What is a Limited Liability Partnership (LLP)

The popularity of LLPs has grown significantly among entrepreneurs across various industries, thanks to their ability to shield partners' assets and offer more streamlined regulatory requirements compared to traditional corporations. Introduced in India in 2008, the Act provides a reliable and adaptable option for businesses of all sizes, making it an attractive choice for startups and established companies. This structure is ideal for professional services like law firms, consulting, and small enterprises looking for a flexible yet secure business framework. 

In this guide, we will walk you through the process of LLP registration in India, its benefits, and the documents required for the Advantages and Disadvantages of LLP registration.

Designated Partner in LLP: Roles and Responsibilities

In a Limited Liability Partnership (LLP), a designated partner is a partner who is responsible for various statutory compliances and liabilities. The concept of designated partners was introduced in the Limited Liability Partnership Act, 2008, to ensure that there is a person responsible for the LLP's compliance with the law.

Who can be a Designated Partner?

Any partner in an LLP can take on the critical role of a Designated Partner in an LLP, provided they meet certain criteria. While the LLP agreement may outline specific requirements, typically, a designated partner is an individual who:

• Is a resident of India

• Has a DIN (Director Identification Number)

• Has not been disqualified from being a designated partner

Roles and Responsibilities of a Designated Partner

• Signing of Documents: A designated partner is responsible for signing documents, including the LLP agreement, annual returns, and other statutory documents.

• Compliance with Statutory Requirements: A designated partner ensures that the LLP complies with all statutory requirements, including filing of annual returns, income tax returns, and other necessary documents.

• Representation of the LLP: A designated partner represents the LLP in all legal proceedings and dealings with the government and other authorities.

• Appointment of Auditors: A designated partner is responsible for appointing auditors and ensuring that the LLP's accounts are audited annually.

• Filing of Documents: A designated partner is responsible for filing documents with the Registrar of Companies, including the LLP agreement, changes in partners, and other necessary documents.

• Liability: The designated partner is liable for any penalties or fines imposed on the LLP for non-compliance with statutory requirements.

Consequences of Non-Compliance

If a designated partner fails to comply with the statutory requirements, they may be liable for penalties, fines, or even prosecution. Therefore, a designated partner needs to ensure that the LLP complies with all statutory requirements and maintains proper records and accounts.

In summary, a designated partner plays a crucial role in ensuring the compliance of an LLP with statutory requirements and is responsible for various liabilities and penalties in case of non-compliance.

Designated Partner Identification Number (DPIN)

In an LLP, all Designated Partners are required to possess either a Designated Partner Identification Number (DPIN) or a Director Identification Number (DIN). Notably, both terms are interchangeable, and either can be used to refer to the same identification number. To obtain a DPIN, a Class digital signature, eMudhra Digital Signature is a mandatory requirement for the Designated Partner.

eMudhra Digital Signature

• Eligibility to Become a Designated Partner: All partners in an LLP are eligible to assume the role of a Designated Partner. During the LLP registration process, the incorporation document must specify certain individuals as Designated Partners. The LLP Partnership Deed can also facilitate a rotational system for the Designated Partner role, promoting equal opportunities for participation among all partners.

• Becoming a Designated Partner: Any individual can become a Designated Partner in an LLP, provided they obtain the consent of the existing partners in the LLP. This flexibility allows for a smooth transition and ensures that the LLP can adapt to changing circumstances.

Documents Required for Becoming a Designated Partner

• PAN Card: A valid Permanent Account Number (PAN) card is mandatory for all Designated Partners.

• Identity Proof: Any one of the following identity proofs is required: * Aadhaar Card * Voter's ID * Passport * Driving Licence

• Address Proof: Any one of the following address proofs is required: * Aadhaar Card * Voter's ID * Passport * Utility bills (not older than 2 months)

• Class 2 Digital Signature: A Class 2 digital signature is required to obtain a Designated Partner Identification Number (DPIN) or Director Identification Number (DIN).

• Consent from Existing Partners: A consent letter or a resolution from the existing partners of the LLP is required to appoint a new Designated Partner.

Please note that the specific documents required may vary depending on the circumstances and the LLP's specific needs. It's always a good idea to consult with a professional or the relevant authorities to ensure compliance with all applicable laws and regulations.

Disclaimer

The information provided in this blog is for general informational purposes only. While every effort has been made to ensure the accuracy, completeness, and reliability of the content presented, we make no representations or warranties of any kind, express or implied, regarding the completeness, accuracy, reliability, or availability of the information contained herein. 

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