Management of the business operation and administrative affairs comes under the purview of a designated partner in LLP. An LLP combines the limited liability benefit of a company, the flexibility characteristic of a partnership, as well as favorable taxation provisions, turning it into a distinctive form of conducting business. The designated partners oversee the functioning of the LLP and ensure that it is done in accordance with the set regulations. This type of partnership has different roles than those of the general partner, which include filing of statutory and regulatory documents, bookkeeping of financial records, maintenance of the company’s reputation or integrity as well and openness in all its financial transactions. Anyone thinking seriously of forming or running an LLP has to know what is expected of a designated partner as these persons are essential in the daily operations of an LLP, including its legality requirements.
What is LLP?
An LLP stands for Limited Liability Partnership. It is a partnership firm where some partners have a limited liability. Here the partners and the entity has separate legal status and partners are not responsible for each other’s actions. The minimum requirement for a member to start a Limited Liability Partnership (LLP) is 2. Limited Liability Partnership (LLP) has a perpetual succession and a common seal that stands in the hands of a responsible authority. Every LLP should have at least 2 designated partners to look after the matters of the organization.
In our country India, Limited Liability Partnership is governed under Limited Liability Partnership Act (LLP) 2008. As per Section 7 of the LLP Act 2008 each and every LLP must contain 2 designated partners one should be an individual and at least one should be a resident of India.
Difference between a partner and designated partner in LLP
A general partner can be any person and is not required to have a Designated Partner Identification Number (DPIN). He acts as a director as well as agent in the organization.
A designated partner is the one who is appointed by the shareholders of the Limited liability Partnership. He has a Designated Partnership Identification Number (DPIN). He acts as the agent to the organization.
Who is eligible to be a designated partner?
- A designated partner should be an individual.
- He/she must be a major i.e should have completed the age of 18.
- He/she should have DPIN Designated Partner Identification Number.
Who is not eligible to be a designated partner?
- A person of an unsound mind cannot be a designated partner in LLP.
- A minor i.e age below 18 years cannot be a designated partner.
- Who has been declared insolvent by the court.
- A person who has been prisoned for any immoral acts where the sentence was at least of 6 months.
- A person whose involvement is declared in the preceding 5 years.
- A person who has not cleared his debts and withheld payments for preceding 5 years.
DPIN:
Designated partner identification number (DPIN) is a number or specific identification given to such partners. As per Rule 10(1)(a) of Limited Liability Rules 2009 every individual who is appointed as a designated partner in Limited liability partnership shall apply for a DPIN in Form DIR-3. All the details must be mentioned such as name, address , education qualification along with identity proof such as details pf passport, pan card, voter Id etc. All the supporting documents such as utility bills i.e electricity bill, telephone bill, bank statement is included. For applying DPIN one requires to submit online application on the official website of Ministry of Corporate Affairs.
If designated partner is not appointed:
If there is a failure in the appointment of designated partner the LLP would be fined penalty and the penalty amount could extend from Rs. 10,000 and more.
Within 30days of vacancy of the post of designated partner it should be filled. When the LLP is new and formed the vacancy for designated partner should be filled within 60 days.
ROLES, RESPONSIBILITIES AND BENEFITS OF A DESIGNATED PARTNER IN LLP
- The designated partner is responsible to look after all the administrative functions of the firm.
- To notify any changes in the name, address of the partner to the Registrar of Company.
- To notify the if any changes in the name, address or working of LLP to the Registrar of Companies.
- To prepare statement of accounts of the LLP.
- To file annual return every year within 60days after the financial year end with the Registrar of Companies.
- He/she has to sign on the accounts prepared.
- He/ she is liable to keep a check on the records and books of accounts.
- The designated partner has to sign an LLP agreement where the roles, salary, benefits and liability would be clearly mentioned.
- It is the legal obligation of the designated partner to have a mutual right and mutual decision on the matters in the organization.
- It is designated partner’s duty to conduct lawful business.
- One of the task for them is to keep a proper coordination and communication between the employees and employers.
- He/she is responsible to sign all the e-forms that are filed with the Registrar of Companies.
This Blog is Written by Athira Nair.
