What is a Designated Partner in an LLP – Explained?

In today’s evolving business landscape, Designated Partner in an LLP plays a crucial role in ensuring that Limited Liability Partnerships (LLPs) operate smoothly and legally. An LLP is a popular business structure that combines the flexibility of a partnership with the limited liability of a company.

Today, In this Article we will Look at Designated Partner in an LLP on fileSure.

Understanding the Concept of a Designated Partner in an LLP

A Designated Partner in LLP is a person who is officially recognized by law to take responsibility for the management, legal filings, and compliance of the firm. Unlike regular partners, designated partners are accountable to regulatory authorities like the Ministry of Corporate Affairs (MCA).

Every LLP must have at least two designated partners, and one of them must be a resident of India. They act as the “face” of the LLP before legal authorities and ensure that all statutory obligations are fulfilled.

Difference Between Partner and Designated Partner

While both partners and designated partners are integral to an LLP, their responsibilities vary. Here’s a simple comparison for better understanding:

Basis	Partner	Designated Partner
Legal Recognition	Has general duties & rights in LLP	Officially recognized under the LLP Act
Responsibility	Contributes to business operations	Handles compliance & legal filings
Liability	Limited to contribution	Liable for non-compliance penalties
Appointment	As per LLP Agreement	Must have DPIN & consent filed with MCA
Regulatory Interaction	Indirect	Directly interacts with MCA & other authorities

This table highlights that while every designated partner is a partner, not every partner can be a designated partner. The latter holds more legal accountability.

What are the Role and Responsibilities of a Designated Partner in an LLP?

The role and responsibilities of a designated partner go far beyond business management. They serve as the backbone of compliance and legal governance within an LLP.

1.Ensuring Legal Compliance:

Designated partners are responsible for ensuring that the LLP follows all MCA rules for designated partners and adheres to statutory deadlines like filing annual returns, financial statements, and income tax returns.

They must ensure that the LLP complies with the provisions of the Limited Liability Partnership Act, 2008 and any notifications issued by the government.

2.Maintaining Statutory Records:

Every designated partner must ensure that the LLP maintains accurate records such as books of accounts, register of partners, and statements of account and solvency.

Timely updates and correct documentation protect the LLP during audits and inspections.

3.Filing Annual Returns:

Designated partners must file the Statement of Account & Solvency (Form 8) and the Annual Return (Form 11) with the Registrar every year. Non-filing can lead to heavy penalties and loss of good standing.

4.Acting in Good Faith:

They must always act in good faith towards the LLP, its partners, and creditors. Ethical behavior and transparency in operations help build credibility and trust in the market.

What is the Eligibility Criteria for Designated Partner?

Eligibility Condition	Details
Minimum Number	Every LLP must have at least 2 designated partners
Resident Requirement	At least one designated partner must be an Indian resident
Individual Status	Only individuals can become designated partners (not companies)
Age Limit	Must be above 18 years
Consent	Written consent (Form 9) is mandatory
DPIN	Must possess a Designated Partner Identification Number (DPIN)

These eligibility norms ensure that only responsible and legally recognized individuals handle key LLP duties.

What is the Appointment and Removal of Designated Partner?

Appointment Procedure:

To appoint a Designated Partner, the following steps are required:

Obtain a DPIN (Designated Partner Identification Number) from MCA.
Secure Digital Signature Certificate (DSC) for electronic filing.
File consent to act as a designated partner (Form 9) with the Registrar.
Update the LLP Agreement to include the new partner’s role and duties.

Once these steps are completed, the individual officially becomes a designated partner with all statutory rights and duties.

Removal of Designated Partner:

If a designated partner resigns, passes away, or becomes disqualified, the LLP must:

File Form 4 with the Registrar to record the change.
Update the LLP Agreement accordingly.
Appoint a new designated partner within 30 days to maintain compliance.

This process ensures that there are always at least two active designated partners in the LLP.

What are the Penalties for Non-Compliance by a Designated Partner?

Default Type	Penalty
Failure to File Annual Return	₹100 per day till filed
Non-Filing of Financial Statement	₹100 per day till filed
Non-Maintenance of Books	₹25,000 to ₹5,00,000
False Statements or Fraud	Imprisonment up to 2 years or fine up to ₹5,00,000

The LLP compliance responsibilities must be taken seriously to avoid such penalties and maintain business credibility.

Conclusion

In conclusion, Designated Partner in an LLP is the cornerstone of accountability, compliance, and corporate responsibility. The presence of designated partners ensures that the LLP adheres to all MCA regulations, files accurate returns, and maintains transparency in its operations.

Also Read : What Happens If You Miss Your ROC Annual Filing Deadline

Table of Contents