{"id":51310,"date":"2022-12-15T11:35:15","date_gmt":"2022-12-15T06:05:15","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=51310"},"modified":"2022-12-15T11:35:43","modified_gmt":"2022-12-15T06:05:43","slug":"complete-guide-on-section-7-designated-partners","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/complete-guide-on-section-7-designated-partners\/","title":{"rendered":"A Complete Guide on Section 7 Designated Partners"},"content":{"rendered":"\n<p>An LLP (Limited Liability Partnership)\nis a contemporary corporate entity. It is a hybrid structure that incorporates\naspects of both a partnership and a corporate (i.e. limited liability with\nflexibility). The LLP Act of 2008 and the rules created thereunder, known as\nthe Limited Liability Rules of 2009, govern the creation and regulation of\nlimited liability partnerships. Designated Partners are defined in <em>Section\n7<\/em>&nbsp;of the Act.<\/p>\n\n\n\n<p>In a recent course of action, the LLP\nAct of 2008 &amp; the LLP Rules of 2009 were amended for the very first time,\nand the same was notified by the MCA or the Ministry of Corporate Affairs.<\/p>\n\n\n\n<p>Rule 19(1) of Limited Liability\nPartnership Rules, 2009 was amended by The Limited Liability Partnership\n(Amendment) Rules, 2022. The amendment introduced a new rule, 19A. Rule 19A\nsays a new name can be allotted to the existing firm under&nbsp;<em><strong>Section 17(3)<\/strong><\/em>.&nbsp;&nbsp;<em>Section\n17(3<\/em>) was introduced by the LLP (Amendment) Act, 2021. This article will\nguide your way through the rights, responsibilities and privileges of\nDesignated Partners under&nbsp;<em>Section 7<\/em>.&nbsp;<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/complete-guide-on-section-7-designated-partners\/#A_Brief_about_LLP_and_Its_Historical_Perspective\" >A Brief about LLP and Its Historical Perspective<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/complete-guide-on-section-7-designated-partners\/#Who_are_Designated_Partners\" >Who are Designated Partners?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/complete-guide-on-section-7-designated-partners\/#What_are_the_duties_of_Designated_Partners\" >What are the duties\nof Designated Partners?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/complete-guide-on-section-7-designated-partners\/#Designated_Partner_Identification_Number_DPIN\" >Designated Partner Identification Number (DPIN)<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/corpbiz.io\/learning\/complete-guide-on-section-7-designated-partners\/#What_Are_The_Eligibility_Criteria_For_Designated_Partners\" >What Are The Eligibility Criteria\nFor Designated Partners?&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/corpbiz.io\/learning\/complete-guide-on-section-7-designated-partners\/#Persons_Who_Cannot_Act_As_Designates_Partners\" >Persons Who Cannot Act As Designates\nPartners<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/corpbiz.io\/learning\/complete-guide-on-section-7-designated-partners\/#What_Are_The_Required_Documents_For_Obtaining_DPIN\" >What Are The Required Documents For Obtaining DPIN?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/corpbiz.io\/learning\/complete-guide-on-section-7-designated-partners\/#Fines_Imposed_On_Designated_Partners\" >Fines Imposed On Designated\nPartners&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/corpbiz.io\/learning\/complete-guide-on-section-7-designated-partners\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"A_Brief_about_LLP_and_Its_Historical_Perspective\"><\/span>A Brief about LLP and Its Historical Perspective<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>An LLP is a\ncombination of a Partnership Act and a Companies Act provision. The LLP is a\ncorporate body created and established in accordance with the act; as such, the\npartners do not in any way affect the LLP&#8217;s legal status. Most of the Act&#8217;s\nprovisions are similar to those in the Companies Act. Instead of directors, LLP\nhas partners known as &#8220;Designated partners,&#8221; who are placed in the\nposition of directors.<\/p>\n\n\n\n<p><strong><a class=\"text-primary\" href=\"https:\/\/corpbiz.io\/llp-registration\">Limited Liability Partnership<\/a><\/strong> (LLPs) was founded\nfor the first time in history in the aftermath of the crash of real estate and\nenergy prices in Texas, United States of America, in the 1980s, which caused a\nsignificant wave of insolvency of numerous bank\/savings\/loan\norganizations,&nbsp;<\/p>\n\n\n\n<p>In 1957, iron,\nsteel, and hardware merchants proposed that limited liability partnerships be\nrecognized in India because small enterprises had difficulty complying with the\ncomplex structure of the Companies Act. But the 7th Law Commission rejected\nthis proposition.