Process for Designated Partner Appointment in LLP
Limited Liability Partnerships (LLPs) are regulated in accordance with the provisions of the Limited Liability Partnership Act of 2008. In contemporary business, LLPs are becoming increasingly favored over traditional private or limited companies due to their simplified structure and reduced regulatory requirements.
Each LLP is required to have a minimum of two partners, with at least two of them serving as designated partners responsible for representing the partners and engaging in the LLP’s daily operations. The appointment, removal, or change of partners, including designated partners, is a flexible process within an LLP’s framework.
Procedure for Adding a Designated Partner in an LLP
To add a designated partner to your Limited Liability Partnership (LLP), follow these steps:
1. Apply for Digital Signature Certificate (DSC):
The proposed designated partner must initiate the process by applying for a Digital Signature Certificate (DSC). The following documents are necessary for the DSC application:
- PAN Card of the applicant
- Aadhaar Card of the applicant
- Passport-sized photo of the applicant
- Email address of the applicant
- Phone number of the applicant
2. Apply for Director Identification Number (DIN):
After obtaining the DSC, apply for the Director Identification Number (DIN) for the designated partner. This can be done by submitting Form DIR-3 along with identity and address proof.
3. LLP Meeting and Resolution:
Once the DIN is assigned to the designated partner, convene a meeting with all the existing partners of the LLP. During this meeting, pass a resolution to officially add the designated partner to the partnership deed.
4. Supplementary Partnership Deed:
Draft a supplementary partnership deed that includes the name of the newly added partner. This document formalizes the addition of the designated partner to the LLP.
5. Written Consent:
Obtain written consent from the designated partner, acknowledging their willingness to become part of the LLP as a designated partner.
6. Filing Forms with the Ministry of Corporate Affairs:
Prepare and submit the necessary forms to the Ministry of Corporate Affairs within the stipulated timeframe:
- File Form-4 for LLP within 30 days of the appointment.
- File Form-3, along with both the supplementary and original partnership deeds, also within 30 days of the appointment.
7. Verification and Registration:
After the successful filing of these forms, the name of the designated partner will be officially added to the LLP and will be visible on the Ministry of Corporate Affairs website.
Following these steps ensures a smooth and compliant process for adding a designated partner to your LLP.
| S. No. | Small LLPs/Other than Small LLPs | Fee applicable (INR) |
| 1 | For Small LLPs | 50 |
| 2 | For Other than Small LLPs | 150 |
Additional Fees in case of delay in filing of forms
| S. No. | Period of delay | Additional fee payable for Small LLPs (INR) | Additional fee payable for Other than Small LLPs (INR) |
| 1 | Up to 15 days | 1 times of normal filing fees | 1 times of normal filing fees |
| 2 | More than 15 days and up to 30 | 2 times of normal filing fees | 4 times of normal filing fees |
| 3 | More than 30 days and up to 60 days | 4 times of normal filing fees | 8 times of normal filing fees |
| 4 | More than 60 days and up to 90 days | 6 times of normal filing fees | 12 times of normal filing fees |
| 5 | More than 90 days and up to 180 days | 10 times of normal filing fees | 20 times of normal filing fees |
| 6 | More than 180 days and up to 360 days | 15 times of normal filing fees | 30 times of normal filing fees |
| 7 | Beyond 360 days | 25 times of normal filing fees | 50 times of normal filing fees |
Understanding Small LLP
A Limited Liability Partnership (LLP) has emerged as the preferred business entity in India since its inception in 2008 under the Limited Liability Partnership Act, 2008. It combines the attributes of both a partnership and a company. Like a partnership, it operates based on an agreement, known as the LLP agreement, which outlines the fundamental structure of the business. However, unlike traditional partnership firms, an LLP offers limited liability to its partners, restricting their liability to their invested capital. Additionally, an LLP is recognized as a distinct legal entity with perpetual succession, much like a company. This business structure is particularly favored by professionals, family-owned enterprises, and others seeking to conduct business with a certain degree of autonomy.
In 2021, the Limited Liability Partnership (Amendment) Act introduced the concept of “small LLP” and “start-up LLP” to the Limited Liability Partnership Act of 2008. This innovation aligns with the concept of a small company introduced in the Companies Act of 2013. The primary aim of introducing the small LLP category is to facilitate the operations of small LLP businesses in India, streamlining the ease of doing business. The Indian government has been taking proactive measures in recent years to simplify business operations in the country.
According to the amended act, a small Limited Liability Partnership (small LLP) is defined as any LLP that meets the following criteria:
- Contribution: The total contribution of the LLP is less than Rs. 25,00,000, or a higher amount (not exceeding Rs. 5,00,00,000) as may be prescribed.
- Turnover: The LLP’s turnover for the preceding financial year does not exceed Rs. 40,00,000, or a higher amount (not exceeding Rs. 50,00,00,000) as may be prescribed.
The legislation also allows for the incorporation of additional requirements over time as deemed necessary. The introduction of the small LLP classification aims to provide a conducive environment for the growth and success of small businesses in India.