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Adding a Designated Partner

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Designated Partner in LLP – Overview

  • At least two partners are required to serve as designated partners in a Limited Liability Partnership (LLP). These partners must be included by name in the LLP partner agreement and have a Designated Partner Identification Number. It is possible to add or subtract the appointed partner. When compared to other forms of company registration, these are simpler to apply for and require less compliances.
  • The number of partners has no upper limit. Additionally, there are no limitations on entering or leaving an LLP. It is simple to join or quit. Additionally, the ownership can be easily transferred from one person to another. Read through to find out more about adding a designated partner in LLP.

Penalty For Not Appointing A Designated Partner

As per the Limited Liability Partnership (LLP) Act, 2008, an LLP must have at least 2 Designated Partners. A Designated Partner is an individual who is responsible for the management of the LLP and is required to be a resident of India.

If an LLP does not have at least 2 Designated Partners, it will be dissolved. The LLP will also be liable to a penalty of up to Rs. 1 lakh.

Here are the specific penalties for not appointing a Designated Partner:

  • If an LLP does not have at least two Designated Partners at the time of its registration, it will be dissolved by the Registrar of LLPs.
  • If an LLP ceases to have two Designated Partners at any time after its registration, it will be dissolved by the Registrar of LLPs unless it appoints at least two Designated Partners within thirty days of the occurrence of the event that resulted in the LLP ceasing to have two Designated Partners.
  • If an LLP fails to appoint a Designated Partner within the stipulated time period, it will be liable to a penalty of up to Rs. 1 lakh.

The penalty will be imposed by the Registrar of LLPs. The LLP may also be liable to pay compensation to any person who suffers any loss or damage as a result of the LLP’s failure to appoint a Designated Partner.

It is important to note that these are just the penalties under the LLP Act. There may be other penalties under other laws, such as the Companies Act, 2013.

Minimum & Maximum No. Of Designated Partner

Under the Limited Liability Partnership (LLP) Act, 2008, there must be at least two Designated Partners in an LLP. There is no upper limit on the number of Designated Partners.

  • Designated Partners are individuals who are responsible for the management of the LLP. They are required to be residents of India.
  • The names of the Designated Partners must be mentioned in the LLP registration documents.
  • If a Designated Partner dies, resigns, or is expelled, the LLP must appoint a new Designated Partner within 30 days.

If an LLP does not have at least two Designated Partners, it will be dissolved.

 

Appointment of Designated Partner in LLP

The best thing about LLPs is that partners can be added or removed anytime. However, the designated partner should be made fully aware of his roles and responsibilities before adding him to the LLP. In order to add a partner in an LLP, you have to follow the steps mentioned below:

  • DIN and Digital Signature have to be obtained and processed for adding a designated partner. We will obtain its consent letter.
  • Through the partnership deed, the decision to add a designated partner will take place in a meeting.
  • The new partner’s name will be added to the supplementary partnership deed.
  • We help you draft the partnership deed.
  • Following the appointment, within 30 days, the new partner must file form-4. You must submit this form along with both the additional and original deed.
  • After this process, form-3 should be filed and processed along with the partnership deed within 30 days of the appointment.
  • Once all the procedures are done, the new designated partner’s name will be added to the LLP and viewed on the MCA (Ministry of Corporate Affairs) website.

Role of Designated Partner in LLP

While adding a designated partner in LLP, the partner should be aware of his/her duties and responsibilities to be followed while in the period of holding the partnership.

  • The Designated Partner of the LLP is authorised to attach his signature on the Statement of Account and Solvency, form – 8, which is a declaration.
  • The LLP must file annual returns with the Registrar within a specified period of 60 days from the date of closure of the financial year. If this isn’t implemented, every Designated Partner will be imposed with a fine exceeding Rs 10,000.
  • If there is any need, then the Designated Partner may file the returns of documents.
  • The Designated Partner must support the authority with the necessary documents, information, signing any requirements, etc. by extending his/her co-operation to the inspector on inquiry or inspection.
  • When an investigation conducted by an inspector takes place, then a Designated Partner is responsible to reimburse the expenses.

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Frequently Asked Questions (FAQs)

Certain individuals cannot be designated partners in a Limited Liability Partnership (LLP). These include:

  • Minor Individuals: Anyone below the age of 18 cannot become a designated partner in an LLP.
  • Undischarged Insolvent: Individuals declared insolvent by a court and not discharged from those liabilities cannot be designated partners.
  • Persons of Unsound Mind: Individuals declared of unsound mind by a competent court are ineligible.
  • Disqualified by Law: Those disqualified under specific laws, such as the Companies Act or other relevant regulations.

Yes, a designated partner can be removed from an LLP under certain circumstances. Removal typically involves:

  • Resignation: A designated partner can resign by providing a written notice to the LLP, which must be filed with the Registrar of Companies (ROC).
  • Resolution: Partners may pass a resolution for the removal of a designated partner, subject to the terms of the LLP agreement.
  • As per LLP Agreement: The LLP agreement may specify conditions and procedures for removal.
  • Court Order: In some cases, a court may order the removal of a designated partner for misconduct or other valid reasons.

To add a designated partner to an LLP, follow these steps:

  • Agreement: Ensure that the LLP agreement allows for the addition of a designated partner and specifies the procedure.
  • Consent: Obtain the consent of the proposed designated partner. They must be eligible as per LLP rules.
  • Resolution: Pass a resolution at a meeting of the partners, authorizing the addition of the designated partner.
  • ROC Filing: File the required forms with the Registrar of Companies (ROC) within the stipulated time frame, along with the designated partner’s consent and other necessary documents.
  • Intimate ROC: Inform the ROC about the change within 30 days from the date of appointment.
  • Update Records: Update all official records, including LLP agreement, and notify concerned authorities of the addition.
  • Publication: Publish a notice about the designated partner’s appointment in a newspaper, as required by law.
Yes! At least 2 partners are necessary to add a designated partner in LLP
Within 30 days following the LLP Agreement’s modification, Form 4 must be submitted as a Linked Form with Form 3 in the event that the change was caused by a change in partners or the designated partner.
A ‘partner’ is somebody who enters into a partnership with other individuals. Contrarily, any partner designated as such in the Limited Liability Partnership’s governing instrument at the time of registration is referred to as a designated partner.

One can get a DPIN number using the documents listed below:

  • a picture of the applicant
  • Identity documentation for the application. For Indian nationals, PAN is required. Any foreign national must have a passport.
  • proof of the applicant’s address.

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