Who is an authorised partner in a firm? If you are confused about their role, in particular, this blog will come in handy. Read on to know more.
According to the LLP Act of 2016, an Authorised Partner is a person who is either the LLP’s sole manager or one of its partners and who has engaged in a partnership agreement with the LLP. One must have owned at least 10% of the company’s equity and have operated a firm for at least two years in order to qualify as an authorised partner. Learn more about the Authorised Partner Who Resides in the LLP.
A member, also referred to as the founding or principal member of an LLP, should not be mistaken for an authorised partner. Only issues involving their own affairs may be voted on by a member. Other members, however, are only allowed to attend and speak at meetings.
What Are the Eligibilities to be an Authorised Partner?
The only permitted authorised partners are individuals. Two or more partners may be designated as an Authorised Partner from among the members of a Limited Liability Partnership. At least one Authorised Partner in every LLP must be an Indian resident.
According to the definition given above, an authorised partner is a person chosen by an LLP to run the company’s operations. In other words, it is a person who the LLP has designated to serve as a partner in the company. The function of an authorised partner includes a variety of other responsibilities in addition to managing corporate operations.
Steps to Become an Authorised Partner
One must first enter into a memorandum of understanding with the LLP in order to become an authorised partner in the LLP. Then, to become an authorised partner, one must invest 10% of their own money in the company and run it for at least two years.
A member also referred to as the founding or principal member of an LLP, should never be mistaken for a designated partner. Only issues involving their own affairs may be voted on by a member. Other members, however, are only permitted to attend and participate in meetings. Members are considered equal under the terms of the LLP Act apart from that.
Advantages of Becoming an Authorised Partner
You will have more influence over the company and its choices if you become an authorised partner in an LLP. You will also get a vote on any issues involving the alliance or the company.
Role of an Authorised Partner in an LLP
It is anticipated that an authorised partner will act as a liaison between the investors and other partners in the LLP. The authorised partner will probably serve as an objective mediator between the investors and the other LLP partners. An authorised partner’s other responsibilities include overseeing investor relations and responding to inquiries the organisation receives.
Who Cannot Become an Authorised Partner in an LLP?
The following people are ineligible to be authorised partners:
- An insolvent who is undischarged
- A person who has been implicated for the last five years
- A person who has refused to pay their creditors at any point over the five years prior and has not reached a compromise with them
- A person who has served at least six months of a jail sentence for any immoral behaviour
- Minors who are under 18 years old.
However, the Central Government has the authority to overturn a person’s disqualification.
Documents Needed to Become an Authorised Partner
To receive a DPIN and become an Authorised Partner in an LLP, the following paperwork must be submitted:
- A copy of the identity proof that has been attested or certified and includes a self-portrait, the date of birth, and the name of the father or husband
- A certified or attested copy of the evidence of residence
- If the applicant is the body corporate’s nominee, he or she must enclose a copy of the resolution or authorisation on the organisation’s letterhead. The individual’s name and address must be mentioned, among other details
- A copy of the applicant’s current passport would be sufficient if they were a foreign national.
Penalties for Not Appointing an Authorised Partner
Every LLP must have at least two Authorised Partners in order to operate. If the requirements are not met, a penalty of at least ₹10,000 may be assessed. Additionally, LLP will be subject to penalties of the same kind as those outlined above if the vacancy caused by the departure of a Designated Partner is not filled within a 30-day window.
Role of an Authorised Partner
It is clear that an Authorised Partner must file documents, taxes, statements, etc., but that is not the end of his or her responsibilities. Below are a few crucial ones that we’ve listed:
- On the Statement of Account and Solvency, which is filled up by the Limited Liability Partnership, the Authorised Partner is permitted to sign it.
- If the necessity arises, the Designated Partner may file the document returns.
- The LLP is required to submit annual returns to the Registrar in a prescribed manner within a time frame of 60 days following the end of the financial year. Every Authorised Partner shall be subject to a fine exceeding ₹10,000 if this is not done.
- The Authorised Partner must cooperate with the inspector during an inquiry or inspection by providing the authority with the relevant papers, data, and signatures for examination, among other things.
Click here: Adding a Designated Partner
Conclusion
The same procedures are used to appoint normal partners and Authorised Partners. The appointment may be made in accordance with the procedure described in the LLP Agreement and the LLP Act. Appointing Partners and Authorised Partners involves amending the LLP Agreement and submitting electronic paperwork to the MCA. If you need any legal help in this regard, Vakilsearch can help you in abundance. Give us a call today to know more.
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