What is the Difference Between Designated Partner and Partner in LLP

Did you know that not all partners in an LLP have the same roles and responsibilities? At first glance, you may think that all partners, including designated partners, share the same set of responsibilities. However, the reality is more nuanced, and the difference between a designated partner and a partner in an LLP holds significant importance. This distinction can greatly influence how your business operates.

As LLP registration in India has seen a 37% year-on-year increase in 2025, more entrepreneurs and startups are choosing this business structure because of its flexibility. However, this flexibility also comes with a need for clarity. This is why understanding the differences between a partner and a designated partner is essential for ensuring proper management, legal compliance, and smooth operations of an LLP.

While both designated partners and regular partners share profits and losses, the duties they perform are different. This blog will explain the key differences between a designated partner and a regular partner in an LLP. By understanding these roles and their responsibilities, you can make informed decisions about structuring your business for success.

What is a Partner in an LLP?

A partner, whether an individual or a corporate entity, contributes capital and shares the profits or losses according to the LLP agreement. The agreement outlines the rights and duties of LLP partners, providing a clear framework for decision-making and business operations. 

The main roles of an LLP partner include:

• Capital contribution: Partners invest in the LLP.
• Profit/loss sharing: Profits and losses are divided according to the agreement.
• Decision-making: Partners make key business decisions.
• Access to records: Partners have the right to access business documents.
• Limited liability protection: Their liability is limited to their capital contribution.

In addition to these roles, partners also have several important responsibilities:

• Active Participation: Partners contribute to business operations.
• Compliance: They follow the terms of the LLP agreement.
• Management: Partners help oversee business strategy.

These rights and responsibilities help maintain structure and efficiency within the business.

For example, in a small marketing LLP, one partner may be responsible for the day-to-day operations, while another partner might focus on financial planning and strategy. Both partners share profits and make key decisions together, ensuring the business functions smoothly while adhering to legal requirements.

Who is a Designated Partner (DP) in an LLP?

A Designated Partner (DP) plays a key role under the LLP Act, 2008, holding special legal responsibilities. This role is assigned to at least two partners, with one partner being a resident Indian. A resident Indian is someone who has stayed in India for at least 182 days during the preceding year. DPs have additional legal obligations compared to regular partners, making their role critical for LLP compliance and obligations after registration.

Key responsibilities of designated partners include:

• Complying with ROC filings: Ensuring timely submission of all required documents to the Registrar of Companies (ROC).
• Obtaining DPIN/DIN: Designated partners must obtain a Designated Partner Identification Number (DPIN) and Director Identification Number (DIN).
• Maintaining books and records: Designated partners must maintain accurate financial records.
• Authorized signatory/legal representative: Designated partners sign important documents and act as the official legal representative of the LLP.

The role of a designated partner in an LLP is similar to that of a director in a company. They hold the legal responsibility to ensure that the business complies with statutory regulations, including LLP annual compliance.

In addition to roles, designated partners also have several important responsibilities:

• Compliance Oversight: Ensure the LLP meets legal requirements.
• Leadership: Participate in key business decisions.
• Legal Representation: Act on behalf of the LLP in legal matters.

While both partners and designated partners in an LLP share ownership and profit and loss, the designated partner plays a more involved role in regulatory matters. Designated partners are required to file LLP Form 8 and Form 11, ensuring statutory compliance.

For example, in a small tech consulting LLP, the designated partner can be responsible for ensuring legal filings, maintaining financial records, and representing the LLP in legal matters. 

What is the Difference Between Partners and Designated Partners in an LLP?

