• Personal exposure

Are the personal assets of a Director or LLP Partner at risk under any circumstances while performing his/ her duties.
Asked 4 years ago in Business Law

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11 Answers

A partner is not personally liable, directly or indirectly for an obligation of LLP solely by reason of being a partner of the LLP.

2) The liabilities of the LLP shall be met out of the property of the limited liability partnership.

3) The partnership firm would be liable to the full extent of its assets, while the partner would be liable only to the extent of their agreed contribution. But these protections do not affect the personal liability of a partner for his own wrongful act or omission.

Ajay Sethi
Advocate, Mumbai
87893 Answers
6207 Consultations

5.0 on 5.0

Every partner of an LLP would be, for the purpose of the business of the LLP, an agent of the LLP but not of the other partners. Liability of partners shall be limited except in case of unauthorized acts, fraud and negligence. But a partner shall not be personally liable for the wrongful acts or omission of any other partner. An obligation of the limited liability partnership whether arising in contract or otherwise, is solely the obligation of the limited liability partnership. The liabilities of LLP shall be met out of the property of the LLP.

The Act provides for the minimum of two partners to carry on LLP. If at any time the number of partners of a limited liability partnership is reduced below two and the limited liability partnership carries on business for more than six months while the number is so reduced, the person, who is the only partner of the limited liability partnership during the time that it so carries on business after those six months and has the knowledge of the fact that it is carrying on business with him alone, shall be liable personally for the obligations of the limited liability partnership incurred during that period.

The Act also provides that any person (not being a partner in any LLP), who by words spoken or written or by conduct, represents himself, or knowingly permits himself to be represented to be a partner in a LLP (known as ‘partner by Holding out’) is liable to any person who has on the faith of any such representation given credit to the LLP, whether the person representing himself or represented to be a partner does or does not know that the representation has reached the person so giving credit.

It has further been provided that where any credit is received by the LLP as a result of such representation, the LLP shall, without prejudice to the liability of the person so representing himself or represented to be a partner, be liable to the extent of credit received by it or any financial benefit derived thereon.

The provisions have also been made in the Act to provide that where after a partner's death the business is continued in the same LLP name, the continued use of that name or of the deceased partner's name as a part thereof shall not of itself make his legal representative or his estate liable for any act of the LLP done after his death.

Ruchit Dugar
Advocate, New Delhi
190 Answers

4.9 on 5.0

Hi, yes the personal assets may be attached to recover any liability from the director

Hemant Chaudhary
Advocate, Gurgaon
4619 Answers
67 Consultations

4.9 on 5.0

Dear Sir,

Every partner of an LLP would be, for the purpose of the business of the LLP, an agent of the LLP but not of the other partners. Liability of partners shall be limited except in case of unauthorized acts, fraud and negligence. But a partner shall not be personally liable for the wrongful acts or omission of any other partner. An obligation of the limited liability partnership whether arising in contract or otherwise, is solely the obligation of the limited liability partnership. The liabilities of LLP shall be met out of the property of the LLP.

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For authenticated information on this subject is found in the following link

http://www.mca.gov.in/MinistryV2/liabilityofpartners.html

Kishan Dutt Kalaskar
Advocate, Bangalore
6050 Answers
381 Consultations

4.8 on 5.0

Dear Client,

Limited Liability Partnership is a different concept than the conventional partnership. Here, LLP has it`s INDIVIDUAL STATUS AND PROPRIETIES. advantage OF IT- limited partners are not personally liable for business debts NOT THERE personal resources.

Yogendra Singh Rajawat
Advocate, Jaipur
21481 Answers
31 Consultations

4.4 on 5.0

Yes it is subject upto partners liability

Sudhindra Bhat
Advocate, Bangalore
51 Answers

Not rated

The partners of the LLP is having limited liability which means partners are not liable to pay the debts of the company from their personal assets. No partner is responsible for any other partner misbehaves or misconduct.

Siddharth Jain
Advocate, New Delhi
5925 Answers
101 Consultations

5.0 on 5.0

See it can be at risk, subject to the liability of the said partner though he will not be liable for other partners debts in the company he shall be liable upto his nominal value of share.

Shubham Jhajharia
Advocate, Ahmedabad
25516 Answers
179 Consultations

5.0 on 5.0

Generally personal property is not at risk, but do not make up any mind to do something wrong. You and your property is not safe against frauds or illegal work.

Jugal Kishore Agrawal
Advocate, Jaipur
81 Answers

Not rated

This is my response to you:

1. This will depend on the terms and conditions of your partnership agreement;

2. Also this would depend on the clauses that you entered into;

3. This will also be subject to the Article of Association or any other document which binds the directors of the LLP and/or its employees;

4. By the basic definition of an LLP, it means that director is partly liable;

5. For example: Under bankruptcy the liquidator can freeze the assets because there is no fundamental difference, in law, between owners and management in an LLP, which is not the case in respect of companies (i.e. directors and shareholders).

Gowaal Padavi
Advocate, Mumbai
1920 Answers
5 Consultations

5.0 on 5.0

Until and unless the director or the partner is not involved in the misappropriation or fraudulent act in respect of the company's account there's is no danger for their personal assets and it cannot be attached for the company's poor performance or settlement if debts.

T Kalaiselvan
Advocate, Vellore
78048 Answers
1543 Consultations

5.0 on 5.0

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