A Designated Partner in an LLP (Limited Liability Partnership) is similar to a Director in a Private Limited Company but enjoys greater rights and privileges. Introduced under the Limited Liability Partnership Act, 2008, a Designated Partner is responsible for compliance, financial management, and legal matters in an LLP. This article explains the designated partner meaning, their role, responsibilities, and privileges, helping you understand their significance in an LLP.
Table of Contents
Who Can Be a Designated Partner in LLP?
Only individuals can be Designated Partners in an LLP. As per the Limited Liability Partnership Act, 2008, a minimum of two Designated Partners is mandatory, and at least one must be an Indian resident. This designation is crucial for ensuring legal compliance, managing financial responsibilities, and fulfilling statutory obligations within the LLP.
Who Can't Be a Designated Partner?
- Undischarged insolvents
- Individuals declared insolvent or who have withheld creditor payments in the last five years
- Those imprisoned for six months or more for offences involving moral turpitude
- Minors below 18 years
The Central Government holds the authority to annul these disqualifications if deemed necessary.
Designated Partner Identification Number (DPIN)
Every Designated Partner in an LLP must obtain a Designated Partner Identification Number , also referred to as a Director Identification Number (DIN). This unique number is mandatory for LLP registration and compliance. To obtain a DPIN, you need a Class 2 digital signature, which ensures secure authentication.
All partners in an LLP are eligible to become Designated Partners, but only those specified in the incorporation document hold this role at the time of registration. The LLP Partnership Deed allows rotation of the Designated Partner role, enabling different partners to take on responsibilities with mutual consent. This flexibility ensures equal participation while maintaining compliance with LLP regulations.
Documents Required for Becoming a Designated Partner
To become a Designated Partner in an LLP, you need to apply for a Designated Partner Identification Number. For this, you must submit the following documents:
- Identity Proof – A self-attested or certified copy of a document that includes your photograph, date of birth, and father’s or husband’s name (such as an Aadhaar card, PAN card, or passport).
- Residential Proof – A self-attested or certified copy of an address proof like a utility bill, bank statement, or rent agreement.
- For Nominees of a Body Corporate – A resolution or authorisation letter from the company mentioning their name and address is needed.
- For Foreign Nationals – A valid passport copy is needed.
Authorities for Attestation/Certification
Certain officials and professionals can attest or certify documents needed for a Designated Partner Identification Number . These include:
- Gazetted officers from the Central or State Government
- Notaries public
- Practicing professionals like Company Secretaries, Chartered Accountants, or Cost and Works Accountants
While attesting documents, the authority must include their name in capital letters, registration number, ministry or department details, and an official seal or stamp. This ensures the documents are valid and accepted for DPIN approval.
Translation Certificate
If your documents are in a language other than Hindi or English, you must attach a translated copy. This translation must be certified and attested to meet compliance requirements. It ensures that authorities can verify the details correctly and process the application without delays.
Appointment of Designated Partner
At least two individuals must be appointed as Designated Partners when registering an LLP. If a Designated Partner leaves the LLP, a new one must be appointed within 30 days. Failing to do so will result in all partners being considered Designated Partners, which may lead to compliance issues. To complete the appointment process, the following forms must be submitted:
To appoint a Designated Partner, the following forms must be submitted:
- Form 9 – This form records the consent of an individual to become a Designated Partner.
- Form 4 – It contains details of individuals who have given their consent to take on the role.
- Form 10 – This form is used to notify any changes made by the Designated Partners.
- Form 5 – Every LLP must submit this form to the registrar, providing details of individuals who have consented to become Designated Partners. It must be filed within 30 days of the appointment.
Related Read: What is LLP Form 11?
Government Fee for Appointment of Designated Partner
The government charges a fee based on the LLP’s contribution when appointing a Designated Partner. The fee structure is as follows:
- ₹50 – If the LLP’s contribution is up to ₹1,00,000
- ₹100 – If the contribution exceeds ₹1,00,000 but is limited to ₹5,00,000
- ₹150 – If the contribution exceeds ₹5,00,000 but is limited to ₹10,00,000
- ₹200 – If the contribution exceeds ₹10,00,000
Related Read: Complete LLP Registration Fees Guide
Duties and Responsibilities of a Designated Partner
- Signing the Statement of Account and Solvency: The Designated Partner must sign the Statement of Account and Solvency, confirming the financial position of the LLP. This document is crucial for transparency and is filed annually.
- Filing Annual Returns on Time: It is the Designated Partner’s responsibility to ensure that the LLP files its annual returns within 60 days of the financial year’s closure. Late filing can result in penalties and legal complications.
- Filing Additional Documents: The Designated Partner must submit any other documents requested by regulatory authorities to comply with legal requirements.
- Cooperating with Inspectors: During investigations or inquiries, the Designated Partner is required to cooperate with inspectors, providing necessary documents and signing examination notes to verify accuracy.
- Reimbursing Investigation Expenses: In the case of investigations, the Designated Partner is responsible for reimbursing the costs incurred, such as those related to audits or compliance checks.
