How to Appoint a Designated Partner in an LLP?

A Limited Liability Partnership (LLP) is a business structure that combines the features of a partnership and a company, providing benefits from both. One key aspect of running an LLP is appointing Designated Partners—individuals who take on additional responsibilities compared to regular partners, such as ensuring the LLP meets legal requirements. In this guide, we’ll explain the step-by-step process for appointing a Designated Partner in an LLP and what you need to know to get it done smoothly.

Who is a Designated Partner?

In an LLP, a Designated Partner has more responsibilities than a regular partner. While all partners play a role in managing the business, designated partners are tasked with extra duties like:

• Making sure the LLP complies with laws and regulations.
• Submitting necessary documents and returns.
• Handling tax and legal obligations on behalf of the LLP.

Under Indian law, every LLP must have at least two designated partners, with at least one of them being a resident of India.

Who Can Become a Designated Partner?

Before someone can be appointed as a designated partner, they must meet a few basic requirements:

1. Age: They must be at least 18 years old.
2. DIN/DPIN: They need to have a Director Identification Number (DIN) or a Designated Partner Identification Number (DPIN).
3. Legal Eligibility: The person should not be disqualified by law, such as being declared insolvent or convicted of certain offenses.
4. Indian Residency: At least one designated partner must be a resident of India, meaning they should have spent at least 182 days in India during the past year.

Now, let’s go over the process of appointing a designated partner.

Steps to Appoint a Designated Partner in an LLP

Step 1: Obtain a Digital Signature Certificate (DSC)

The first step is to get a Digital Signature Certificate (DSC) for the new designated partner. This certificate is required to sign electronic documents during the appointment process.

The individual can apply for a DSC through an authorized agency by submitting identity and address proof, such as a PAN card or Aadhar card.

Step 2: Apply for DIN or DPIN

If the person doesn’t already have a DIN or DPIN, they must apply for one by submitting Form DIR-3 to the Ministry of Corporate Affairs (MCA).

The following documents are needed to complete this step:

• Proof of identity (such as a PAN card).
• Proof of address (like a passport, voter ID, or Aadhar card).
• Passport-sized photograph.

Once the application is approved, the individual will receive their DIN or DPIN, which is required to become a designated partner.

Step 3: Pass a Resolution for Appointment

The existing partners of the LLP need to pass a resolution to officially approve the appointment of the new designated partner. This is typically done in a meeting, and the decision should be recorded in the meeting’s minutes.

The resolution should clearly mention:

• The name of the new designated partner.
• The effective date of their appointment.
• Confirmation that the individual meets all eligibility requirements.

Step 4: Filing Forms LLP-3 and LLP-4

After the resolution is passed, the LLP must file two forms with the Registrar of Companies (ROC):

• Form LLP-3: This form is used to update the LLP agreement to reflect the new partner’s appointment.
• Form LLP-4: This form is used to notify the ROC about the new designated partner and includes details like their DIN/DPIN, personal information, and date of appointment.

Both forms must be submitted within 30 days of passing the resolution. Failing to do so can result in penalties.

Step 5: Pay Filing Fees

When submitting Form LLP-3 and Form LLP-4, you will need to pay the applicable government fees. The amount varies based on the capital contribution of the LLP. Make sure to pay the fees on time to avoid delays in the process.

Step 6: Registrar Approval

Once the forms and fees are submitted, the Registrar of Companies will review the documents. If everything is in order, the ROC will approve the appointment and update the LLP’s records accordingly.

You will receive confirmation once the ROC has completed the process and approved the appointment.

Responsibilities of a Designated Partner in an LLP

Designated partners in an LLP have important responsibilities, including:

• Annual Filing: Ensuring that the LLP submits its annual returns and complies with other filing requirements.
• Tax Compliance: Handling tax matters and ensuring that tax returns are filed on time.
• Adherence to the LLP Agreement: Ensuring that all actions taken by the LLP comply with the terms of the LLP agreement.

Conclusion

Appointing a designated partner in an LLP requires following a few legal steps, including obtaining identification numbers, passing a resolution, and filing the necessary forms with the ROC. By following these steps, you can ensure that your LLP stays compliant with the law and that your new designated partner is properly authorized to carry out their duties.

Designated partners play a key role in managing the LLP, so it’s important to choose someone who is not only qualified but also reliable. By following this simple process, you can successfully appoint a designated partner and keep your LLP running smoothly.