Designated partners

Definition. A designated partner is any partner designated as such under section 7 of the Limited Liability Partnership Act, 2008 (s. 2(1)(j)). Unless the Act expressly provides otherwise, a designated partner is responsible for doing everything the LLP must do to comply with the Act, including filing its documents, returns and statements, and anything specified in the LLP agreement, and is liable to all penalties imposed on the LLP for contravening those provisions (s. 8).

Eligibility

1. Number and status: every LLP must have at least two designated partners, and they must be individuals.
2. Residence: at least one of them must be resident in India. When this paper was set, "resident" meant a person who had stayed in India for at least 182 days during the immediately preceding one year (Explanation to s. 7); the requirement is now 120 days during the financial year.
3. Corporate partners: where all the partners are bodies corporate, or some are individuals and some bodies corporate, at least two individuals who are partners, or nominees of the bodies corporate, act as designated partners.
4. Capacity: an individual cannot become a partner, and so cannot be a designated partner, while a finding by a court of competent jurisdiction that he is of unsound mind is in force, while he is an undischarged insolvent, or while his application to be adjudged insolvent is pending (s. 5).
5. Disqualifications (LLP Rules, 2009, rule 9(1)): a person cannot be appointed a designated partner if, within the preceding five years, he has been adjudged insolvent; if he suspends, or has within the preceding five years suspended, payment to his creditors without having made a composition with them within that period; or if he has been convicted of an offence involving moral turpitude and sentenced to at least six months' imprisonment, or of an offence involving section 30 of the Act. The Central Government may remove the first two disqualifications by notification (rule 9(2)).
6. Consent and conditions: an individual becomes a designated partner only after giving his prior consent to the LLP in the prescribed form and manner, and he must satisfy the conditions and requirements prescribed by the rules (s. 7(3), (5)).

Appointment (s. 7(2))

1. On incorporation: if the incorporation document names who are to be designated partners, those persons become designated partners on incorporation; if it states that every partner from time to time is to be a designated partner, every partner is one.
2. Later: any partner may become a designated partner, and may cease to be one, in accordance with the LLP agreement.
3. Formalities: the LLP files the particulars of each individual who has consented to act with the Registrar, in the prescribed form and manner, within thirty days of his appointment, and every designated partner must obtain a Designated Partner Identification Number (s. 7(4), (6)). Under rule 10(1) of the LLP Rules, 2009, as it now stands (substituted in 2018), an individual who is to be appointed designated partner of an existing LLP applies electronically in Form DIR-3 to obtain the DPIN, and a Director Identification Number (DIN) is sufficient for the appointment.
4. Vacancy: the LLP may appoint a designated partner within thirty days of a vacancy arising for any reason, and s. 7(4) and (5) apply to the new designated partner; under the proviso to s. 9, if no designated partner is appointed, or at any time only one remains, every partner is deemed a designated partner (s. 9).

Conclusion. Every LLP must at all times have at least two individual designated partners, one resident in India, named in the incorporation document or later under the LLP agreement, each with his consent and a DPIN; and if no designated partner is appointed, or at any time only one remains, every partner is deemed a designated partner (s. 9).