Question 3 (c)

Extent of liability of a designated partner

5 marks

Time to write
About 10 minutes

From an older CBCS paper

Question

Question 3 (c) · 5 marks

Extent of liability of designated partner.

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

10 minfor 5 marks

Write it in this order

  1. Read; underline the asks; jot your points 1 min
  2. 1 Section 8 3 marks 5 min
  3. 2 Penalties; limited liability as partner 2 marks 3 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 10 minutes for 5 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.

Liabilities of a designated partner (s. 8, Limited Liability Partnership Act, 2008). Unless expressly provided otherwise in the Act, a designated partner is:

Picture itExtent of liability of a designated partner

The others head home; the two designated partners stay back, stamping and filing the LLP's returns.

Designated partnersEvery LLP must have two or more designated partners who are individuals; responsible for everything the LLP must do to comply with the Act, including filing documents and returns.

  1. responsible for doing all acts, matters and things required to be done by the LLP for compliance with the Act, including filing any document, return, statement and report under the Act and as specified in the LLP agreement; and
  2. liable to all penalties imposed on the LLP for any contravention of those provisions.

Penalties. Every LLP must have at least two designated partners who are individuals, at least one of them resident in India (s. 7(1)). As the Act stood when the paper was set, if the LLP contravened s. 7(1), the LLP and its every partner were punishable with a fine of not less than ₹10,000, which might extend to ₹5 lakh (s. 10(1)); and if it contravened s. 7(4) or (5) (filing the particulars of each designated partner within thirty days of his appointment; the prescribed conditions for eligibility), s. 8 or s. 9, the LLP and its every partner were punishable with a fine of not less than ₹10,000, which might extend to ₹1 lakh (s. 10(2)). The LLP (Amendment) Act, 2021 later took s. 8 out of s. 10 and replaced these fines with money penalties: for a contravention of s. 7(4), the LLP and its every designated partner are liable to a penalty of ₹5,000, with a further ₹100 for each day the contravention continues, up to ₹50,000 for the LLP and ₹25,000 for each designated partner. As a partner, he is otherwise liable only to the extent of his agreed contribution, like any partner, except in the case of wilful fraud.

Where the 5 marks sit

#ComponentMarks
1Section 83
2Penalties; limited liability as partner2
Total5
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