Chapter VIII - Assignment and Transfer of Partnership Rights
Section 42
Section 42: partner's transferable interest
A partner may transfer profit, loss and distribution rights, in whole or part; transfer alone does not make the transferee a manager or end the partner’s membership.
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This article is for general information. Refer to the Limited Liability Partnership Act, 2008 official text for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
(1) The rights of a partner to a share of the profits and losses of the limited liability partnership and to receive distributions in accordance with the limited liability partnership agreement are transferable either wholly or in part. (2) The transfer of any right by any partner pursuant to sub-section (1) does not by itself cause the disassociation of the partner or a dissolution and winding up of the limited liability partnership. (3) The transfer of right pursuant to this section does not, by itself, entitle the transferee or assignee to participate in the management or conduct of the activities of the limited liability partnership, or access information concerning the transactions of the limited liability partnership.
Key takeaways
Core rule
A partner may transfer profit, loss and distribution rights, in whole or part; transfer alone does not make the transferee a manager or end the partner’s membership.
Operational step
Identify the economic right being transferred
How section 42 works
A partner may transfer profit, loss and distribution rights, in whole or part; transfer alone does not make the transferee a manager or end the partner’s membership.
Practical steps
Identify the economic right being transferred; read the LLP agreement; record the transfer; keep management and information rights distinct.
Practical preparation
Check these points against the Act and the relevant records.
- Identify the economic right being transferred
- Read the LLP agreement
- Record the transfer
- Keep management and information rights distinct.
Practical checklist
Do
- Identify the economic right being transferred
- Read the LLP agreement
- Record the transfer
- Keep management and information rights distinct.
Avoid
- Do not bypass the approvals, time limits or conditions stated in this section.
Illustrative example
Hypothetical: partner's transferable interest
A partner assigns half of future distributions to a lender.
Step 1
Record the scope of the economic transfer
Step 2
Check the agreement
Step 3
Keep the lender out of management absent a separate legal basis.
Outcome
- The lender receives the assigned economic right but does not gain management or information rights merely from section 42.
Glossary
- transferee
- A person receiving a partner’s transferable economic interest.
Frequently asked questions
What does section 42 provide?
A partner may transfer profit, loss and distribution rights, in whole or part; transfer alone does not make the transferee a manager or end the partner’s membership.
What should be checked in practice?
Identify the economic right being transferred; read the LLP agreement; record the transfer; keep management and information rights distinct.
Need help applying this provision to your situation?
Contact BizeneedLast updated 10 October 2026