In an LLP, partners and designated partners have different roles and responsibilities. Understanding these differences is essential for the smooth operation of your business. Below is a comparison table highlighting the key differences between partners and designated partners in an LLP:

Aspect	Partner	Designated Partner
Role	Contributes capital, shares profits, and makes business decisions.	Holds additional responsibilities for compliance and legal obligations.
Legal Responsibility	No special legal duties apart from business operations.	Responsible for ensuring compliance with statutory regulations like ROC filings.
Compliance Duties	No direct involvement in compliance.	Must file important documents like LLP Form 8 and Form 11.
DPIN/DIN Requirement	Not required.	Must obtain a DPIN and DIN.
Liability	Limited liability based on capital contribution.	Liable for non-compliance with statutory regulations.
Record-Keeping	No responsibility for maintaining business records.	Must ensure proper maintenance of financial records and statutory filings.
Power to Sign Documents	May sign documents related to business operations.	Has the authority to sign compliance-related documents on behalf of the LLP.
Decision-Making	Involved in making business decisions based on the LLP agreement.	Has a more formalized role in ensuring compliance but may also be part of decision-making.
Admission and Removal Process	Admitted and removed according to the LLP agreement.	Changes in the designated partner role require formal filings with the ROC.
Minimum Number of Partners	No minimum number of partners is specified by law.	At least two designated partners, one of whom must be a resident Indian.
Business Continuity	Death or resignation does not affect compliance directly.	A designated partner’s death or resignation impacts business continuity and compliance, requiring immediate action.
Operational Workload	Partners share operational responsibilities, often focused on business management.	Designated partners carry a heavier operational workload, ensuring compliance and governance.
Impact on Governance	Partners share responsibility for making business decisions.	Designated partners play a critical role in governance by ensuring legal and regulatory compliance.
Role in Dispute Resolution	Partners may engage in dispute resolution as per the LLP agreement.	Designated partners have a more formal role in resolving compliance-related disputes.

In summary, while both partners and designated partners share profits and decision-making responsibilities in an LLP, designated partners hold greater legal and compliance obligations, ensuring smooth governance and regulatory compliance.

Confused between partners and designated partners in an LLP? RegisterKaro provides expert guidance to set up your LLP correctly and stay fully compliant. Contact us today! 

Can a Partner Also Be a Designated Partner in an LLP?

Yes, a single individual can take on both the roles of partner and designated partner in an LLP. This often happens when the business has fewer partners or when streamlined operations are necessary. Some common scenarios in which a single individual holds dual roles of both partner and designated partner are:

• Single-founder startups: When the LLP is started by one individual, they automatically act as both partner and designated partner, taking on both operational and compliance responsibilities.
• Family-run LLPs: A family member may take on both roles to simplify management and ensure smooth operations within the family business.
• Temporary arrangements during transitions: A business may temporarily assign one person for both roles during changes in ownership or leadership.
• Founders handling operations and legal matters: In some cases, founders of a business may hold both roles to manage both day-to-day operations and ensure legal compliance.
• Partners with compliance expertise: A partner who has expertise in legal and compliance matters may take on the additional responsibilities of a designated partner to streamline processes.  

When an individual holds both roles, they must balance the benefits with the potential challenges. The combined roles can simplify operations, but they also come with increased responsibility and risks.

Benefits of Holding a Dual Role

Holding both roles can offer several advantages, such as:  

• Faster Decision-Making: One person managing both roles can make decisions without delays.
• Clear Accountability: The individual takes responsibility for both legal and operational aspects, ensuring accountability.
• Cost Savings: By combining roles, the business saves on administrative and operational costs.

Drawbacks of Holding a Dual Role

While the dual role can bring benefits, there are potential drawbacks that businesses should consider. Some of these are:

• Responsibility Concentration: With more responsibilities, there’s a higher risk of oversight or burnout.
• Legal Implications: The difference between a partner vs a designated partner in an LLP becomes crucial here, as the designated partner faces more compliance obligations. 
• Limited Oversight: The individual may lack the capacity to oversee every detail of the business effectively, risking missed opportunities or compliance issues.

Understanding the balance between partners and designated partners in an LLP is key when considering whether one person should hold both roles. It’s important to weigh the benefits of simplicity against the added pressure and responsibility.

What Happens in the Case of Changes in Partners/Designated Partners?

