Appointment of Designated Partner/Partner in LLP

In this article, we will tell you about the legal procedure to be followed for Appointment of Partner/Designated Partner in the Limited Liability Partnership (LLP).

Section 7 of the LLP Act, 2008 and Rule 7, Rule 8, Rule 9, Rule 10 and Rule 22 of the LLP Rules, 2009 provides the provisions for Appointment of Partner/Designated Partner in the LLP.

Pursuant to Section 6, every LLP shall have a minimum of 2 partners. Section 7 states that every LLP shall have atleast 2 Designated Partners who are individuals. Once appointed, a partner or a designated partner can be changed, removed or appointed. Appointment of Designated Partner or Partner shall be as per the process defined in the LLP agreement. In case, the process is not defined in the LLP agreement then the consent of all partners is required for such appointment.

If partners want to appoint a new Partner or Designated Partner then it must be recorded in an agreement. Every change in LLP agreement must be approved by MCA.

LLP shall obtain consent from the incoming Partner or Designated Partner and intimation that he/she is not disqualified to be appointed as Partner or Designated Partner under Rule 9 of the LLP Rules, 2009. Under Rule 9, a person shall not be capable of being appointed as a designated partner of a limited liability partnership, if he/she –

• has at any time within the preceding five years been adjudged insolvent; or
• suspends, or has at any time within the preceding five years suspended payment to his creditors and has not at any time within the preceding five years made, a composition with them; or
• has been convicted by a Court for any offence involving moral turpitude and sentenced in respect thereof to imprisonment for not less than six months; or
• has been convicted by a Court for an offence involving section 30 of the Act.

The procedure for Appointment of Designated Partner or Partner is as follows:

Step 1: Check whether such person have DPIN No. or Not. If such person doesn’t have DPIN No. then Apply for DPIN in Form DIR-3. For appointment as Partner, DPIN is not mandatory.

Step 2: Take following duly signed documents from the proposed Designated Partner or Partner: –

• Consent to act as Designated Partner or Partner in Form 9;
• Intimation that he/ she is not disqualified to be appointed as Designated Partner or Partner; and
• Disclosure of Interest in other entities, if any.

Step 3: Hold a Meeting to take partners approval or consent to appoint Designated Partner or Partner in the LLP and to alter the LLP Agreement. The resolutions shall be passed by all the partners.

Step 4: Draft and execute a supplementary agreement with the Incoming Partner. All the partners must execute and sign the supplementary agreement in front of the witness. The supplementary agreement must be executed on the stamp paper and must be notarized.

Step 5: After passing the Resolution and execution of supplementary agreement, the LLP shall file the resolution passed and consent of Incoming DP or Partner in LLP Form No. 4 and supplementary agreement in LLP Form No. 3 with the concerned Registrar along with prescribed fee within 30 days of passing resolution. Both the forms should be filed as Linked forms.

Attachments with LLP Form No. 4

• Certified copy of the minutes of decision/ resolution/ consent of partners for appointment of Designated Partner or Partner
• Consent to act as DP or Partner in Form 9
• Interest in other entities, if any

Attachments with LLP Form No. 3

• Certified copy of the minutes of decision/ resolution/ consent of partners for alteration of LLP Agreement
• Supplementary Agreement

Step 6: The Registrar will examine the forms and approve the Appointment of Partner or Designated Partner.

Important Notes:

1. LLP Form No. 4 can be filed with different event dates only if dates are within 30 days of the filing date.
2. Filing of LLP Form No. 3 and Form No. 4 will not be allowed in case there is another LLP Form No. 3 and Form No. 4, respectively is pending for payment or under processing in respect of the LLP.