LLP Act MCQ Quiz - Objective Question with Answer for LLP Act - Download Free PDF

The correct answer is Option 3.

Key PointsUnder the Partnership Act, 1932, there are some Duties of partners: 

• Duty to indemnify for loss caused by fraud: According to Section 10 , Every partner shall indemnify the firm for any loss caused to it by his fraud in the conduct of the business of the firm. 
• Duty to indemnify for wilful neglect: According to Section 13(f), a partner shall indemnify his firm for any of the losses caused to it due to his wilful neglect during the course of the business. Wilful neglect refers to an act that is deliberate and intentional. 

Additional Information

• Duty of greatest common advantage: As per Section 9 of the Act, it is incumbent upon the partners to carry on their business for the greatest common advantage of the firm. The partners must act so that all the partners benefit and secure the maximum profits. No partner should act for their personal gain. 
• Duty of good faith: As per Section 9, the partners must act just to each other. The relationship of partnership is on mutual trust and hence, there must be good faith between them. A partnership is of fiduciary nature and thus, at every stage of a partnership, the partners must act just and faithful to one another. 
• Duty to render true accounts: Partners of a firm have a duty to render true accounts as per Section 9. A partner of a firm must keep and render true and complete accounts of the partnership firm’s business. He must make it available to other partners or their representatives when required. 
• Duty to render full information: As per Section 9, partners of a firm have a duty to provide true and full information regarding the business. Partners are agents of each other and hence, partners must communicate all information regarding the running of the business in a complete and truthful manner to each other. 
• Duty to not carry another business: As per Section 11(2) of the Act, a partner must not conduct a business other than that of the firm. Partners can restrain one another from carrying on another business, provided that such restraint is reasonable. 
• Duty to act diligently: As per Section 12(b), a firm’s partner must act diligently in the business. 
• Duty to perform without remuneration: As per Section 13(a), every partner must perform and attend to the firm’s business without expecting remuneration. There is a presumption that all partners are to work for the common advantage of the firm. 
• Duty to share losses: As per Section 13(b) of the Act, partners must share losses in the proportions as provided by the partnership agreement. If the agreement does not provide it, it must be shared in the proportion that they share the profits. 
• Duty to not assign his rights: No partner can assign his rights in a partnership firm to a third person in order to make him a partner. 
• Duty to act within authority: Every person has to act within the authority that he has conferred upon him as per the partnership agreement. 
• Duty to account private profits: Section 16(a) provides that no partner can use the partnership firm’s property for private use, or use any profits derived from the partnership business for his own advantage. If the property of profits of a firm is ever used for personal advantage, it must be accounted for. 
• Duty not to compete: Section 16(b) states that no partner of a firm can carry on another business simultaneously, except with the consent of other partners. On the failure of obtaining the consent, he must account for all the profits he made as a result of that and must compensate for the losses sustained by the firm if any.

The correct answer is Option 3.

Key Points Section 29: Rights of Transferee of Partners interest.

Section 29(1) deals with the position during the continuance of the firm, where as the position on dissolution of the firm of contained in Section 29(2). 

• During the continuance of the firm, the transferee of a partner's interest does not become entitled to interfere in the conduct of the business of the firm. Nor can such transferee require accounts. Nor can he inspect the books of the firm.
• He is bound to accept of the account of profits agreed to by the partners. His only right is to receive the share of profits of transferring partner.
• The reason why the transferee is not entitled to interfere in the conduct of business is that partnership being based on mutual confidence and trust between partners. There should be no interference by any outsider. 
• When the firm is dissolved or the transferring partner ceases to be a partner there is obviously final settlement of accounts. At the time, the transferee is entitled to share of assets of transferring partner. For the purpose of ascertaining such share he is also entitled to account as from date of dissolution.
• What is meant by a share of partner to his proportion of partnership assets after they have been realised and converted into money and all the partnership liabilities and have been paid and discharged [Section 44(e)]. 

As per section 11 A person is said to commit sexual harassment upon a child when such person with sexual intent,--

(i) utters any word or makes any sound, or makes any gesture or exhibits any object or part of body with the intention that such word or sound shall be heard, or such gesture or object or part of body shall be seen by the child; or

(ii) makes a child exhibit his body or any part of his body so as it is seen by such person or any other person; or

(iii) shows any object to a child in any form or media for pornographic purposes; or

(iv) repeatedly or constantly follows or watches or contacts a child either directly or through electronic, digital or any other means; or

(v) threatens to use, in any form of media, a real or fabricated depiction through electronic, film or digital or any other mode, of any part of the body of the child or the involvement of the child in a sexual act; or

(vi) entices a child for pornographic purposes or gives gratification therefor.

As per section 26 of the act Every partner of a limited liability partnership is, for the purpose of the business of the limited liability partnership, the agent of the limited liability partnership, but not of other partners.

Section 17 provides that Rectification of name of limited liability partnership.—(1) Notwithstanding anything contained in sections 15 and 16, if through inadvertence or otherwise, a limited liability partnership, on its first registration or on its registration by a new name, is registered by a name which is identical with or too nearly resembles to-- (a) that of any other limited liability partnership or a company; or (b) a registered trade mark of a proprietor under the Trade Marks Act, 1999 (47 of 1999), as is likely to be mistaken for it, then on an application of such limited liability partnership or proprietor referred to in clauses (a) and (b) respectively or a company, the Central Government may direct that such limited liability partnership to change its name or new name within a period of three months from the date of issue of such direction

The aggrieved party must file the appeal within 60 days from the date of receiving the order copy

Explanation: Section 57: Conversion from unlisted public company into limited liability partnership 57. An unlisted public company may convert into a limited liability partnership in accordance with the provisions of this Chapter and the Fourth Schedule. 

