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A Designated Partner in a Limited Liability Partnership (LLP) is a key individual responsible for managing the day-to-day operations and ensuring the LLP’s compliance with legal and regulatory requirements. As per the LLP Act, 2008, every LLP must have at least two designated partners, with at least one being a resident of India. Designated partners hold a higher level of responsibility compared to regular partners, and they must comply with legal obligations such as filing returns, maintaining records, and acting on behalf of the LLP in official matters.
A Designated Partner in a Limited Liability Partnership (LLP) holds a significant role in overseeing both the operational and regulatory aspects of the business. While all partners may be involved in the running of the LLP, the designated partners are entrusted with additional legal and administrative responsibilities. The LLP Act, 2008, mandates that at least two designated partners must be appointed, with at least one being a resident of India.
Compliance Management
Designated partners ensure that the LLP complies with the provisions of the LLP Act and other statutory regulations.
They are responsible for timely filing of annual returns, income tax filings, and other necessary documents with the Registrar of Companies (RoC).
Legal Accountability
In case of non-compliance or legal discrepancies, designated partners may be held liable for any penalties or legal consequences. This adds a layer of responsibility to ensure all operations are within the legal framework.
Business Management
Beyond compliance, designated partners are actively involved in strategic decision-making and managing the day-to-day business operations, ensuring the LLP runs smoothly and efficiently.
Shareholders’ Approval
A general meeting of shareholders must be convened, where a special resolution is passed to approve the change in the Object Clause of the MoA.
Financial Oversight
Designated partners manage the financial affairs of the LLP, including preparation and submission of financial statements, audit reports (if applicable), and ensuring transparency in financial dealings.
Representation of LLP
They act as representatives of the LLP in legal matters, signing documents, contracts, and agreements on behalf of the LLP, and attending any legal or regulatory proceedings.
To become a Designated Partner in a Limited Liability Partnership (LLP), certain eligibility criteria must be met as specified under the LLP Act, 2008. These criteria ensure that only qualified individuals who meet the necessary legal and regulatory requirements can take on this critical role.
Minimum Number of Partners:-
An LLP must have at least two designated partners, and at least one of them must be a resident of India (i.e., a person who has stayed in India for at least 182 days during the preceding financial year).
Age Requirement:-
The designated partner must be at least 18 years old. There is no upper age limit, meaning even senior professionals can be appointed.
DIN Requirement:-
The individual must have a Director Identification Number (DIN) issued by the Ministry of Corporate Affairs (MCA). This is a mandatory requirement for anyone acting as a designated partner in an LLP.
Qualification:-
There are no specific educational qualifications required to become a designated partner. However, they must have the necessary expertise and experience to manage and oversee LLP operations effectively.
Minimum Number of Designated Partners
As per the LLP Act, 2008, every Limited Liability Partnership (LLP) must have at least two designated partners.
Among them, at least one designated partner must be a resident of India, which means they must have stayed in India for at least 182 days during the previous financial year.
Maximum Number of
Designated Partners There is no maximum limit on the number of designated partners in an LLP. An LLP can appoint as many designated partners as required, depending on the business needs, without any legal restriction on the upper limit.
The LLP must have at least two designated partners, with no cap on the maximum number. This flexibility allows LLPs to structure their management as per their operational requirements.
Certain individuals are legally disqualified from being appointed as designated partners in a Limited Liability Partnership (LLP) under the LLP Act, 2008. These disqualifications ensure that only eligible and compliant individuals take on the role.
Any individual below the age of 18 cannot be appointed as a designated partner.
If a designated partner has not attended Board meetings for 12 consecutive months, they can be disqualified from holding the position under certain provisions.
A person who has been declared insolvent or has not been discharged from insolvency proceedings cannot serve as a designated partner. This ensures that financially unstable individuals do not take on a management role.
A person convicted of an offense involving moral turpitude or fraud and sentenced to imprisonment for a period of six months or more cannot be appointed as a designated partner. The conviction should not have been completed within five years prior to the appointment.
Any person who has been disqualified from being a director under the Companies Act, 2013 is also disqualified from being a designated partner in an LLP. This typically includes individuals who have failed to comply with legal obligations related to directorship.
A designated partner must have a Director Identification Number (DIN) issued by the Ministry of Corporate Affairs (MCA). Without a valid DIN, an individual cannot be appointed.
As per the Limited Liability Partnership Act, 2008, every LLP must have at least two designated partners, with one of them being a resident of India. Failure to meet this requirement results in penalties, including:
Monetary Penalty:
If an LLP fails to appoint a designated partner, both the LLP and its partners can be fined. The penalty imposed is a minimum of ₹10,000, which may extend up to ₹5 lakhs, depending on the duration and severity of non-compliance.
Additional Penalties for Continuous Non-Compliance:
For continued non-compliance, the penalty may increase, and additional fines may be imposed for each day the default continues, with daily fines typically ranging from ₹100 to ₹500 per day.
Legal and Regulatory Consequences:
The LLP may face legal challenges from regulatory authorities, and repeated non-compliance can lead to stricter enforcement actions, including disqualification of existing partners from serving in management positions.
Impact on Business Operations:
Failure to appoint designated partners can also hamper the LLP’s ability to meet statutory requirements and may result in delays in filing annual returns or other necessary documents with the Registrar of Companies (RoC).
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