Who Is Eligible to Be an LLP Designated Partner?

Following is an article that will help one comprehend the requirements to be a designated partner in LLP. Read below!

A limited liability partnership is a corporation created and registered under the Limited Liability Partnership Act, 2008, and is a distinct legal entity from its members. An endless succession is a feature of an LLP, and any changes in the members have no bearing on the entity’s existence, rights, or obligations. Learn more about designated partner. 

Benefits Of LLP

Here are the advantages of forming an LLP – 

• The company’s board of directors take all decisions, and each partner has limited personal liability
• There are no limitations on entering, leaving, or transferring an LLP.

Qualifications For Designated Partners

To be appointed as a designated partner in an LLP, the following criterion must be met – 

1. Designated partner can only be individuals (a person). A limited liability partnership does not allow other businesses, partnerships, corporations, or organisations to sign up as partners
2. The applicant for partnership must possess a unique identification number
3. There must be two chosen partners in every LLP
4. The range of partners in a limited liability partnership is not capped at a certain number
5. An Indian national who lives in India must be at least one of the authorised partners
6. Letters of permission are also required from the other Designated Partners.
7. The applicant must be at least 18 years old.

Who Is Not Eligible To Be A Designated Partner?

An individual cannot be appointed as a designated partner if –

• They have been declared bankrupt during the last five years
• They have missed payments to creditors within the previous five years without reaching an agreement
• They have served a term of more than six months
• They have previously been in fraud
• They are under the age of 18 years. 

LLP Addition Of Designated Partners

This is how it should be done – 

1. The applicant for designation as a designated partner identification shall possess a current director identification number
2. By submitting the e-form DIR-3, you can request this DIN or Director Identification Number
3. To view and submit this form, visit the MCA website
4. After completing the filing process with the required information, submit the remaining papers
5. To authenticate the form, upload and register your DSC
6. The following paperwork is necessary to get a DIN:

• Pan card
• Aadhar card
• A passport-sized photo
• Contact information such as a phone number and email address
• Educational background
• Information about capital contributions to LLP

1. After the DIN is assigned, the person must inform the LLP they are considering a partnership with this number
2. You should create a partnership deed online that includes the new partner’s name
3. The new partner must submit Form 4 within 30 days of being appointed. This form and the original and supplemental deed must be submitted
4. When everything is finished, the name of the new designated partner will be added to the LLP and made available for viewing on the MCA website.

A Few Important Details

• An LLP is a hybrid business structure that combines elements of a partnership firm under the Partnership Act of 1932 and a corporation under the Companies Act of 1956/2013
• The Registrar of Companies oversees the LLPs
• Partners’ liability is restricted unless an act is carried out by the LLP to defraud creditors or other parties or for any other dishonest reason
• Similar to the structure observed in company registration in India, an LLP is a public company and a separate legal entity from its partners. There is a continuous succession. An LLP can therefore acquire, possess, hold, and dispose of property on its behalf, whether it be movable or immobile, tangible or intangible. It can engage in legal action, sues, and other activities that a corporate body may engage in or suffer from.
• The maximum number of partners is unlimited
• The LLP Agreement between the partners, or between the LLP and its partners, governs the rights and obligations of an LLP’s partners and the reciprocal rights and obligations between an LLP and its partners
• Partners are LLP’s agents but are not each other’s agents
• A corporate body or a person may join an LLP as a partner
• At least two people must be designated partners for an LLP. Indian residency is required for at least one Designated Partner. A Designated Partner may be proposed by a corporate body partner of the LLP.

The Selection Of A Designated Partner For An LLP

Here is a step-by-step procedure for choosing a designated partner in an LLP:

1. Applying for a Designated Partner’s Identification Number is the first step (DPIN)
2. The current partners convene a meeting after receiving the DPIN. A resolution to include a designated partner in the partnership agreement is approved at this meeting
3. They create an additional deed and include the new partner’s name
4. The current partners obtain the new partner’s written approval
5. The final step involves adding the specified partner to the limited liability partnership. The same is also apparent on the MCA portal.

To Sum Up,

An essential aspect of an LLP’s operation is the designated partner. It’s also critical to understand the procedure for choosing an LLP partner because an LLP may change, add, or delete a partner or designated partner. We trust that this blog has made the process above more understandable. For more information or legal advice related to choosing a designated partner, get in touch with Vakilsearch.