Lec 2 - CA Foundation Bootcamp | LLP ACT 2008

Summary

This video lesson covers the key concepts of Limited Liability Partnership (LLP) and compares it with partnership firms and companies. It explains the procedures for name changes in LLPs, the roles of partners and designated partners, and the key legal differences between LLPs, partnerships, and companies. The video also emphasizes important aspects like liability, governance, and legal compliances for LLPs. The lesson wraps up with an overview of relevant acts, such as the LLP Act, Companies Act, and Partnership Act, and motivates students to stay focused and continue studying the law.

Takeaways

• 😀 LLPs must change their name within 3 months of receiving notice and inform the registrar within 15 days of the change.
• 😀 After changing the name, LLPs must update their agreement within 30 days of receiving the new certificate of incorporation.
• 😀 If an LLP defaults in complying with the naming procedure, the central government will allot a new name to the LLP.
• 😀 The LLP Act is the governing law for Limited Liability Partnerships, whereas the Partnership Act governs traditional partnerships.
• 😀 LLPs offer limited liability for their members, while in a partnership, the liability of partners is unlimited.
• 😀 In LLPs, the concept of mutual agency does not exist, meaning one partner cannot bind another partner, unlike in partnerships.
• 😀 At least two designated partners are required in an LLP, while a partnership can have a flexible number of partners.
• 😀 LLPs require formal annual filings with the registrar, similar to a company, whereas partnerships do not have such obligations.
• 😀 Foreign nationals can become partners in an LLP but are not allowed to be partners in a partnership firm.
• 😀 A minor can be a partner in an LLP, but cannot be admitted to the benefits of a partnership firm.
• 😀 Unlike partnerships, LLPs have perpetual succession, meaning that the dissolution of one partner does not lead to the dissolution of the LLP.

Q & A

What is the process for changing the name of an LLP according to the script?

The process involves notifying the registrar within 15 days after the name change and ensuring the change is reflected in the certificate of incorporation within 30 days. The LLP must also update its LLP agreement to reflect the new name.

What happens if an LLP defaults in complying with the name change procedure?

If an LLP defaults, the central government will allocate a new name to the LLP, which will be recorded by the registrar in place of the old name.

What is the main difference between a Limited Liability Partnership (LLP) and a partnership firm?

The key difference is that an LLP provides limited liability protection to its partners, whereas in a partnership, partners have unlimited liability. Additionally, LLPs are registered entities with perpetual succession, unlike partnership firms.

Can foreign nationals become partners in an LLP, and how does this compare to a partnership firm?

Yes, foreign nationals can become partners in an LLP. However, they cannot become partners in a partnership firm, as it is not allowed under the regulations governing partnership firms.

What are the responsibilities of designated partners in an LLP?

Designated partners are responsible for ensuring that the LLP complies with legal requirements, including filings with the registrar, and are liable for penalties in case of non-compliance.

What does 'mutual agency' mean in a partnership, and how does it differ in an LLP?

In a partnership, mutual agency means that each partner is an agent of the other partners and can bind the firm in legal matters. In an LLP, mutual agency does not apply; partners cannot bind each other in legal matters.

What is required for the annual filing of an LLP?

LLPs are required to file an annual statement, a statement of solvency, and returns with the registrar every year, similar to the filing requirements of a company.

What is the significance of 'perpetual succession' in an LLP compared to a partnership?

LLPs have perpetual succession, meaning the LLP continues to exist even if a partner dies, becomes insolvent, or becomes mentally incapacitated. This is not the case in a partnership, where the firm may dissolve under such circumstances.

How does the management structure of an LLP differ from that of a company?

In an LLP, the business is managed by the partners, particularly the designated partners. In contrast, a company is managed by a board of directors who are appointed to handle the business operations.

What are the legal implications for minor partners in an LLP compared to a partnership?

In an LLP, a minor can only be admitted for the benefits of the LLP, but cannot become a full partner. In contrast, in a partnership, a minor can be admitted to the benefits of the partnership, but not to its liabilities.