Duties and rights of a partner in Limited Liability Partnership

Limited Liability Partnership

Limited liability partnership (LLP) comprises of a partnership formed and registered bel under Limited Liability Partnership Act 2008, which is an alternative company business form that provides the benefits of limited liability of a company as well as the flexibility of a partnership. The LLP could hold its existence irrespective of changes in partners. It is able to step into contracts and holding property in its name. The LLP is a separate lawful entity, is legally responsible towards the full extent of its assets however legal responsibility of the partners is limited to their agreed contribution inside the LLP. Furthermore, no partner is liable owing to the independent or un-authorized actions of any other partners, therefore individual partners are protected from joint liability created by another partner’s wrongful business decisions or wrongdoing.

A Partner in a Limited Liability Partnership (LLP) has some duties and rights. Such, duties and rights of a Partner are.

General Duties of Partners in Limited liability partnership (LLP)

Partners are obliged to carry on the commerce of the LLP towards the common benefit, to be fair and faithful towards one another, and to render true accounts and complete information of all matters affecting the company to any partner.

Duty towards Indemnifying for Fraud

Every partner of an LLP is required to indemnify the LLP for any losses caused to it by fraud in the conduct of the business of the firm.

Each partner of an LLP is requisite to indemnify the LLP for any losses that were caused to it through a fraud inside the conduct of the business of the corporation.

Rights of the Partners in an LLP

The rights of a Partner in an LLP are:

•    Each Partner has a right to participate in the conduct of the business of the LLP.

•    Each Partner is obliged to attend diligently to their responsibilities in the conduct of the business of the LLP.

•    Any difference that arises because of the ordinary matters related with the business might be decided through a majority of the Partners, and every Partner is required to have the right to express their view prior to the matter is decided.

•    Each Partner has a right to have access as well as towards inspecting and copying the book of accounts of the LLP.

•    When a partner dies, their heirs or legal representatives would have the right to access, inspect as well as copy any of the books of accounts of the LLP.

Implied Authority of Partner

The implied authority of a Partner in the direction of binding the LLP, for an act or transaction carried on, in the standard way business is carried on through the LLP, it binds the LLP. This authority of the Partner is referred to as the implied authority.

If there is an absence of any authorization or custom of trade, implied authority doesn’t allow a Partner towards:

•    Submitting a dispute concerning the business of the LLP to arbitration.

•    Opening a banking account for the LLP in their name.

•    Compromising or relinquishing any claim or portion of a claim by the LLP.

•    Withdrawing a suit or proceeding filed on behalf of the LLP.

•    Admitting any accountability in a suit or proceeding against the LLP.

•    Acquiring immovable property on behalf of the LLP.

•    Transferring immovable property belonging towards the LLP.

Property Belonging to LLP

Subjected to the LLP Agreement, the property of the LLP shall consist of all the property and rights as well as interest in assets originally brought into the stock of the LLP. The responsibilities of Partner in LLP, or acquired, or generated during the business of the LLP, is also consist of the goodwill of the business. Every property, rights, and interest in assets (tangible or intangible) acquired or developed with the money of the LLP are considered to belong to the LLP. 
Subjected to the LLP Agreement, every of the property of the LLP would be held and utilized by the LLP Partners completely for the business purpose of the LLP.

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Author:

eStartIndia Team