Addition of a Partner in LLP | Form No. 4

Introduction

Form No. 4 of LLP includes the addition of a new partner or designated partner in an llp. Unlike traditional partnership structures, LLPs appoint designated partners as separate entities to control the overall business management, where the management responsibilities rest solely with the partners. In this article, we’ll learn about the requirements and qualities that are involved in addition of a new partner/designated partner.

Who is a Partner?

An individual and any body corporate can be a partner of an LLP. There should be a minimum of two partners and there is no upper limit on the number of partners of an LLP as per Section 5 and 6 of LLP Act, 2008.

Who is a Designated Partner?

Only an individual can be appointed as a designated partner. As per the MCA circular No. 13/2013 dated 29-7-2013, HUF or its Karta cannot be appointed as a designated partners in LLP. In order to act as Designated Partner in LLP, consent of all partners is required. Every LLP shall file the particulars with the Registrar of every individual who has given his/her consent to act as designated partner as per section 7(4) of LLP Act.

LLP must have at least two designated partners and at least one of them shall be a resident in India as per section 7(1) of LLP Act. Nominees can act as designated partners only if all partners are corporate entities. The LLP agreement governed their appointment and they must consent to the role, with their particular field, with the Registrar of companies within 30 days. Before their appointment they must obtain a Designated Partner Identification Number (DPIN) from the Central Government.

Foreign Company or Company as Member

A Foreign LLP or foreign company can be a partner in LLP incorporated in India. However there would be some difficulties in repatriation of profit or capital, unless FEMA provisions are complied with.

Also, a company can be a member and it has to ensure that investment is within limits of Companies Act, 2013. Further, legally business of LLP should not be outside the objects as indicated in Memorandum of the Company.

Who can become a Designated Partner?

A LLP Act & LLP Agreement include the qualification that a designated partner should have. The eligibility criteria for selecting a designated partner for LLP is as follow:

Documents Required to add a Designated Partner

To add a designated Partner, certain documents are needed from the new designated partner. Also, few forms are required to be filed. They are as follow:

Procedure to add a Designated Partner

In the LLP Agreement, the process to appoint a designated partner is specifically mentioned. The designated partner is selected by all existing partners of the company. The procedure to add designated partner in LLP is as follow:

1. Step 01: Review LLP Agreement: It is crucial to review the LLP Agreement before proceeding with the addition of a partner in llp. In order to add a new partner it is important to understand the responsibilities and obligations of all partners. It is required to pay attention to any clauses or provisions related to addition of new designated partners.
2. Step 02: Obtain the consent of the partners: Once you review the LLP Agreement and understand its clauses, you need to obtain the consent form. The consent of all the existing partners to appoint a new partner is mandatory.
3. Step 03: Acquire DPIN: DPIN is a unique identification number allotted to someone who is looking to become a designated partner. DPIN stands for Designated Partner Identification Number. DIR-3 is an e-application used to fill in order to obtain a DPIN. DPIN is usually allotted by the Central Government.
4. Step 04: File Form-3 & Form-4 with ROC: Once the DPIN is obtained by a designated partner, another form-3 & form-4 is required to be filed. Both the forms are required to be filled by a designated partner.
5. Step 05: Update LLP Agreement: Once the form-3 & form-4 are obtained from the designated partner, the company should update their LLP Agreement. LLP can formalize the appointment of the designated partner by updating the LLP Agreement. Also, it maintains transparency and accountability within its governance framework.

Why Bizfoc?

We at Bizfoc, provide a seamless, hassle free experience guided by a team of experts. Our Professionals ensure that every step is completed efficiently and in full compliance with legal requirements. We guide you in the process of gathering documents in order to add a new designated partner. By consulting with us, you can focus on your LLP day to day responsibility and can work for its growth.

Conclusion

Addition of a new designated partner in LLP is a critical process. It ensures the firm’s effective governance and compliance with legal requirements. The transition can be made smooth and efficient by collecting important documents. It includes a consent letter, DPIN, and updated LLP Agreements, etc. Designated partners play an essential role in maintaining the integrity of the LLP. To ensure compliances and operational success, it is important to detain this process.

Frequently Asked Questions (FAQs)