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Adding a Designated partner

Role of Designated Partner in LLP

A designated partner becomes personally and severally liable for compliances prescribed under the LLP Act, Now learn more about the same

The LLP Act stipulates that a designated partner vacancy must be filled up within 30 days of its occurrence. If no designated partners are nominated, or if there is only one designated partner at any time, each LLP partner is considered a designated partner. If the LLP fails to identify Role of Designated Partner, the LLP as well as each of its partners will be fined.

Who is Eligible to be a Designated Partner in an LLP?

According to the LLP Act, a limited liability partnership must have at least two designated partners understanding the Role of Designated Partner, and if the number falls below two, the surviving partner is personally liable for the LLP’s obligations. There must also be at least two designated partners, both of whom must be humans rather than legal entities, and one of whom must be a resident of India. 

In the event of an LLP with only two partners, they do not have to be people. According to the proviso to section 7(1) of the LLP Act, at least two individuals who are partners of such limited liability partnership or nominees of such bodies corporate shall act as designated partners if all the partners are bodies corporate or if one or more partners are individuals and bodies corporate.

Rights and Duties of a Designated Partner in an LLP

  • Section 83 of the LLP Act specifies that Role of Designated Partner are responsible for complying with the terms of this act and any penalties that may result from their failure to do so. The Designated Partners have a legal obligation to complete relevant documentation, such as statements and returns, as specified in the LLP Agreement
  • The liability to comply with the provisions of any other laws or acts is determined by the agreement between partners, however, as per the LLP Act, the Designated Partners are exclusively responsible for all compliances and fines

Role of Designated Partner in LLP

  • The LLP Agreement also allows for the appointment of a managing partner, who is in addition to the Designated Partners, although this does not imply that the managing partner and Designated Partners are the same person. The managing partner’s responsibility is to guarantee that all legal requirements are met
  • The Designated Partners’ rights are very comparable to those of an LLP partner, and they do not get any compensation for participating in the LLP’s governance or management unless it is clearly stated in the LLP Agreement. The Designated Partners are also accountable for carefully adhering to the provisions of the LLP act, or else face consequences for failing to do so
  • The LLP must file its particulars with the registrar within 30 days of individuals consenting to operate as Designated Partners, according to Section 7(4)
  • A DPIN must be obtained from the central government, according to Section 7(6), and Section 266A-G of the Companies Act, 1956, including the regulations of Mutatis Mutandis, which apply to Designated Partners
  • If the Designated partners violate the provisions of Sections 7, 8, or 9, the LLP and each partner are responsible to pay a fine of of not less than ₹10,000 but not more than ₹1 lakh, according to Section 107.

Role of a Designated Partner in an LLP

  • Role of Designated Partner is solely responsible for the administration and execution of all LLP acts and things, including compliance with LLP Act regulations such as paperwork, returns, and statements. In contrast, partners in an LLP are not accountable for such activities and are only required to contribute to the LLP
  • The LLP is responsible for preparing the statement of account and solvency, which requires the signature of a designated partner
  • A designated partner must cooperate with the investigating body by submitting all essential books and papers pertaining to the Limited Liability Partnership
  • The inspector is entitled to remuneration for his investigation from a selected partner.
  • Every designated partner in LLP is required to file annual returns with the registrar within 60 days after the end of the financial year, or face a fine of more than ₹10,000
  • Any changes in the LLP must be reported to the designated partner, including changes in partners’ names, home addresses, and the signature of e-forms to be filed with the registrar.

Vakilsearch is India’s most trusted corporate law service provider. The onboarding role of the designated partner in LLP  is a complex task which requires the expertise of an experienced legal team. And there’s no one better to offload this task to than the corporate law experts at Vakilsearch. If you have any questions about the designated partner onboarding process, please contact our team of expert business law consultants. Who will make every effort to dispel any doubts you may have before they emerge.

Visit us at Vakilsearch to know more about the legal aspects and the Role of Designated Partner.  

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