# Partners and Designated Partners

## Section 5 — Who can be a Partner?

An individual or a body corporate may become a partner. However, an individual is disqualified if:

1. He has been declared of unsound mind by a competent court.

2. He is an undischarged insolvent.

3. He has applied to be adjudicated as insolvent and the application is pending.

## Section 6 — Minimum Number of Partners

Minimum: 2 partners
Maximum: No limit

Consequence of going below 2: If the number of partners reduces below 2 and the LLP carries on business for more than 6 months, the sole remaining partner becomes personally liable for obligations incurred by the LLP after those 6 months — if he knew of the reduction.

## Section 7 — Designated Partners (DP)

### (1) Requirement

At least 2 individuals or BC as DPs.
At least 1 DP must be a resident of India.
Resident in India = stayed in India for ≥ 120 days during the FY.

### Special situations

All partners are BC: Nominees of the BCs shall act as DPs.
Mix of individuals and BCs: Either individual partners or nominees of BC partners shall act as DPs.

### Failure to appoint 2 DPs

LLP: ₹10,000 + ₹100/day (max ₹1 lakh)
Every partner: ₹50,000

### (2) From Incorporation Document

If the document names DPs → those persons become DPs on incorporation.
If the document says each partner from time to time shall be DP → every partner is a DP.
A person may become/cease to be a DP per the LLP agreement.

### (3) Consent & Filing

Every partner appointed as DP must give prior consent.
LLP must file particulars of DP with RoC within 30 days of appointment.
Penalty for non-filing: LLP: ₹5,000 + ₹100/day (max ₹50,000); DP: max ₹25,000.

### (4) DPIN

Every DP must obtain a Designated Partner Identification Number (DPIN) from CG.

> Note: DIN (Director Identification Number) and DPIN can be used interchangeably.

## Section 8 — Liabilities of a Designated Partner

Unless otherwise provided in the LLP agreement, a DP is:

1. Responsible for all acts of the LLP — filing of documents, returns, statements, etc.

2. Liable to all penalties imposed on the LLP for non-compliance.

## Section 9 — Vacancy in DP

1. LLP may appoint a DP within 30 days of vacancy from any reason.

2. If there is no DP, or only 1 DP, every partner is deemed to be a DP.

Contravention penalty: LLP: ₹10,000 + ₹100/day (max ₹1 lakh); Every partner: ₹50,000.

Worked example

### Example 1

Example — Falling below minimum partners: A 2-partner LLP loses one partner on 1st January. The remaining partner continues the business alone, knowing of the reduction. On 1st August (>6 months later), the LLP incurs ₹10 lakh in debt. Result: Under Section 6 proviso, the sole partner is personally liable for the post-6-month obligation.

### Example 2

Example — Residency test for DP: A DP stays in India from 1st April to 25th July (116 days) and is otherwise abroad. Result: He fails the 120-day test and cannot be counted as the 'resident DP'. The LLP must appoint another DP who satisfies the residency rule.

### Example 3

Example — Deemed DP under Section 9: An LLP has 4 partners but only 1 DP after the other DP resigns. The LLP fails to appoint a replacement within 30 days. Result: All 4 partners are deemed DPs and bear the corresponding liabilities.

⚠️ Common exam mistakes

Forgetting that a body corporate can be a partner but not directly a DP — only an individual (including a nominee of a BC) can act as DP.
Using '182 days' as the residency test (the Income Tax test) — the LLP Act uses 120 days during the FY.
Missing that both the LLP and every partner are penalised separately for failure to appoint 2 DPs.
Confusing the 30-day filing window (consent with RoC) with the 30-day window for filling a DP vacancy — both exist but are independent.

Bare-Act text Sections 5–9 · Limited Liability Partnership Act, 2008 · click to expand

Section 7(1) Every limited liability partnership shall have at least two designated partners who are individuals and at least one of them shall be a resident in India: Provided that in case of a limited liability partnership in which all the partners are bodies corporate or in which one or more partners are individuals and bodies corporate, at least two individuals who are partners of such limited liability partnership or nominees of such bodies corporate shall act as designated partners. Explanation. — For the purposes of this section, the term 'resident in India' means a person who has stayed in India for a period of not less than one hundred and twenty days during the financial year.

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Partners and Designated Partners (Sections 5–9)

Worked example

⚠️ Common exam mistakes