013. Which of the statements given above is/are correct?a)1 Onlyb)2 Onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for With reference to Limited Liability Partnership (LLP), consider the following statements: Under LLP structure, every partner is liable, jointly with all the other partners for all acts of the firm done while he is a partner. LLP will have lesser flexibility as compared to a company regulated under Companies Act 2013. Which of the statements given above is/are correct?a)1 Onlyb)2 Onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'B'. Can you explain this answer?.
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