Effect of Registration of Limited Liability Partnership under LLP Act 2008

Sec. 14 of the LLP Act lays down that: On registration, a limited liability partnership shall, by its name, be capable of:

1. suing and being sued;
2. acquiring, owning, holding and developing or disposing of property, whether movable or immovable, tangible or intangible;
3. having a common seal, if it decides to have one; and
4. doing and suffering such other acts and things as bodies corporate may lawfully do and suffer.

Further upon registration following effect will also be notable :

• The mutual rights and duties of the partners and the mutual rights and duties of the limited liability partnership and its partners shall be determined, subject to the terms of any LLP Agreement or in the absence of any such Agreement on any matter, by the provisions in this Schedule.
• All the partners of a LLP are entitled to share equally in the capital, profits and losses of the LLP.
• The LLP shall indemnify each partner in respect of payments made and personal liabilities incurred by him
  • In the ordinary and proper conduct of the business of the LLP; or
  • In or about anything necessarily done for the preservation of the business or property of the LLP.
• Every partner shall indemnify the LLP for any loss caused to it by his fraud in the conduct of the business of the LLP.
• Every partner may take part in the management of the LLP.
• No partner shall be entitled to remuneration for acting in the business or management of the LLP.
• No person may be introduced as a partner without the consent of all the existing partners.
• Any matter or issue relating to the LLP shall be decided by a resolution passed by a majority in number of the partners, and for this purpose, each partner shall have one vote. However, no change may be made in the nature of business of the LLP without the consent of all the partners.
• Every LLP shall ensure that decisions taken by it are recorded in the minutes within 30 days of taking such decisions and are kept and maintained at the registered office of the LLP.
• Each partner shall render true accounts and full information of all things affecting the LLP to any partner or his legal representatives.
• If a partner, without the consent of the LLP, carries on any business of the same nature as and competing with the LLP, he must account for and pay over to the LLP all profits made by him in that business.
• Every partner shall account to the LLP for any benefit derived by him without the consent of the LLP from any transaction concerning the LLP, or from any use by him of the property, name or any business connection of the LLP.
• No majority of the partners can expel any partner unless a power to do so has been conferred by express agreement between the partners.

Assignment and Transfer of Partnership Rights (Sec. 42)

Rights of a partner to share profits and losses of LLP and to receive distributions are transferable either wholly or in part. Transfer of right does not cause disassociation of the partner or dissolution and winding up of LLP. Transfer of right does not entitle the transferee or assignee to participate in the management or conduct of activities of LLP or access information concerning the transactions of LLP.

Business Transactions of Partner with LLP (Sec. 66)

A partner may lend money to and transact other business with the LLP and has the same rights and obligations with respect to the loan or other transactions as a person who is not a partner.