CAIIB BRBL Module D Unit 23 : Limited Liability Partnership Act, 2008

29/11/2023

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CAIIB Paper 4 BRBL Module D Unit 23 : Limited Liability Partnership Act, 2008 (New Syllabus)

IIBF has released the New Syllabus Exam Pattern for CAIIB Exam 2023. Following the format of the current exam, CAIIB 2023 will have now four papers. The CAIIB Paper 4 (BANKING REGULATIONS AND BUSINESS LAWS) includes an important topic called “Limited Liability Partnership Act, 2008”. Every candidate who are appearing for the CAIIB Certification Examination 2023 must understand each unit included in the syllabus.

In this article, we are going to cover all the necessary details of CAIIB Paper 4 (BRBL) Module D (COMMERCIAL & OTHER LAWS WITH REFERENCE TO BANKING OPERATIONS) Unit 23 : Limited Liability Partnership Act, 2008, Aspirants must go through this article to better understand the topic, Limited Liability Partnership Act, 2008 and practice using our Online Mock Test Series to strengthen their knowledge of Limited Liability Partnership Act, 2008. Unit 23 : Limited Liability Partnership Act, 2008

LLP

A limited liability partnership firm is a body corporate which has its existence separate from the partners of the firm and has certain characteristics which are similar to that which a company constituted under the Companies Act 2013 has.

These characteristics are available in Section 3 of the LLP Act 2008. As per Section 3

A limited liability partnership is a body corporate formed and incorporated under this Act and is a Legal entity separate from that of its partners.
A limited liability partnership shall have perpetual succession.
Any change in the partners of a limited liability partnership shall not affect the existence, rights or liabilities of the limited liability partnership.

Partner / Designated Partner

According to Section 6

Every limited liability partnership shall have at least two partners.
If at any time the number of partners of a limited liability partnership is reduced below two and the limited liability partnership carries on business for more than six months while the number is so reduced, the person, who is the only partner of the limited liability partnership during the time that it so carries on business after those six months and has the knowledge of the fact that it is carrying on business with him alone, shall be liable personally for the obligations of the limited liability partnership incurred during that period.

Designated partners’ required to be identified in each Limited Liability Partnership Firm as per Section 7.

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.
If the incorporation document specifies who are to be designated partners, such persons shall be designated partners on incorporation

An individual shall not become a designated partner in any limited liability partnership unless he has given his prior consent to act as such to the limited liability partnership in such form and manner as may be prescribed.

Every limited liability partnership shall file with the registrar the particulars of every individual who has given his consent to act as designated partner in such form and manner as may be prescribed within thirty days of his appointment.
An individual eligible to be a designated partner shall satisfy such conditions and requirements as may be prescribed.
Every designated partner of a limited liability partnership shall obtain a Designated Partner Identification Number (DPIN) from the Central Government and the provisions of sections 153 to 159 (both inclusive) of the Companies Act, 2013 (18 of 2013)] shall apply.

Liabilities Of And Changes In Designated Partners

The responsibilities/ liabilities of the designated Partner have been detailed in Section 8. A designated partner shall be—

Responsible for the doing of all acts, matters and things as are required to be done by the limited liability partnership in respect of compliance of the provisions of this Act including filing of any document, return, statement.
Liable to all penalties imposed on the limited liability partnership for any contravention of those provisions.

As per Section 9 a limited liability partnership may appoint a designated partner within thirty days of a vacancy arising for any reason.

Incorporation Document

Section 11 states: for a limited liability partnership to be incorporated,—

Two or more persons associated for carrying on a lawful business with a view to profit shall subscribe their names to an incorporation document
The incorporation document shall be filed in such manner and with such fees, as may be prescribed with the Registrar of the State in which the registered office of the limited liability partnership is to be situated.
There shall be filed along with the incorporation document, a statement in the prescribed form, made by either an advocate, or a Company Secretary or a Chartered Accountant or a Cost Accountant, who is engaged in the formation of the limited liability partnership

The incorporation document shall—

Be in a form as may be prescribed
State the name of the limited liability partnership
State the proposed business of the limited liability partnership;
State the address of the registered office of the limited liability partnership
State the name and address of each of the persons who are to be partners of the limited liability partnership on incorporation
State the name and address of the persons who are to be designated partners of the limited liability partnership on incorporation

If a person makes a statement which he— (a) Knows to be false; or (b) Does not believe to be true, shall be punishable with imprisonment for a term which may extend to two years and with fine which shall not be less than ten thousand rupees but which may extend to five lakh rupees.

Registration

When the requirements have been complied with, the Registrar shall retain the incorporation document and, unless the requirement has not been complied with, he shall, within a period of fourteen days—

Register the incorporation document
Give a certificate that the limited liability partnership is incorporated by the name specified therein.
The Registrar may accept the statement delivered under section 11 as sufficient evidence that the requirement imposed by clause (a) of that sub-section has been complied with
The certificate issued shall be signed by the Registrar and authenticated by his official seal.
The certificate shall be conclusive evidence that the limited liability partnership is incorporated by the name specified therein

Effect Of Registration

As per Section 14 of the statute On registration, a limited liability partnership shall, by its name, be capable of—

Suing and being sued
Acquiring, owning, holding and developing or disposing of property, whether movable or immovable, tangible or intangible
Having a common seal, if it decides to have one; and
Doing and suffering such other acts and things as bodies corporate may lawfully do and suffer

Cessation of partnership

As per Section 24

A person may cease to be a partner of a limited liability partnership in accordance with an agreement with the other partners or, by giving a notice in writing of not less than thirty days to the other partners of his intention to resign as partner.
A person shall cease to be a partner of a limited liability partnership—
On his death or dissolution of the limited liability partnership;
If he is declared to be of unsound mind by a competent court;
If he has applied to be adjudged as an insolvent or declared as an insolvent.

The cessation of a partner from the limited liability partnership does not by itself discharge the partner from any obligation to the limited liability partnership or to the other partners or to any other person which he incurred while being a partner.
Where a partner of a limited liability partnership ceases to be a partner, the former partner or a person entitled to his share in consequence of the death or insolvency of the former partner, shall be entitled to receive from LLP:-
An amount equal to the capital contribution of the former partner actually made to the limited liability partnership
His right to share in the accumulated profits of the limited liability partnership, after the deduction of accumulated losses of the limited liability partnership, determined as at the date the former partner ceased to be a partner.

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