Question 5 OR (b)

When a partner ceases to be a partner of an LLP, and the effect

7 marks

Time to write
About 14 minutes

From an older CBCS paper

Question

Question 5 OR (b) · 7 marks

When, under the LLP act (2008), does a partner cease to be a partner? What effect does this cessation of partnership interest have?

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

14 minfor 7 marks

Read from the question

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

Write it in this order

  1. Read; underline the asks; jot your points 1 min
  2. 1 Ways of cessation 3 marks 5 min
  3. 2 Effect of cessation 4 marks 7 min
  4. Check: every ask answered, key terms underlined 1 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 14 minutes for 7 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.

Cessation (s. 24, Limited Liability Partnership Act, 2008):

  1. By agreement: in accordance with an agreement with the other partners.
  2. By notice: in the absence of agreement, by giving the other partners not less than thirty days' notice in writing of his intention to resign.
  3. By operation of law: on his death or the dissolution of the LLP; if a competent court declares him to be of unsound mind; or if he has applied to be adjudged, or is declared, an insolvent.

Effect of cessation (s. 24(3) to (6)):

  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 7 marks sit

#ComponentMarks
1Ways of cessation3
2Effect of cessation4
Total7
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