Add Designated Partner

Every Limited Liability Partnership must have at least two designated partners. To add a designated partner, a resolution needs to be passed. He must have a DPIN and his name must be amended in the LLP agreement.

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Limited Liability Partnership (LLP) is a relatively new type of business entity in India that combines the advantages of both the Company and Partnership into a single form of organization and one partner is not responsible or liable for another partner’s misconduct or negligence. Therefore, all partners have a form of limited liability for each individual’s protection within the partnership, similar to that of the shareholders of a company. For various reasons, there could be a requirement for adding a new Partner to an existing Partnership.

Significant differences between a partner and a designated partner in an LLP

In the event of non-compliance of an LLP with the terms of the LLP Act, a partner is neither responsible nor liable for the payment of fines. Designated partners in contrast have extended accountability for the LLP’s penalties in the event of non-compliance concerning filing paperwork, returns, and account statements. 

  • A designated partner of a Limited Liability Partnership (LLP) is responsible for an LLP’s compliance obligations, which include filing any document, return, or statement with any authority as and when necessary and needed
  • If the designated partner of the LLP fails to comply with the stated requirements, i.e. if the provisions are violated, the designated partner of the LLP may be personally and severally liable for the punishments and penalties imposed by the LLP Act (or any other applicable Act).
  • The LLP authority does not need a partner to obtain an identifying number. The designated partners, on the other hand, must obtain a DPIN (Designated Partner Identification Number) from them.
  • An LLP firm can have any person or corporation as a partner. However, only one person can be designated as a designated partner.
  • While partners operate as the partnership firm’s agent, designated partners act as the partnership firm’s agent while serving as a Director
  • The term ‘partner’ is frequently used in the context of both general partnerships and limited liability partnerships. The terminology ‘designated partner,’ on the other hand, is only used in the context of LLPs.
  • After the formation of an LLP, designated partners are more responsible for regulatory and legal compliances in addition to the day-to-day activities and operations of the LLP, and their obligation and liability increase proportionately.
  • Anyone who forms a partnership with other people is referred to as a ‘partner.’ Designated Partner, on the other hand, refers to any partner identified as such in the Limited Liability Partnership’s incorporation document at the time of registration.

Eligibility of designated partner in LLP

A person has to fulfil the specific requirements in case he wants to enrol himself as a designated partner with an LLP. Let us have a look at some of the primary requirements to be eligible to become a designated partner in an LLP:

  • The individual must be at least 18 years old.
  • Any individual or body corporate can be eligible to be a partner in an LLP.
  • The individual who wishes to become a partner must have a unique identification number (For instance, an Aadhaar card)
  • Every LLP must have a minimum of two designated partners.
  • The person should be in a sound mind.
  • The person shouldn’t be involved in fraudulence.
  • There is no maximum limit for the number of partners in a limited liability partnership.
  • At least one designated partner must be an Indian national who resides in India.
  • The other Designated Partners must also provide a consent letter stating their proof and other documents.
  • The individual should not have been adjudged bankrupt in the last 5 years.
  • One who has not properly closed the payment settlements with any creditors in the last 5 years and also hasn’t made an agreement regarding the same with them.
  • In case the partner has changed his/her name or address, then the partner shall inform the LLP of any modification made in his/her name or address within 15 days of such revision. It’s the LLP firm’s responsibility to file such details with the Registrar within 30 days of such a change in Form 4.

Penalty for not having a designated partner

All LLPs must have a minimum of two or more Designated Partners. Failure to comply with the same could result in a levy of penalty amounting to Rs 10,000 or more. Besides, in an instance where the vacancy due to the exit of a Designated Partner is not being addressed within 30 days, penalties, similar to the nature described above, will be levied on the LLP.

We provide legal advice to the partnership firm on the rights, duties, and responsibilities of the designated partner, as well as the consequences of non-compliance with the legal requirements.

What are the responsibilities of a Designated Partner?

Designated Partners are in charge of controlling the internal management of an LLP. Besides, they also perform tasks on behalf of the LLP, like meeting statutory compliances, filing applications, and 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.

  • A Designated Partner must sign the LLP’s statements of accounts and solvency.
  • The Designated Partner should assist and cooperate with the investigating authorities in cases of an investigation by providing the necessary official documents and papers of the LLP.
  • The Designated Partner is required to pay the inspector back for the conducted investigation.
  • Within 60 days of the end of the fiscal year, the Designated Partner must properly file the annual returns with the Registrar; otherwise, the firm will be fined more than 10,000.
  • The Designated Partner must both sign the e-forms that must be filed with the Registrar and notify the Registrar of any changes to the LLP, such as changes to the partners’ names or addresses.

We ensure that the partnership firm complies with all the legal requirements while adding a designated partner, including the submission of the required forms and documents to the Registrar of Firms.

Procedure to add a designated partner:

  • Apply for Digital Signature Certificate:
  • The proposed designated partner shall apply for a DSC. The following documents are required for the application:
  • PAN Card of the applicant
  • Aadhaar Card of the applicant
  • Photo of the applicant
  • Email Id of the applicant
  • Phone number
  • Apply for DIN Number- After the DSC, the Director Identification Number of the Director will be applied in the form DIR–3 along with the address proof and the identity proof of the applicant.
  • Once the DIN is allotted to the designated partner, all the existing partners of the LLP will call a meeting and pass a resolution to add a designated partner to the partnership deed.
  • A supplementary partnership deed will be drafted in which the new partner’s name will be added.
  • Then the consent of the incoming partner will be taken in writing.
  • After these documents are prepared, Form – 4 of LLP will be filed within 30 days of the appointment.
  • After filing this form, FORM – 3 will be filed, along with the supplementary and the original partnership deed within 30 days of appointment.
  • After the filing of all these forms, the name of the designated partner will be added and will be seen on the site of the Ministry of Corporate Affairs.
  • If Form – 3 and Form – 4 are filed within 30 days there is an additional fee on each form of Rs. 100/- per day.

We prepare the necessary documents required for adding a designated partner, including the partnership deed, Form-4, Form-9, and any other legal documents required under the law.

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