<\/p>\n\n\n\n<p><strong><em>Following the\nrejection by the 7th Law Commission, various expert groups and committees were\nformed, including:&nbsp;<\/em><\/strong><\/p>\n\n\n\n<ul><li>Abid Hussain\nCommittee in 1997;<\/li><li>Naresh Chandra\nCommittee on Audit &amp; Corporate Governance in 2003;<\/li><li>Dr J.J. Irani\nCommittee on Company Law in 2005. <\/li><\/ul>\n\n\n\n<p>They recommended\nthe need for a law allowing the formation of LLPs in India. On November 2,\n2005, the Ministry of Company Affairs issued a concept paper on limited\nliability partnership after considering all of the proposals made by the\ndifferent committees.&nbsp;<\/p>\n\n\n\n<p>Taking in all the\nsuggestions and comments on the concept paper by the different committees, the\nGovernment of India eventually introduced the &#8220;Limited Liability\nPartnership Bill, 2006&#8221; after analysing the various committees&#8217;\nrecommendations and remarks made on the concept paper. Both houses then passed the bill, which led to the creation of the LLP Act\nthat is currently in effect.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Who_are_Designated_Partners\"><\/span>Who are Designated Partners?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Any partner designated as such in the incorporation document is\nreferred to as a designated partner at the time of LLP registration. Section\n2(j) defines the term designated Partner as any partner thus designated as per\nSection 7 of the Act. As per Section 7 of the LLP Act of 2008, every LLP must\nappoint at least 2 designated partners who are individuals &amp; at least one\nshould be a resident of India. <\/p>\n\n\n\n<p>A designated partner is entrusted with fulfilling all compliance\nobligations, which includes filling out documents, statements and returns. <\/p>\n\n\n\n<p>In non-compliance, a Designated Partner will be held liable for all\nthe punishments\/penalties mentioned under the act. The partnership deed will\ndetermine who will be the designated Partner. If any corporate bodies partner with\nLLP, then they can nominate any person to be a Designated Partner. The act\nspecifies for how long a person may be a designated partner. Therefore only the\nmatter of termination and designation is decided by the partnership deed\nitself.<\/p>\n\n\n\n<p>The guidelines mentioned under Rule 9(1) of the Limited Liability\nPartnership Rules are supplementary to section 7 of the act.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_are_the_duties_of_Designated_Partners\"><\/span><strong>What are the <\/strong>duties\nof Designated Partners?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The duties of designated partners are explained below:<\/p>\n\n\n\n<ul><li>Duty to fulfil all\n     compliances under Income Tax, GST, LLP Act;<\/li><li>Responsible for\n     signing all the e-forms that are filed with the ROC (Registrar of\n     Companies);<\/li><li>Duty to maintain all\n     the books related to accounts, annual statements, and audit reports;<\/li><li>Duty to produce\n     documents before inspector as and when required.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Designated_Partner_Identification_Number_DPIN\"><\/span><strong>Designated Partner Identification Number (DPIN)<\/strong><strong><\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The MCA (Ministry of Corporate Affairs) issues the\nindividuals designated Partners with unique identification called DPINs, also\nknown as Designated Partner Identification numbers. TH, which are unique\nidentification numbers.<\/p>\n\n\n\n<p>Every designated Partner is required by section 7(6) of\nthe LLP Act to obtain a Designated Partner Identification Number (DPIN) from\nthe central government. DPIN and Directors Identification Numbers are highly\nsimilar (DIN).&nbsp;<\/p>\n\n\n\n<p><strong><em>(Note: Class 2 digital signature is required to obtain\nDPIN.)<\/em><\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_Are_The_Eligibility_Criteria_For_Designated_Partners\"><\/span>What Are The Eligibility Criteria\nFor Designated Partners?&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Rule 9(1) of LLP Rules talks about the individuals who\nare not eligible to be Designated Partners:<\/p>\n\n\n\n<ol><li>The person who is\n     currently insolvent;<\/li><li>The person who was\n     declared insolvent at any time within the preceding five years<\/li><li>The person has\n     failed to make any payments to creditors in the last five years.<\/li><li>The individual who\n     has been or is currently serving a sentence of at least six months in jail\n     for any offence involving moral dishonesty.<\/li><\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Persons_Who_Cannot_Act_As_Designates_Partners\"><\/span>Persons Who Cannot Act As Designates\nPartners<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Here\nis the list of persons or individuals who cannot act as Designates Partners, as they are not covered\nunder the definition of Individual\/body\ncorporate:<\/p>\n\n\n\n<ul><li>A\nMinor<\/li><li>A\nCorporation sole<\/li><li>A\nCo-operative society<\/li><li>A\nTrust (subject to certain exceptions)<\/li><li>A\nPartnership firm<\/li><li>Association\nof person<\/li><li>A\nHindu Undivided family.