What governs Limited Liability Partnerships (LLPs)?

Limited Liability Partnerships (LLPs) are primarily governed by the general partnership principles as set forth in the applicable partnerships act, which outlines how partnerships operate, their rights, duties, and liabilities. The important distinguishing feature of an LLP is that it provides limited liability to its partners, protecting them from being personally liable for the debts and obligations of the partnership beyond their initial investment. This framework allows partners to take on business risks while offering a measure of personal financial protection.

The general partnership principles guide the formation, management, and dissolution of partnerships, including LLPs. These principles apply unless specifically modified by the rules governing limited liability partnerships. As a result, understanding these principles is crucial for those involved in or considering the formation of an LLP.

The other options do not adequately address the governance of LLPs. The corporate law statutes may apply to corporations but do not contain specific provisions for LLPs in the same way that the partnerships act does. Federal statutes on corporate governance primarily pertain to companies and may not address the unique aspects of LLPs. Similarly, while the business incorporation act deals with the incorporation of businesses, it does not specifically apply to the governance of LLPs. Thus, the principles laid out in the partnerships act are the foundation for how LLPs