Appointment of a Designated Partner in LLP

Over the last few years, Limited Liability Partnerships or LLPs have grown in popularity across various industries. They were designed to offer the best of two worlds – companies and partnership firms. They offer limited liability benefits to all partners while maintaining the flexibility of a partnership firm. Designated partners are at the helm of an LLP, working on behalf of all the other partners. Today, we will discuss the procedure for the appointment of a designated partner in LLP.

appointment of a designated partner in LLP

Eligibility Criteria for the Appointment of a Designated Partner in LLP

Here is the eligibility criteria for the appointment of a designated partner of LLP:

  1. Every LLP must have at least two designated partners. Also, there is no limit on the maximum number of partners in an LLP.
  2. At least one designated partner needs to be a citizen and resident of India.
  3. Only individuals over 18 years of age are eligible to become designated partners.

Persons not permitted to be a designated partner

  • Any individual who was declared bankrupt in the last five years.
  • he has been found to be of unsound mind by a Court of competent jurisdiction and the finding is in force;
  • If an individual has served a prison term for more than six months, then he is not eligible.
  • Any individual who has been involved in any fraud
  • Minors
  • Individuals who have a history of credit defaults over the last five years without reaching an agreement with the creditors

Appointment of a designated partner in LLP

Here is a stepwise process for the appointment of a designated partner in LLP:

Step 1. Apply for a Designated Partner’s Identification Number (DPIN)

The proposed designated partner must apply for a DPIN. He must fill Form DIR-3 on the website of the Ministry of Corporate Affairs (MCA) and provide proof of identity and address.

The next few steps

Step 2. On the receipt of the DPIN, the existing partners call a meeting. At this meeting, they pass a resolution to add a designated partner in the partnership deed.

Step 3. They draft a supplementary deed and add the name of the new partner.

Step 4. The existing partners take the consent of the incoming partner in writing.

Form filling

Step 5. Once they complete Step 4, they must file Form 3 and Form-4 of the LLP with the MCA. Further, they must ensure that Form 3 and Form 4 are the linked forms and be filed within 30 days of the appointment of a designated partner of LLP. Supplementary LLP agreement must be attached in Form 3 and Consent of New Partner in Form 9 and copy of the resolution of LLP must be attached in form 4.

Step 6. The designated partner is now added to the LLP. Also, the same is visible on the MCA portal.

Summing Up

A designated partner plays an important role in the functioning of an LLP. Also, since an LLP can change, appoint or remove a partner or a designated partner, it is important to know the process of appointment of a designated partner of LLP. We hope that this article provided clarity regarding the said process.

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