An LLP is mix of features of partnerships and private limited companies. It protects partners from personal responsibility for the LLP’s debts. This setup is great for medium businesses as it keeps partners’ assets safe. The procedure for appointment of designated partner in LLP involves a few steps to ensure the proper designation of individuals to take on specific responsibilities within the LLP.
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Who can be Designated Partner in LLP?
Becoming a designated partner in an LLP involves meeting specific criteria:
- Only individuals, not companies or other entities, can be appointed.
- Before appointment, the individual needs a Unique Identification Number (UIN).
- An LLP must have at least 2 designated partners with no maximum limit.
- 1 designated partner must be an Indian resident for compliance reasons.
- The proposed partner must provide a consent letter expressing their willingness to join.
- He should be at least 18 years old to legally enter into contracts.
This covers the procedure for appointment of designated partner in LLP.
Who cannot be a Designated Partner in LLP?
Some entities are not allowed to be designated partners in an LLP:
- Bankrupt people cannot be designated partners due to their financial situation.
- Individuals who haven not paid their debts, as identified by creditors like lenders, are also disqualified.
- Those involved in criminal activities or convicted of crimes are also disqualified.
- People under 18 years cannot be designated partners in LLPs due to legal capacity reasons.
- Non-residents without citizenship are not eligible unless they meet certain exemptions.
Procedure for Appointment of Designated Partner in LLP
Step 1: Get Your DSC
To appoint a designated partner, you will need to obtain a DSC. A DSC is an electronic signature issued by certified authority that verifies your identity online. You will need to provide the following documents to obtain a DSC:
- PAN Card (Permanent Account Number): Your tax identification proof.
- Aadhaar Card: Your official identity and address proof issued by UIDAI.
- Email Address and Phone Number: It is for communication and verification purposes.
- Passport sized Photo: A clear and current photo of yourself.
By obtaining DSC, you ensure the validity and security of your digital documents and transactions.
Step 2: Apply for DIN
Upon obtaining your Digital Signature Certificate (DSC), you must apply for a Director Identification Number (DIN) through Form DIR. This number is essential to serve as a director or designated partner in companies or Limited Liability Partnerships (LLPs). You will need to provide the following documents to obtain a DIN:
- Identity Proof: you can provide any of your documents as identity proof:
- PAN card
- Passport
- Voter ID or
- Driving license
- Address Proof: you can provide any of your documents as address proof:
- Passport
- Voter ID
- Ration card
- Utility bill (electricity or telephone)
- Bank statement.
- Photograph: Passport-sized photograph
After submission and approval of your application for DIN, you will receive 8 digit DIN. This number serves as your permanent identification and does not require the renewal.
Step 3: Hold a Board Meeting
After receiving DIN, the current partners of LLP must hold a board meeting. During this meeting, they will formally approve the appointment of the new designated partner and make necessary changes to the partnership agreement.
It is important to record the minutes of this meeting which must be signed by all partners for record purposes. The board resolution should clearly state the information related to the proposed designated partner including their DIN and outline the specific duties and responsibilities they will assume within this LLP.
Step 4: Draft Supplementary Deed
During the process of assigning a designated partner in LLP, it is important for the partners to draft a partnership deed and include new designated partner’s name as per existing partnership agreement. This supplementary partnership deed shows the changes to partnership as compared to original deed. Additionally, the designated partner must provide a written statement expressing their consent to join the LLP in this capacity. This letter will be attached to the partnership agreement as proof of their agreement.
Step 5: File Form-4 & Form-3
After creating the updated partnership agreement and acquiring consent, the LLP must submit Forms 4 and 3 to the Registrar of Companies (ROC) through the Ministry of Corporate Affairs portal within 30 days of appointing new designated partners.
- Form 4 provides details about the designated partners including their DIN and their agreement to serve in that role in LLP.
- Form 3 outlines the details of the LLP agreement, the rights, obligations, and responsibilities of all partners including the designated partners.
All forms and supporting documents must be digitally signed before submission.
Step 6: Verification and Approval of Appointment
After submitting all necessary forms and documentation, MCA will thoroughly examine them to ensure compliance with the Limited Liability Partnership Act and regulations. Additionally, ROC will verify the accuracy of designated partner appointments. Upon meeting all requirements, the MCA will approve the addition of designated partner to your LLP. An official notification will be sent to your LLP for confirming the approval.
Step 7: Confirmation of Appointment
Upon receiving approval from MCA, you can verify the designated partner’s addition to your LLP by accessing the official website. Once this last step is complete, the designated partner is authorized to fulfill their assigned duties and responsibilities within the LLP. With this step, the procedure for appointment of designated partner in LLP ends.
Read also: How To Become an Independent Director Under Companies Act, 2013
Conclusion
By following the procedure for appointment of designated partner in LLP and providing the required documents, the businesses can enjoy the benefits of LLP like liability protection and flexible management. LLP structures are favored by many entrepreneurs for their optimal balance of protection and convenience. Simplified compliance and the benefits offered make LLP a widely popular option in the today’s business environment.
Frequently Asked Questions (FAQ)
Form-4 is required to be submitted to ROC for the appointment of a designated partner in LLP.
The Ministry of Corporate Affairs is a government ministry in charge of regulating corporate affairs which ensures the compliance with laws related to companies, limited liability partnerships and other corporate entities in India.