Difference Between Partner and Designated Partner In LLP

 

A limited liability partnership (LLP) is a business with a minimum of two members. There is no maximum number of members that can be in an LLP. 

 

LLPs are controlled by the Limited Liability Partnership Act of 2008, as opposed to Private Limited Company, which are governed by the Companies Act. 

 

 

 

Know more about the difference between LLP Vs Pvt Ltd.

 

The LLP Act of 2008 lists the following as an LLP's essential qualities:

 

• The LLP has perpetual succession and is a distinct legal entity and body corporate from its partners. Any two or more individuals who are listed in the formation documents and have them properly submitted to the Registrar may establish an LLP.
• There should be a minimum of two recognised partners, one of whom must reside in India. Any of the other partners may act as the LLP's agents. The partners' obligations must be compliant with the law.
• An LLP is governed by the terms of the LLP agreement, which is created upon the company's establishment on comparable terms with each partner. It's also important to remember that these fall under the 2008 Limited Liability Partnership Act. In the absence of such an agreement, the act must control the parties' respective rights and obligations.
• Because an LLP is a separate legal entity, each partner is accountable for the LLP's tangible and intangible assets as well as their respective agreed-upon contributions to the business.
• LLPs utilise an accounting system and trading disclosures that are comparable to those used by other business kinds.

 

The requirements of the Indian Partnership Act, 1932 do not apply to LLPs.

 

An LLP's members are only partially liable. Each partner in an LLP is not accountable or liable for the wrongdoing or carelessness of another partner.

 

Significant Differences Between a Partner and a Designated Partner in an LLP

 

• A partner is not responsible nor liable for the payment of fines if an LLP violates the LLP Act's requirements. The designated partners, on the other hand, have increased responsibility for the LLP's fines if paperwork, returns, and account statements are not filed promptly.
• A Limited Liability Partnership's (LLP) designated partner is in charge of the LLP's compliance requirements, which include timely submission of any document, return, or statement with any authority.
• The designated partner of the LLP may be held jointly and severally accountable for the punishments and penalties imposed by the LLP Act if the designated partner of the LLP violates the provisions or fails to comply with the stated requirements (or any other applicable Act).
• A partner is not required for the LLP authority to receive an identification number. On the other side, the designated partners must request a DPIN (Designated Partner Identification Number) from them.
• Any individual or business can join as a partner in an LLP. However, a chosen partner can only be assigned to an individual.
• While partners work as the partnership firm's agents, designated partners do so in addition while holding the position of director.
• Both general partnerships and limited liability partnerships make frequent use of the word "partner." On the other hand, the phrase "designated partner" is solely used concerning LLPs.
• Following the creation of an LLP, authorised partners have a greater obligation and accountability to ensure that the LLP is operating in conformity with all applicable laws and regulations as well as its daily operations.
• A "partner" is somebody who enters into a partnership with other individuals. On the other hand, a designated partner is a partner who has been designated as such in the limited liability partnership's governing documents as of the time of registration.

 

Is It Mandatory to Appoint Designated Partner in an LLP?

A partner in a partnership who has been given additional responsibilities or powers by the other partners is known as a designated partner. 

 

In certain partnerships, the designated partner may be responsible for management decisions, while in others, they may simply have a greater say in how the partnership is run. 

 

The designated partner may also be in charge of managing the finances of the partnership.

 

A partner who has been assigned certain responsibilities by the other partners is known as a designated partner. 

 

A designated partner may have restricted accountability for the partnership's obligations and debts, depending on the terms of the partnership agreement.

 

A minimum of two "designated partners" must be appointed for any LLP. A minimum requirement for Designated Partners is outlined in the Limited Liability Partnership Act of 2008 for both LLP registration and the duration of the LLP's operation. 

 

A Limited Liability Partnership must be created under the Act with at least two distinct Designated Partners, one of whom must be an Indian citizen.

 

It is important to note that each partner will be a designated partner if the incorporation document does not specifically name any designated partners. But, rather specifies that each partner will occasionally serve as the designated partner.

 

Eligibility to become Designated Partners

A person must first fulfil the requirements to become a designated partner in an LLP. 

 

A few of the most crucial requirements for being a designated partner in an LLP are as follows:

 

• Minimum age of eighteen is required.
• Any number of people or businesses can join as partners in an LLP.
• Anyone who wishes to become a Partner shall be asked to provide a unique identification number (For instance, Aadhaar Card)
• Every LLP must have a minimum of two designated partners.
• The person must be mentally sound.
• The person shouldn't have engaged in fraudulent behaviour.
• Indian citizens who live in India must make up at least one of the authorised partners.
• A consent letter together with supporting documents and other papers are required from the other Designated Partners.
• The person shouldn't have been declared bankrupt in the past five years.