UPSC Prelims 2010 Q136: Indian Economy – Infrastructure & Industry
Which one of the following is not a feature of Limited Liability Partnership firm ?
- (a) Partners should be less than 20
- (b) Partnership and management need not be separate
- (c) Internal governance may be decided by mutual agreement among partners
- (d) It is corporate body with perpetual succession
Answer: (a) Partners should be less than 20
Explanation
Limited Liability Partnership: finding what's NOT a feature
The LLP structure, introduced in India via the LLP Act, 2008, offers specific flexible features.
| Option | Verdict | Reason |
|---|---|---|
| (a) Partners should be less than 20 | NOT a feature | Unlike traditional partnership firms (capped at 20 partners), an LLP has NO such cap on the number of partners — this is precisely one of its key advantages over regular partnerships |
| (b) Partnership and management need not be separate | Is a feature | LLPs allow partners to directly manage the business, unlike a strict separation |
| (c) Internal governance decided by mutual agreement | Is a feature | LLPs have flexible internal governance, set by the partners' own agreement |
| (d) Corporate body with perpetual succession | Is a feature | An LLP is indeed a separate legal entity with perpetual succession, like a company |
LLP key features:
| Point | Detail |
|---|---|
| Partner cap | No limit (unlike the 20-partner cap on regular partnerships) |
| Governance | Flexible, by mutual agreement |
| Legal status | Separate legal entity, perpetual succession |
Answer: (a) Partners should be less than 20.
Why each option is right or wrong
- (a) CORRECT. An LLP has no cap of 20 partners — this restriction applies to traditional partnerships, not LLPs.
- (b) Incorrect. This statement is true: LLPs do allow combined partnership-management roles, so it's not the answer.
- (c) Incorrect. This statement is true: flexible internal governance by mutual agreement is a genuine LLP feature.
- (d) Incorrect. This statement is true: perpetual succession as a corporate body is a genuine LLP feature.
Key point
An LLP has NO cap on the number of partners (unlike the traditional partnership's 20-partner limit) — the removal of this cap is itself one of the LLP structure's key advantages.
Remember
LLP: NO cap on the number of partners (unlike regular partnerships' 20-partner limit) — this is NOT a feature of LLPs.
Common mistakes
- Confusing the traditional partnership firm's 20-partner cap with the LLP structure, which has no such limit.
- Missing the question's framing: it asks for what is NOT a feature.
- Not knowing LLPs are a separate legal entity with perpetual succession, unlike regular partnerships.
Exam tip
LLPs removed the old 20-partner cap of regular partnerships — that's precisely why 'partners should be less than 20' is NOT an LLP feature.
Sources
- Limited Liability Partnership Act, 2008
- Limited Liability Partnership Rules, 2009