Penalty for Not Having a Designated Partner
Every LLP is required to have at least two Designated Partners at all times. Failing to comply with this requirement incurs a penalty starting at ₹10,000, which can increase to ₹5,00,000.
If a Designated Partner exits the LLP and is not replaced within 30 days, the LLP will face similar penalties. Non-compliance with this rule can lead to legal and financial consequences, making it essential for LLPs to appoint and maintain the required number of Designated Partners.
Rights of a Designated Partner
Decision-Making Rights
A Designated Partner holds significant decision-making authority within an LLP. They are involved in making key business decisions, including formulating policies, setting operational strategies, and managing the financial aspects of the LLP. Their role is vital in ensuring that the LLP functions efficiently and adheres to its business goals.
Profit-Sharing and Financial Rights
A Designated Partner is entitled to a share of the profits generated by the LLP, with the exact share determined by the LLP agreement. This agreement outlines how profits and losses are distributed among the partners, ensuring that the Designated Partner receives a portion based on their involvement and the terms set forth.
Additionally, they have financial rights concerning capital contributions and can receive distributions and benefits according to the LLP's agreed financial terms.
Right to Access LLP Records and Documents
A Designated Partner has the right to access all official records and documents of the LLP. This includes financial statements, tax filings, agreements, and any legal documents related to the firm’s operations. This right ensures transparency within the LLP, allowing the Designated Partner to make informed decisions and stay updated on the company’s financial and legal status.
Liabilities of a Designated Partner
Liabilities in Case of Non-Compliance
A Designated Partner is responsible for ensuring that the LLP complies with all relevant legal requirements. Failure to comply with regulations such as filing annual returns or paying taxes can result in penalties, fines, and legal action that impacts both the LLP and the individual partner.
Legal and Financial Liabilities Under the LLP Act
Under the LLP Act, 2008, a Designated Partner may be personally liable if the LLP violates legal obligations. This includes non-payment of statutory dues, failure to meet regulatory requirements, or failure to comply with financial disclosures. In such cases, the Designated Partner is expected to take responsibility for rectifying the situation, with potential legal and financial penalties if the issue remains unresolved.
Situations Where Personal Liability May Arise
Although an LLP offers limited liability protection, there are circumstances where a Designated Partner could be personally liable. If involved in fraudulent activities, misrepresentation, or intentionally ignoring legal obligations, the Designated Partner may face personal liability. This could result in the loss of personal assets or legal actions separate from the LLP’s legal structure.
Frequently Asked Questions
Private Limited Company
(Pvt. Ltd.)
- Service-based businesses
- Businesses looking to issue shares
- Businesses seeking investment through equity-based funding
Limited Liability Partnership
(LLP)
- Professional services
- Firms seeking any capital contribution from Partners
- Firms sharing resources with limited liability
One Person Company
(OPC)
- Freelancers, Small-scale businesses
- Businesses looking for minimal compliance
- Businesses looking for single-ownership
Private Limited Company
(Pvt. Ltd.)
- Service-based businesses
- Businesses looking to issue shares
- Businesses seeking investment through equity-based funding
One Person Company
(OPC)
- Freelancers, Small-scale businesses
- Businesses looking for minimal compliance
- Businesses looking for single-ownership
Private Limited Company
(Pvt. Ltd.)
- Service-based businesses
- Businesses looking to issue shares
- Businesses seeking investment through equity-based funding
Limited Liability Partnership
(LLP)
- Professional services
- Firms seeking any capital contribution from Partners
- Firms sharing resources with limited liability
Frequently Asked Questions
What is a designated partner in LLP?
A Designated Partner in an LLP is an individual who is appointed to manage the operations and compliance of the LLP. They are responsible for filing documents, ensuring annual returns are submitted, and managing financial and legal obligations within the business.
Who is eligible for LLP?
The eligibility to form an LLP in India is that there must be at least two partners, one of whom is an Indian resident. Partners must be between atleast 18 years of age, and both must agree to contribute capital. Additionally, obtaining a Digital Signature Certificate (DSC) and a Designated Partner Identification Number is mandatory.
What is the age limit for a designated partner?
There is no specific age limit for a Designated Partner in an LLP. However, a Designated Partner must be an adult, meaning at least 18 years old. Minors are not allowed to be Designated Partners.
What is the role of a designated member in an LLP?
The role of a Designated Partner in LLP includes signing important documents, managing the financial aspects of the LLP, ensuring legal compliance, and working on behalf of the LLP in official matters. They also handle registration, filing of annual returns, and cooperating during investigations.
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Sarthak Goyal is a Chartered Accountant with 10+ years of experience in business process consulting, internal audits, risk management, and Virtual CFO services. He cleared his CA at 21, began his career in a PSU, and went on to establish a successful ₹8 Cr+ e-commerce venture.
He has since advised ₹200–1000 Cr+ companies on streamlining operations, setting up audit frameworks, and financial monitoring. A community builder for finance professionals and an amateur writer, Sarthak blends deep finance expertise with an entrepreneurial spirit and a passion for continuous learning.
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