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Standard XII
Business Environment, Ethics and Management
Question

Identify the disadvantage of LLP.
  1. An LLP can be structured in such a way that one partner has more rights than another.
  2. An LLP is much easier and cheaper to run than a private limited company.
  3. The partners are free to draft the agreement as they please, with regard to their rights and duties.
  4. Non-compliance fines can escalate to Rs. 5 lakh for a single year.

A
The partners are free to draft the agreement as they please, with regard to their rights and duties.
B
An LLP is much easier and cheaper to run than a private limited company.
C
An LLP can be structured in such a way that one partner has more rights than another.
D
Non-compliance fines can escalate to Rs. 5 lakh for a single year.
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Solution
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Limited Liability Partnership can be defined as form of partnership where the partner or investor's liability is limited to the amount invested in the company. LLP combines the advantages of both the Company and Partnership into a single form of organization. Disadvantages of LLP are as follows:a) An LLP can be structured in such a way that one partner has more rights than another.
b) Non-compliance fines can escalate to Rs. 5 lakh for a single year.

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