This blog will help one understand what a designated partner is and what role is performed in LLP. In order to know more about this, read the blog thoroughly.
Any individual who contributes capital to a partnership firm and agrees to split profits and losses, liabilities, and benefits is referred to as a “partner” in common usage. On the contrary, a designated partner is, as the title indicates, an individual who the other partners nominate to be in charge of adhering to the LLP Act’s criteria.
The concept of designated partners was established by the Limited Liability Partnership Act of 2008. Designated Partners and Directors of a Private Limited Company are analogous. A designated partner in an LLP has more rights and benefits than the CEO of a corporation. An in-depth discussion of a Designated Partner’s rights, obligations, and advantages can be found in this blog. In case of any confusion by the end of this blog, you are requested to get in touch with our legal experts.
But first, let’s learn more about the differences between a Partner and Designated Partner below.
A Simple Comparison Chart Between Partners and Designated Partners
Here are the key differences between the two positions in an LLP:
| Comparison Basis | Designated Partner | Partner |
| Definition | Any partner who is designated as such in the incorporation document at the time of LLP registration is referred to as a designated partner. | When two or more people form a commercial partnership, each member is referred to as a partner. |
| Eligibility Criteria | A designated partner may only be chosen or appointed from among living persons. | Anyone or any legal entity can join an organisation as a partner. |
| Conditions | LLPs only | Limited Liability Partnerships and General Partnerships |
| Identification Number | Each and every designated partner must get a DPIN (Designated Partner Identification Number). | Do not require an identification number |
| Duties and Rights | The LLP Agreement specifies the responsibilities, privileges, and obligations of chosen designated partners. | In the case of a general partnership, the partnership deed outlines the partners’ obligations, rights, and liabilities; in the case of a limited liability partnership, the LLP agreement does so. |
Who May Serve As A Designated Partner In An LLP?
A Limited Liability Partnership’s shareholders may choose two or more partners to serve as Designated Partners. Every LLP must have no more than one Designated Partner who is an Indian citizen.
Who Is Ineligible To Be A Designated Partner?
The following people are ineligible to be designated partners:
- An unsatisfied insolvent
- An individual who was implicated in the previous five years.
- An individual who has refused to pay his debtors at any point during the five years prior and has not reached a compromise with them.
- An individual who has served at least six months of a jail sentence for any immoral activities.
- Individuals under the age of 18.
Identification Code For The Designated Partner (DPIN)
So, what is the use of the identification code for the designated partner? All Designated Partners in LLP must have a Designated Partner Identification Number (DPIN) or Director Identification Number (DIN). The Designated Partner Identification Number (DPIN) and Director Identification Number (DIN), despite going by different titles, are the same number. To obtain a DPIN, the Designated Partner must submit a class 2 authentication.
All LLP members are eligible to become Designated Partners. For the LLP to be registered, designated partners must be named in the incorporation documents. According to the LLP Partnership Deed, the Designated Partner function may be reviewed and rotated to ensure that all partners are participating. Anybody can become a Designated Partner with the consent of the other Partners who have previously joined the LLP.
Required Documents To Become A Designated Partner
To receive a DPIN and become a Designated Partner in an LLP, the necessary paperwork must be submitted:
- An attested or certified copy of the evidence of identity that includes a self-portrait, birth year, and the name of the father or husband
- A certified or attested copy of the residency proof
- If the petitioner is the corporate body’s candidate, they must enclose a copy of the decision or permission on the organisation’s letterhead. The application must provide information such as their name and residence; if they are a foreign national, they only need to attach a copy of their current passport.
Organisations For Certification And Attestation
The following is a list of the authorities in charge of attestation and certification:
- A gazetted government official
- Public notary
- The Company Secretaries Act of 1980, the Charted Accountants Act of 1949, and the Cost and Works Accountants Act of 1959 each grant certificates of practise to individuals with these titles
- The name of the attesting authority in capital letters must be specified when attesting the documents
- Registration information
- The title of the ministry or division where the Gazetted Officer works
- Seal/stamp.
The Designation Of A Designated Partner
During the LLP enrollment process, two or more people must be designated as Designated Partners. An LLP must replace a departing Designated Partner within thirty days or else all partners in the LLP would be deemed Designated Partners. For naming a partner in a limited liability partnership, the following forms are necessary (LLP):
- Form 9 – Form 9 documents an assessee’s agreement to be a Designated Partner
- Form 4 – On this form, the information about the people who have given their consent is listed
- Form 10 – The Designated Partners must notify the public of any modifications to Form 10
- Form 5 – Every Limited Liability Partnership must fill this form and submit it to the registrar with the information on each person who has given their consent to be a designated partner. The form must be submitted within 30 days of the Designated Partner’s employment.
Ministry For Designated Partner Appointment
The following is the government filing cost for the agreement and designated partner appointee:
- LLP, whose maximum contribution is ₹1,00,000 – ₹500
- LLP, whose investment is limited to ₹1,00,000 and cannot exceed ₹5,00,000 – ₹2000
- LLP, whose investment is limited to ₹5,00,000 but doesn’t go beyond ₹10,00,000 in total – ₹4000
- LLP, whose investment exceeds ₹10,00,000 – ₹5000
Conclusion
Every LLP must have at least two Designated Partners to operate. A penalty of at least ₹10,000 may be assessed if the requirements are not met. Additionally, the 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. In case of any help in appointing a Designated Partner in your LLP in India, or if you wish to draft a partnership deed for your company in a seamless manner, get in touch with the legal experts of Vakilsearch.
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