A limited liability partnership's Statement of Account and Solvency shall be signed on behalf of the limited liability partnership by its designated partners. 

Explanation: 67C. Appeal and revision. — The High Court may exercise, so far as may be applicable, all the powers conferred by Chapters XXIX and XXX of the Code of Criminal Procedure, 1973 on a High Court, as if a Special Court within the local limits of the jurisdiction of the High Court were a Court of Sessions trying cases within the local limits of the jurisdiction of the High Court. 

Explanation: The designated partner is responsible for compliance with the provisions of LLP Act and is required to obtain Directors Identification Number (DIN) from the Central Government, according to Sec 7 of the LLP Act, 2008.

As per section 5 of LLP Act, 2008 only an individual or body corporate may be a partner in a Limited Liability Partnership. A HUF cannot be treated as a body corporate for the purposes of LLP Act, 2008. Therefore, a HUF or its karta cannot become designated partner in LLP.

The correct answer is Option 3.

Key PointsUnder the Partnership Act, 1932, there are some Duties of partners: 

• Duty to indemnify for loss caused by fraud: According to Section 10 , Every partner shall indemnify the firm for any loss caused to it by his fraud in the conduct of the business of the firm. 
• Duty to indemnify for wilful neglect: According to Section 13(f), a partner shall indemnify his firm for any of the losses caused to it due to his wilful neglect during the course of the business. Wilful neglect refers to an act that is deliberate and intentional. 

Additional Information

• Duty of greatest common advantage: As per Section 9 of the Act, it is incumbent upon the partners to carry on their business for the greatest common advantage of the firm. The partners must act so that all the partners benefit and secure the maximum profits. No partner should act for their personal gain. 
• Duty of good faith: As per Section 9, the partners must act just to each other. The relationship of partnership is on mutual trust and hence, there must be good faith between them. A partnership is of fiduciary nature and thus, at every stage of a partnership, the partners must act just and faithful to one another. 
• Duty to render true accounts: Partners of a firm have a duty to render true accounts as per Section 9. A partner of a firm must keep and render true and complete accounts of the partnership firm’s business. He must make it available to other partners or their representatives when required. 
• Duty to render full information: As per Section 9, partners of a firm have a duty to provide true and full information regarding the business. Partners are agents of each other and hence, partners must communicate all information regarding the running of the business in a complete and truthful manner to each other. 
• Duty to not carry another business: As per Section 11(2) of the Act, a partner must not conduct a business other than that of the firm. Partners can restrain one another from carrying on another business, provided that such restraint is reasonable. 
• Duty to act diligently: As per Section 12(b), a firm’s partner must act diligently in the business. 
• Duty to perform without remuneration: As per Section 13(a), every partner must perform and attend to the firm’s business without expecting remuneration. There is a presumption that all partners are to work for the common advantage of the firm. 
• Duty to share losses: As per Section 13(b) of the Act, partners must share losses in the proportions as provided by the partnership agreement. If the agreement does not provide it, it must be shared in the proportion that they share the profits. 
• Duty to not assign his rights: No partner can assign his rights in a partnership firm to a third person in order to make him a partner. 
• Duty to act within authority: Every person has to act within the authority that he has conferred upon him as per the partnership agreement. 
• Duty to account private profits: Section 16(a) provides that no partner can use the partnership firm’s property for private use, or use any profits derived from the partnership business for his own advantage. If the property of profits of a firm is ever used for personal advantage, it must be accounted for. 
• Duty not to compete: Section 16(b) states that no partner of a firm can carry on another business simultaneously, except with the consent of other partners. On the failure of obtaining the consent, he must account for all the profits he made as a result of that and must compensate for the losses sustained by the firm if any.

The correct answer is Option 3.

Key Points Section 29: Rights of Transferee of Partners interest.

Section 29(1) deals with the position during the continuance of the firm, where as the position on dissolution of the firm of contained in Section 29(2). 

• During the continuance of the firm, the transferee of a partner's interest does not become entitled to interfere in the conduct of the business of the firm. Nor can such transferee require accounts. Nor can he inspect the books of the firm.
• He is bound to accept of the account of profits agreed to by the partners. His only right is to receive the share of profits of transferring partner.
• The reason why the transferee is not entitled to interfere in the conduct of business is that partnership being based on mutual confidence and trust between partners. There should be no interference by any outsider. 
• When the firm is dissolved or the transferring partner ceases to be a partner there is obviously final settlement of accounts. At the time, the transferee is entitled to share of assets of transferring partner. For the purpose of ascertaining such share he is also entitled to account as from date of dissolution.
• What is meant by a share of partner to his proportion of partnership assets after they have been realised and converted into money and all the partnership liabilities and have been paid and discharged [Section 44(e)]. 

As per section 11 A person is said to commit sexual harassment upon a child when such person with sexual intent,--

(i) utters any word or makes any sound, or makes any gesture or exhibits any object or part of body with the intention that such word or sound shall be heard, or such gesture or object or part of body shall be seen by the child; or

(ii) makes a child exhibit his body or any part of his body so as it is seen by such person or any other person; or

(iii) shows any object to a child in any form or media for pornographic purposes; or

(iv) repeatedly or constantly follows or watches or contacts a child either directly or through electronic, digital or any other means; or

(v) threatens to use, in any form of media, a real or fabricated depiction through electronic, film or digital or any other mode, of any part of the body of the child or the involvement of the child in a sexual act; or

(vi) entices a child for pornographic purposes or gives gratification therefor.

As per section 26 of the act Every partner of a limited liability partnership is, for the purpose of the business of the limited liability partnership, the agent of the limited liability partnership, but not of other partners.