Designated partners: appointment and eligibility

Designated partners (ss. 2(1)(j) and 7, Limited Liability Partnership Act, 2008). A designated partner is any partner designated as such under section 7. The provisions are:

1. Every LLP must have two or more designated partners who are individuals, at least one of them must be resident in India.
2. 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.
3. "Resident in India" means someone who has stayed in India for not less than 120 days during the financial year (the LLP (Amendment) Act, 2021 replaced the original test of 182 days in the preceding year).
4. Example: in an LLP with five partners, two of them non-resident, designating only the two non-residents would not do; at least one designated partner must be one of the residents.
5. Who is designated (s. 7(2)). The incorporation document may name the designated partners, or state that every partner from time to time is one; later, any partner may become a designated partner, and a partner may cease to be one, in accordance with the LLP agreement.
6. Appointment (ss. 7(3)-(6)). No one becomes a designated partner without his prior consent to the LLP, in the prescribed form and manner; the LLP files the particulars of each consenting individual with the Registrar, in the prescribed form and manner, within thirty days of his appointment; an individual eligible to be a designated partner must meet the conditions and requirements the Rules prescribe (s. 7(5)); and every designated partner obtains a Designated Partner Identification Number (DPIN) from the Central Government, sections 266A to 266G of the Companies Act, 1956 applying to it with the necessary changes (s. 7(6)). Under rule 10(1) of the LLP Rules, 2009, 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.
7. Liability (s. 8). "Unless expressly provided otherwise in this Act" (s. 8), he is responsible for all acts the LLP must do to comply with the Act, including filings, and for whatever the LLP agreement specifies, and is liable to all penalties imposed on the LLP for contravening those provisions.
8. Disqualifications (LLP Rules, 2009, rule 9(1)). No one may be appointed a designated partner who, within the preceding five years, has been adjudged insolvent; who suspends, or has within the preceding five years suspended, payment to his creditors without having made a composition with them within that period; or who 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, by notification in the Official Gazette, remove a disqualification under clause (a) or (b), either generally or for the LLP or LLPs named in the notification (rule 9(2)).
9. Vacancies (s. 9). The LLP “may appoint a designated partner within thirty days of a vacancy arising for any reason”, and sections 7(4) and 7(5) apply to the new designated partner; if no designated partner is appointed, or if at any time there is only one, each partner is deemed to be a designated partner.

A designated partner who is an individual partner is otherwise an ordinary partner: no individual can be a partner while a competent court's finding that he is of unsound mind remains in force, while he is an undischarged insolvent, or while his application to be adjudicated an insolvent is pending (s. 5); a body corporate's nominee acts as a designated partner without being a partner himself.