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Can a Designated Partner Be a Sleeping Partner?

A designated partner is an important position in an LLP. Can a designated partner be a sleeping partner? Learn to know more.

Who Is a Designated Partner?

A designated partner is assigned as a director of the company but with additional rights and privileges. The designated partners should receive a designated partner identification number (DPIN). In the process of registration, the documents should indicate at least two individuals as designated partners. In case there is any shortage of any documents, the partner name which is registered first in the document of partners in the proclamation will be appointed as a designated partner. 

Can a Designated Partner Be a Sleeping Partner? 

Yes, the organisation of the LLP is handled by both partners and designated partners. But their roles are not the same. The managing partner is liable to ensure legal compliance. The designated partner will confirm the documents that have to be submitted for the LLP act. 

This comes under Section 8 of the Act, also under Section 10 of the Act, liabilities for not accepting these laws have been provided, and the designated partner will have to face the consequences. Only for inspecting the legal forms and documents, the designated partners can be assumed as the managing partners. There is no need for the designated partners to contribute in day to day office activities.

There are specific necessities before someone becomes a designated partner, and it is given under Section 7 of the LLP Act. Section 7 of the LLP Act declares that there must be two or more designated partners. Out of the two partners, one should be an Indian citizen.

The designated partnership is arranged by the managing partners themselves. If the need demands that all the partners be designated partners at any point or another then that will have to be the role of that firm. The designated partner has to give prior permission through a form before assigning the post. The company can appoint at least two designated partners and it is compulsory for all the limited liability firms. 

Role of a Designated Partner

The role of designated partner in the case of LLP is similar to the role of a manager in the company.

  • The designated partners as explained in Section 8 are liable for the compliance with all requirements given under the LLP Act and the requirements noted in the LLP agreement
  • The designated partners are different from the other partners, they are responsible for doing all the functions and responsibilities that are needed to be done by LLP in respect of compliance with the requirements of the LLP Act
  • The designated partner is accountable for compliances that come under other acts and laws are to be assumed as per the agreement between the partners
  • The designated partner is approved to use his signature on the record of the account. It is filled and prepared by the LLP
  • The designated partner has to prepare the returns of the documents if the need arises from the co-partners
  • The designated partner has the right to expand someone’s document submission time by permitting the important documents, and data, signing the statements for examination, etc
  • A designated partner is responsible to repay payments on an inquiry supervised by the Inspector.

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Duties of a Designated Partner

The designated partner will deal with all the important documents under the Limited Liability Partnership Act. 

  • The designated partner is responsible for a penalty contravention of all the requirements
  • The designated partner is liable for all the compliance which comes under the appropriate law like income tax, Goods and Service Tax (GST)
  • Responsible for signing online forms with the registered documents of maintenance of proper notes on accounts, documenting yearly statements of accounts
  • The designated partner should hand over the documents to the inspector before it is required.

Liabilities of a Designated Partners 

In an LLP, all the partners have the right to protect their partnership responsibility, which is related to the shareholders of the company

  • The designated partner is accountable for the performing all activities as mentioned previously, they are expected to be done by the limited liability partnership adhering to the submission of the requirements of this Act. It involves  filing of any form, recovery, statement
  • The designated partners are responsible for all the outstanding payments assessed on the limited liability partnership for any contravention of those requirements.

Conclusion

The designated partner spends their whole time and interest in the said partnership company diligently and faithfully by indulging themselves in it and carrying on the company for the greatest benefit of the partnership. 

Experts at Vakilsearch help more than 1000 companies to register as LLPs in India. Vakilsearch provides easy online registration in just three steps. Reach out to experts at Vakilsearch and they will help you pick the right name for your LLP and reserve it for you. In the next step, our experts will help you get a digital signature certificate (DSC) with a validity of 2 years. All the documentation, LLP agreement and filing will be drafted and conducted with the utmost care from our expert team. Make sure to reach out to us to make your LLP process easier!

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