<\/li><li>Other\nforms of unregistered business entities<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_Are_The_Required_Documents_For_Obtaining_DPIN\"><\/span><strong>What <\/strong><strong>Are The Required Documents For Obtaining <\/strong><strong>DPIN<\/strong><strong>?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul><li>A copy of identity proof should contain a\nphotograph and details regarding the date of birth and the father or husband&#8217;s\nname.<\/li><li>A copy of proof of residence.<\/li><\/ul>\n\n\n\n<p>(Note: Above mentioned documents need to be\nattested or certified.)&nbsp;<\/p>\n\n\n\n<ul><li>In the case, where the applicant is a nominee of a\nbody corporate, they must provide their authorization on the body corporate&#8217;s\nletterhead by giving the specifics of the name and the address.<\/li><li>A copy of their valid passport shall be needed if\nthe applicant is a foreign national.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Fines_Imposed_On_Designated_Partners\"><\/span><strong>Fines <\/strong><strong>Imposed On <\/strong><strong>Designated\nPartners&nbsp;<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong>For carrying out the business with fraudulent intention<\/strong><\/p>\n\n\n\n<ul><li>A minimum\npenalty of INR Fifty Thousand<\/li><li>A maximum\npenalty of INR. Five Lakhs<\/li><li>Imprisonment\nup to 2 years<\/li><\/ul>\n\n\n\n<p><strong>For filling any false statements in returns, statements or\ndocuments<\/strong><\/p>\n\n\n\n<ul><li>A minimum\npenalty of INR One Lakhs and&nbsp;<\/li><li>A maximum\npenalty of INR Five Lakhs<\/li><\/ul>\n\n\n\n<p>Imprisonment\nup to 2 years<\/p>\n\n\n\n<p><strong>For failing to file an annual return with the\nRegistrar&nbsp;<\/strong><\/p>\n\n\n\n<ul><li>A minimum\npenalty of INR Ten Thousand&nbsp;<\/li><li>A maximum\npenalty of INR One Lakhs&nbsp;<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>An LLP (Limited Liability Partnership) is a modern corporate\nstructure. It is a hybrid structure that combines elements of a partnership and\na corporation (i.e. limited liability with flexibility). <strong>The\nLLP Act of 2008<\/strong><sup><a class=\"text-primary\" href=\"https:\/\/www.mca.gov.in\/content\/dam\/mca\/pdf\/LLP_Act_2008_15jan2009.pdf\"><strong>[1]<\/strong><\/a><\/sup> and the rules enacted under it, known as the\nLimited Liability Rules of 2009, govern the idea.<\/p>\n\n\n\n<p>All LLPs must have a Designated Partner, defined in Section 2(j) of the Act as any partner thus designated as per Section 7 of the Act. All compliance requirements, including completing paperwork, statements, and returns, are delegated to a designated partner. In the event of non-compliance, a Designated Partner will be held accountable for all the punishments\/penalties specified in the act. <\/p>\n\n\n\n<p class=\"text-left\"><b>Read Our Article<\/b>: <mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/appointment-procedure-of-designated-partner-in-llp\/\">Appointment procedure of Designated Partner in LLP<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>An LLP (Limited Liability Partnership) is a contemporary corporate entity. It is a hybrid structure that incorporates aspects of both a partnership and a corporate (i.e. limited liability with flexibility). The LLP Act of 2008 and the rules created thereunder, known as the Limited Liability Rules of 2009, govern the creation and regulation of limited [&hellip;]<\/p>\n","protected":false},"author":48,"featured_media":51311,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[155],"tags":[2957],"acf":{"service_id":"3"},"authorName":"Astitva Kumar","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2022\/12\/MicrosoftTeams-image-27.jpg","authorDescription":"Astitva Kumar is an advocate by profession and has completed her BBA. LLB from IP University. She is an avid reader, researcher, and legal writer. Her areas of interest include mediation, conflict resolution, finance, cyber laws, and taxation.","postViews":10495,"readingTime":5,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/51310"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/48"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=51310"}],"version-history":[{"count":3,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/51310\/revisions"}],"predecessor-version":[{"id":51314,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/51310\/revisions\/51314"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/51311"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=51310"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=51310"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=51310"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}