How to Add a Designated Partner to LLP? - Setindiabiz (2024)

An LLP is owned by its partners who are responsible for investing capital into it. However, unlike a Partnership firm where the management is controlled by the partners itself, the partners of an LLP do not participate in its management at all. Instead, they appoint designated partners for this purpose. The objective of this blog is to provide to its readers a complete overview of Designated Partners in a Limited Liability Partnership.

Section 7 of the Limited Liability Partnership Act, 2008 contains provisions discussing Designated Partners of an LLP. The ownership of an LLP is shared among all its partners, who are either individuals or body corporates. Among these partners, any two individuals or nominal representatives of body corporates can be appointed as “Designated Partners” of the LLP, with the primary responsibility of controlling its management.

As provided by the LLP Act, an LLP must have at least two designated partners, extendable upto a maximum limit of 15. These designated partners must be individuals, either foreign or Indian. However, at least one, out of all the designated partners of an LLP, must be an Indian resident, that is, must have resided in India for more than 182 days in the immediately preceding calendar year. While provisions regarding the minimum number of designated partners, and the qualifications to be appointed as a designated partner, are mentioned in the LLP act, their terms, manner, and conditions of appointment and removal are decided mutually among the partners, and are mentioned in the LLP Agreement.

What are the qualifications to become a Designated Partner?

The qualifications to be appointed as a designated partner are mentioned in the LLP Act as well as in the LLP Agreement. In other words, the provisions regarding qualifications of a Designated Partner are both statutory and may be decided at the helm of the LLP. The conditions of eligibility of designated partners decided at the end of the LLP are applicable specifically to that particular LLP only, and are mentioned in its LLP Agreement. However, the conditions of eligibility provided in the LLP Act are applicable to all LLPs incorporated in India. All such eligibility conditions applicable to every LLP in India are mentioned below.

What are the responsibilities of a Designated Partner?

We have already discussed earlier that Designated Partners are incharge of controlling the internal management of an LLP. Besides, they also perform tasks on behalf of the LLP, like meeting statutory compliances, filing applications, obtaining licenses and certifications in the name of the LLP. Like a Company’s director, the designated partner also acts as the agent of an LLP. We have listed a few mandatory responsibilities of designated partners below.

Appointment of Designated Partners in an LLP

While the requirement of Designated Partners in an LLP is provided for in the LLP Act, 2008, the manner in which they can be appointed are mentioned in the LLP Agreement and are mutually decided by the partners of the LLP. In fact, any one among the individual partners of the LLP usually plays the role of the designated partner as well, after having been so appointed by the other partners.

The detailed procedure of selection and appointment of the designated partners, their terms of service, their duration of service, and their remuneration, are all mentioned in the LLP Agreement. However, before an individual can be appointed as a Designated Partner he must possess DPIN (Designated Partner Identification Number) and must provide his consent to act as the designated partner.

To obtain a DPIN, an e-application form, DIR 3, available on the official website of the Ministry of Corporate Affairs is required to be filled out and submitted with the following documents:

Consequences of delayed appointment of Designated Partners

If an LLP fails to comply with the requirement of appointing at least two designated partners who are individuals, and at least one of them is an Indian resident, the LLP will be penalized with an amount of Rs.10,000 for each day of default, extending to a maximum limit of Rs.5 lakhs.

Conclusion

We hope that this blog has well attempted to provide a complete overview of designated partners appointed in an LLP, covering in detail the purpose of their appointment, their eligibility, ineligibility, manner, and terms of appointment. If you still have any queries regarding the statutory responsibilities of designated partners, or are looking forward to obtaining documents like DPIN, you can consult our startup advisors without hesitation.