Director Addition or Designated Partner Addition in LLP

Director Addition or designated partner Addition in LLP is a significant decision that requires careful consideration and adherence to legal requirements. The LLP may add a designated partner/partner with the consent of existing partners and then file an application in Form 4 and submit the amended LLP Agreement in form 3 to the ROC for their approval. Contact Us for assistance.

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Director Addition or Designated Partner Addition in LLP

When it comes to Limited Liability Partnerships (LLPs), designated partners play a pivotal role in steering the daily course of operations and ensuring regulatory compliance. Unlike traditional partnership structures, where management responsibilities rest solely with the partners, LLPs appoint designated partners as separate entities to control the overall business management. These designated partners typically include individuals who are entrusted with the task of handling the day-to-day activities, meeting statutory obligations, and representing the business legally before government authorities. In this blog, let’s delve into the intricacies of who designated partners are, their appointment process, and how they participate in the governance of LLPs.

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Who is a Designated Partner in LLP?

In an LLP, a Designated Partner is a key individual responsible for overseeing the organization’s internal operations and legal requirements. Every LLP is required by Section 7 of the LLP Act, 2008 to have a minimum of two designated partners. These partners must be individuals, and at least one of them must reside in India. Here, “resident in India” refers to a person who spent at least 120 days there during the preceding fiscal year. It should be noted that any two individual partners or nominees of such entities may be appointed as designated partners of the relevant LLP if all of the partners in the LLP are body corporates or other LLPs.

The foundation of an LLP’s governance are its designated partners, who guarantee appropriate representation before governmental bodies and adherence to legal obligations. The LLP agreement specifies the designated partners’ appointment procedure. As per the agreement, any partner who satisfies the specified eligibility requirements—discussed in more detail in the blog—may take on this role. However, prior to taking on this role, a person must consent to serving as a designated partner and submit their information to the Registrar of Companies within thirty days of being appointed. Before being appointed, designated partners are also required to obtain a Designated Partner Identification Number (DPIN) from the Central Government. This number serves as their exclusive identity for compliance-related reasons.

How to Appoint Director or Designated Partner in LLP?

Director  addition or designated partner addition in  LLP involves several crucial steps that must be followed diligently to ensure compliance with the law. Here is a step-by-step guide to help you navigate this process smoothly:

Step 1- Board Resolution: The first step is to convene a meeting of the existing board of directors or designated partners to pass a resolution approving the addition of a new director or designated partner.

Step 2- Consent: Obtain the consent of the proposed director or designated partner by having them sign and submit a consent letter agreeing to act in that capacity.

Step 3 – Obtain DIN/DPIN: If the proposed individual does not already have a Director Identification Number (DIN) or Designated Partner Identification Number (DPIN), they will need to apply for one through the Ministry of Corporate Affairs.

Step 4 – Filing with the ROC: Prepare the necessary documentation, including Form Form 4 for a director and  Form 3  for a designated partner, and file it with the Registrar of Companies (ROC) within 30 days of passing the board resolution.

Step 5 – Update LLP Agreement: Once the ROC approves the addition of the new director or designated partner, update the LLP agreement to reflect this change and ensure that all relevant documents are updated accordingly.

Roles & Responsibilities of a Designated Partner

As we’ve already covered, an LLP’s internal management is under the direction of its designated partners. In addition, they carry out duties for the LLP, such as fulfilling legal requirements, submitting applications, and securing licenses and certifications in the organization’s name. The designated partner serves as an LLP’s agent in the same manner as a director of a company. Below is a list of some of the designated partners’ required duties.

  • The statements of accounts and solvency for the LLP must be signed by a Designated Partner.
  • In the event of an investigation, the Designated Partner shall furnish the required official documents and papers pertaining to the LLP in order to support and collaborate with the investigating authorities.
  • The Designated Partner is required to correctly file the annual returns with the Registrar within 60 days of the fiscal year’s end; failure to do so will result in a fine exceeding 10,000 for the firm.
  • The Designated Partner is responsible for notifying the Registrar of any changes to the LLP, including changes to the partners’ names or addresses, as well as signing the electronic forms that need to be submitted to the Registrar.

Liabilities of a Designated Partner

The Limited Liability Partnership Act describes the duties and obligations of a designated partner in an LLP and defines their liabilities. It is the responsibility of designated partners to make sure the limited liability partnership (LLP) complies with all Act requirements, including timely filing of documents, returns, statements, and reports as required by law or as stipulated in the LLP agreement. Moreover, designated partners are responsible for any penalties levied against the LLP for violating these provisions, highlighting their responsibility for following the law and complying with regulations. This liability allocation highlights how important it is for designated partners to carry out their responsibilities with diligence and conscience because it preserves the LLP’s reputation and legal standing.

Do you want to change your partners or Designated Partners?

Adding a director or designated partner to an LLP requires adherence to legal procedures and regulatory requirements. Contact us to get it started. 

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