Designated Partner in LLP
Designated Partner in LLP
Designated Partners is a concept introduced by the Limited Liability Partnership Act, 2008. Designated Partners are similar to Directors of a Private Limited Company. A Designated Partner in a LLP when compared to the Director of a Company, enjoy more rights and priviledges. In this article, we look at the rights, responsibilies and privileges of a Designated Partner in detail.
Who can be a Designated Partner in LLP?
Designated partners can only be individuals. Among the members of a Limited Liability Partnership, two or more partners can be designated as a Designated Partner. In all LLP, atleast one of the Designated Partner must be an Indian Resident.
Who can’t be a Designated Partner?
The persons listed below do not qualify to be a designated partner:
- An undischarged insolvent.
- A person who was declared involvement in the preceding five years.
- A person who has withheld payments to his creditors at any point of time in the preceding five years of time, and has not made a composition with the creditors.
- A person who has been imprisoned for any immoral acts, and where the period of the sentence was at-least 6 months.
- Minors below the age of 18 years.
However, the Central Government is empowered with the rights to annul the disqualification of a person.
Designated Partner Identification Number (DPIN)
All Designated Partners in an LLP are required to have a Designated Partner Identification Number (DPIN) or Director Identification Number (DIN). Though referred by different terms, both Designated Partner Identification Number (DPIN) or Director Identification Number (DIN) are one and the same and can be used interchangeably. To obtain DPIN, a class 2 digital signature must be obtained for the Designated Partner.
All partners of a LLP are entitled to the role of a Designated Partner. During LLP registration, the incorporation document must specify certain people as Designated Partners. The LLP Partnership Deed can allow for perusal and rotation of the role of Designated Partner, ensuring the participation of each and everyone.
Any person can become a Designated Partner in a LLP with the consent of other existing Partners in the LLP.
Documents Required for Becoming Designated Partner
The following documents must be submitted for obtaining DPIN and becoming a Designated Partners in a LLP:
- Attested/Certified copy of the proof identity which contains a self-photograph, and particulars of date of birth and name of the father/husband.
- Attested/Certified copy of the residential proof.
- If the applicant is a nominee of the body corporate, he/she must attach a copy of resolution/authorization on its letter-head. Particulars such as the name and address of the individual must be specified.
- If the applicant is a foreign national, attachment of a copy of the valid passport would suffice.
Authorities for Attestation/Certification
The authorities responsible for attestation/certification are mentioned below:
- Gazetted officer of the Central/State Government.
- Notary public.
- Company Secretary/Charted Accountant/Cost and Works Accountant, who possesses a certificate of practice under the Company Secretaries Act, 1980; Charted Accountants Act, 1949; and the Cost and Works Accountants Act, 1959.
The attesting authority must specify the same while attesting the documents:
- Name of the attesting authority in capital.
- Registration number.
- Name of the ministry/department where the Gazetted Officer is employed.
If the language of the proof is in any other document other than Hindi/English, a certified copy of the translation must be attested to the form.
Appointment of Designated Partner
During the LLP registration process, two or more person(s) must be identified as a Designated Partner. In case of an exit by a Designated Partner, the LLP must replace him/her within a period of 30 days, else all partners in an LLP would be considered as Designated Partners. The following are the relevant forms for appointment of Designated Partner in a LLP:
- Form 9- Form 9 is a record of the consent made by an assessee to become a Designated Partner.
- Form 4- This form contains the details of individuals who’ve given their respective consents.
- Form 10- Form 10 intimates any changes made by the Designated Partners.
- Form 5- Every LLP holds the responsibility to file the particulars of every individual who has consented to be a Designated Partner in this form, and submit the same to the registrar. The form needs to be filed within 30 days of the appointment of the Designated Partner.
Government for Appointment of Designated Partner
The government fee for filing of consent and appointment of Designated Partner is as follows:
- LLP, whose contribution is limited to Rs 1,00,000- Rs 50.
- LLP, whose contribution exceeds Rs 1,00,000 but is limited to Rs 5,00,000- Rs 100.
- LLP, whose contribution exceeds Rs 5,00,000 but is limited to Rs 10,00,000- 150.
- LLP, whose contribution exceeds Rs 10,00,000- Rs 200.
Duties of a Designated Parnter
It is easily understood that a Designated Partner is required to file documents, returns, statements etc, but his/her functions do not conclude there. We have enlisted some vital ones below:
- The Designated Partner is authorized to affix his signature on the Statement of Account and Solvency, the filling of which is prepared by the LLP.
- The LLP must file annual returns with the Registrar within a specified period of 60 days from the date of closure of the financial year in a prescribed manner. If this isn’t implemented, every Designated Partner will be imposed with a fine exceeding Rs 10,000.
- The Designated Partner may file the returns of documents, if the need arises.
- The Designated Partner must extend his/her co-operation to the inspector on inquiry or inspection, by supporting the authority with the necessary documents, information, signing the notes for examination etc.
- A Designated Partner is liable to reimburse expenses on an investigation conducted by the Inspector.
Penalty for Not Having Designated Parnter
It is mandatory for all LLPs to have a minimum of two or more Designated Partners. Failure to comply with the same could result in a levy of penalty amounting to Rs 10,000 or more. Besides, in an instance where the vacancy due to the exit of a Designated Partner is not being addressed within a period of 30 days, penalties, similar to the nature described above, will be levied on the LLP.
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