Indian Partnership Act 1932 and LLP Financial Year Definitions

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What is the significance of the date April 1, 2008 in relation to the Limited Liability Partnership (LLP) Act?

It marks the effective date of enforcement of the LLP Act.

Which of the following statements regarding the application of partnership law to LLPs is correct?

The provisions of the Indian Partnership Act, 1932 are not applicable to LLPs.

What is the liability of partners in a Limited Liability Partnership (LLP)?

All partners have limited liability.

Which of the following entities cannot be converted into a Limited Liability Partnership (LLP)?

A listed public company

For how long is the approved name of a Limited Liability Partnership (LLP) valid from the date of approval?

3 months

Which of the following is an incorrect statement about Limited Liability Partnerships (LLPs)?

A listed public company can be converted into an LLP.

What is the significance of the term 'Resident in India' in the context of Limited Liability Partnerships (LLPs)?

It determines the eligibility for registration as an LLP.

Which of the following statements regarding the financial year of a Small Limited Liability Partnership (LLP) is correct?

The financial year of a Small LLP is determined by the partners and can be different from the financial year of a company.

Which of the following statements regarding the legal compliance requirements for Limited Liability Partnerships (LLPs) is correct?

LLPs have fewer legal compliance requirements compared to companies.

What is the significance of the term 'designated partner' in the context of Limited Liability Partnerships (LLPs)?

It refers to a partner who is responsible for the legal compliance of the LLP.

Study Notes

Definitions

  • An entity means any body corporate and includes a firm set up under the Indian Partnership Act, 1932.
  • A financial year, in relation to a LLP, means the period from the 1st day of April of a year to the 31st day of March of the following year.
  • A foreign LLP means a LLP formed, incorporated or registered outside India which establishes a place of business within India.
  • A limited liability partnership means a partnership formed and registered under the Limited Liability Partnership Act, 2008.

Partners

  • Any individual or body corporate can be a partner in a LLP, except for a person of unsound mind, an undischarged insolvent, or who has applied to be adjudicated as an insolvent.
  • A LLP must have at least two partners.
  • If a LLP carries on business for more than 6 months with only one partner, that partner shall be liable personally for the obligations of the LLP incurred during that period.

Designated Partners

  • A LLP must have at least two designated partners who are individuals and at least one of them shall be a resident in India.
  • A resident in India is a person who has stayed in India for a period of not less than 120 days during the immediately preceding one year.

Incorporation of LLP

  • A LLP is incorporated by subscription of names by two or more persons and filing of documents with the Registrar of Companies (ROC) with prescribed fees.
  • The Ministry of Corporate Affairs enforced the LLP Act, with effect from 1st April 2008.

Small LLP

  • A small LLP is a LLP with a contribution up to Rs. 25 lakh and a turnover of up to Rs. 40 lakh or which fulfills prescribed terms and conditions.

Miscellaneous

  • The approved name of LLP is valid for a period of 6 months from the date of approval.
  • The name of the Limited Liability Partnership shall be ended by "Limited Liability Partnership" or "LLP".
  • An LLP has a legal personality separate from that of its members.
  • The liability of each partner in an LLP is limited.

This quiz covers the definitions of 'entity' and 'financial year' as per the Indian Partnership Act, 1932, and the Limited Liability Partnership (LLP) regulations. Test your knowledge on these legal terms and their implications.

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