Question 4 OR (b) part i

Cessation of a partner of an LLP

3 marks

Time to write
About 6 minutes

From an older CBCS paper

Question

Question 4 OR (b) part i · 3 marks
  1. In what ways can an existing partner of an LLP cease to be a partner ? What are the consequences of the cessation?

Reworded from the university paper; the task is the same. The original paper belongs to the University of Delhi. See DU's question bank.

Before you write

Read off the question and its marks

6 minfor 3 marks

Read from the question

  • What…?What are the…?2 asks, each with its own marks below. Answer both.

What the paper leaves open

Marked as one question of 6 marks; answered here in 2 parts of 3 marks each (marks inferred).

Write it in this order

  1. 1 (i) Cessation 1½ marks 3 min
  2. 2 Consequences 1½ marks 3 min

Short on time? Trim steps 1 and 2 evenly rather than skip one: each is capped at its own marks.

Try it first. About 6 minutes for 3 marks. Write it out, then open the solution.

Solution

Hover or tap a marked figure, like 72,000, to see how it is made and where else it appears.

(i) Cessation (s. 24, Limited Liability Partnership Act, 2008). A person ceases to be a partner “in accordance with an agreement with the other partners or, in the absence of” such agreement, by giving not less than thirty days' notice in writing of his intention to resign; and by operation of law, on his death or the dissolution of the LLP, if he is declared of unsound mind by a competent court, or if he has applied to be, or is, declared insolvent.

Consequences:

  1. He is still regarded as a partner by anyone dealing with the LLP unless that person has notice of the cessation or notice has been delivered to the Registrar.
  2. Cessation does not by itself discharge him from obligations he incurred while a partner.
  3. Unless the LLP agreement provides otherwise, he (or the person entitled to his share) receives his capital contribution actually made and his share of accumulated profits, after deducting his share of accumulated losses.
  4. Neither he nor his successor may interfere in the management of the LLP.

Where the 3 marks sit

#ComponentMarks
1(i) Cessation1.5
2Consequences1.5
Total3
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