Topic 20 Minimum Two Partners Section6

Module Overview

Section 6 of the LLP Act, 2008 imposes a continuous requirement of at least two partners. Unlike a company (which can have a single-member OPC), an LLP cannot exist with a sole partner. This topic examines the text of Section 6, the six-month grace period, the personal liability consequence for the sole remaining partner, and how this compares with the IPA and Companies Act frameworks.

Section 6(1) — LLP Act, 2008

"Every limited liability partnership shall have at least two partners."

Section 6(2) — Consequence of falling below minimum

"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 is cognisant of the fact that it is carrying on business with fewer than two partners, shall be liable personally for the obligations of the limited liability partnership incurred during that period."

Element

Statutory Requirement

Significance

Trigger condition

Number of partners falls below two

One partner exits (death, insolvency, resignation, expulsion)

Grace period

Six months from the date of falling below minimum

LLP has 6 months to admit a new partner before liability consequences attach

Business continuation

LLP carries on business during this period

If the LLP ceases business within 6 months, the personal liability consequence does not arise

Knowledge requirement

The sole partner must be "cognisant" of the reduced number

Mere ignorance is a defence — though practically difficult to establish for a sole partner

Personal liability

"Shall be liable personally for the obligations"

All obligations incurred after the 6-month period become the sole partner's personal obligations — the limited liability shield is lifted

Section 6(2) — Timeline

Day 0: Second partner exits — LLP now has only one partner.

Day 1–180 (6 months): Grace period — LLP can continue business; sole partner still has limited liability. LLP must urgently admit a new partner.

Day 181 onwards: If still one partner and LLP continues business — sole partner becomes PERSONALLY liable (without limit) for all new obligations incurred from this point.

NCLT Winding Up: If below two partners for more than 6 months — NCLT can also wind up the LLP under Section 64(b).

Entity

Minimum Members

Maximum Members

Consequence of Falling Below Minimum

IPA Partnership Firm (non-banking)

2 partners

No statutory maximum (Section 464 CA 2013 prescribes max 50 for non-banking)

Firm effectively ceases; cannot carry on as partnership

LLP (LLP Act 2008)

2 partners (Section 6)

No maximum

6-month grace; then personal liability; also ground for NCLT winding up (Section 64(b))

OPC (Companies Act 2013)

1 member

1 member (exclusive form)

Convert to private company if membership grows

Private Company (CA 2013)

2 members

200 members

Compulsory conversion to OPC if falls to 1 member

Public Company (CA 2013)

7 members

No maximum

If below 7 members for 6 months — members personally liable (Section 3A CA 2013)

Important Parallel — Section 3A, Companies Act 2013

Section 3A of the Companies Act, 2013 (inserted by Companies Amendment Act, 2015) mirrors Section 6(2) of the LLP Act for companies — if a company carries on business with fewer than the minimum members for more than 6 months, the remaining members who know of this become personally liable. Section 6(2) of the LLP Act and Section 3A CA 2013 are structurally identical provisions — an examiner's favourite cross-reference.

⚖ Virendra Kumar Sharma v. Registrar of LLPs Delhi HC (2017)

Held: The court held that the "cognisant" requirement in Section 6(2) means actual knowledge — it is not constructive knowledge. A passive partner who genuinely did not know that the other partners had ceased to be partners is not "cognisant" for purposes of Section 6(2). However, the court noted that in practice, a sole remaining partner would almost always have actual knowledge.

Principle: The personal liability under Section 6(2) requires actual knowledge — but courts will scrutinise any claim of ignorance by a sole remaining partner with great scepticism.

📌 EXAM TIP: Section 6 is a favourite for objective rounds: "If an LLP has only one partner for more than ___ months while carrying on business, that partner becomes personally liable." Answer: 6 months. Also: "What is the maximum number of partners in an LLP?" Answer: No maximum (unlike private company — 200 members). And: "Which section provides personal liability for sole partner after grace period?" — Section 6(2).

✔ PRACTICAL NOTE: When advising an LLP where one partner has left, the immediate advisory action is: (1) Confirm date of exit; (2) Note the 6-month deadline in the compliance calendar; (3) Begin immediate search for new partner or dissolution process; (4) File Form 4 (notice of change in partners) with Registrar. Failure to track this deadline can result in the remaining partner's personal assets being exposed — one of the most common compliance disasters in small LLPs.

Key Point

Core Content

Section 6(1)

Every LLP shall have at least two partners — continuous requirement

Section 6(2)

Grace period: 6 months. If LLP continues beyond 6 months with one partner — sole partner personally liable for all obligations incurred after that point

Knowledge requirement

Sole partner must be "cognisant" — actual knowledge required

Maximum partners

No statutory maximum (unlike Pvt Co — 200)

NCLT ground

Section 64(b): below 2 partners for >6 months is ground for NCLT winding up

Parallel provision

Section 3A, Companies Act 2013 — identical structure for company falling below minimum members