Changes in the structure of an LLP, such as the admission, removal, or resignation of partners and designated partners in the LLP, must follow a legal process. These changes require formal documentation and compliance to ensure smooth transitions and continued business operations.

a. Admission of New Partner/Designated Partner (DP)

When a new partner or designated partner joins the LLP, the business must make the necessary updates and filings to ensure a smooth transition.

• Update the LLP agreement: Modify the agreement to reflect the new partner’s terms, capital contribution, and responsibilities.
• Obtain written consent: Get written consent from the incoming partner or designated partner agreeing to the terms outlined in the agreement.
• Acquire DPIN/DIN: New designated partners must obtain a DPIN or DIN.
• File necessary forms with the ROC: Required forms are:
  • Form 4 to officially add the new designated partner
  • Form 3 to record the new partner’s admission.   

The new partner agrees to contribute capital, assume responsibilities, and participate in the business operations as outlined in the LLP agreement. Similarly, the DP takes on additional compliance responsibilities. This ensures the LLP meets statutory requirements, including filings and legal obligations. 

b. Removal/Resignation Process

When a partner or designated partner wishes to leave the LLP, the business must follow the procedures outlined in the LLP agreement to ensure a legal exit.

• Follow the procedures: Adhere to the steps defined in the LLP agreement for removing or resigning a partner or designated partner.
• File relevant documents with the ROC:
  • Form 4: Submit the “Cessation of a Designated Partner” form to officially record the departure of the designated partner.   
  • Form 3: File the “Removal of a Partner” form to formally document the partner’s exit.

Ensure that the business complies with all necessary legal and regulatory requirements during this process, including any required filings.

By following these steps, the LLP ensures smooth transitions while maintaining compliance with statutory obligations.

c. Death of Partner/DP: Continuity Implications

When a partner or designated partner passes away, the LLP must act promptly to ensure legal compliance and business continuity.

• If a designated partner dies, the LLP appoints a new designated partner immediately.
• The LLP notifies the ROC about the change and files the required documents to update the business structure.

The absence of a designated partner can disrupt legal compliance, especially with statutory filings. This is crucial since designated partners are responsible for ensuring regulatory compliance and business operations.  

Practical Considerations for Startups & SMEs When Appointing a Partners in an LLP

Appointing partners in an LLP is an essential step that should occur early to ensure legal compliance and smooth operations. When appointing partners, keep the following tips in mind:

• Choose partners who understand statutory requirements and can ensure timely filings and adherence to regulations.
• Select dependable individuals, as their role involves significant legal and operational responsibilities.
• Ensure that at least one designated partner is a resident Indian to meet the legal requirements of the LLP Act.
• Draft a clear LLP agreement that defines roles, responsibilities, and decision-making processes to prevent future disputes.
• When you include foreign or corporate partners, appointing a resident Indian partner is necessary to meet legal obligations while allowing foreign entities to participate in the business.  

By addressing these points, you set a solid foundation for your LLP’s compliance and smooth operation.   

Frequently Asked Questions (FAQs)

1. What is the difference between a designated partner and a partner in an LLP?

The difference between a designated partner and a partner in an LLP lies primarily in their roles and responsibilities. While all partners share profits and losses, designated partners have additional legal obligations, such as ensuring statutory filings, maintaining financial records, and submitting annual returns. 

2. Can one person be both a designated partner and a partner in an LLP?

Yes, one person can hold both the roles of designated partner and partner in LLP. This dual role simplifies decision-making and streamlines operations, particularly for small businesses or startups. However, this also increases the individual’s responsibilities, balancing both operational and compliance duties, which could lead to higher pressure.

3. What are the key responsibilities of a designated partner in an LLP?

A designated partner is responsible for key compliance duties, including maintaining books of accounts, filing annual returns, and submitting forms like LLP Form 8 and Form 11 to the Registrar of Companies (ROC). They must also obtain a DPIN and DIN, act as the legal representative, and ensure the LLP meets all legal and regulatory obligations.

4. Who can become a designated partner in an LLP?

To become a designated partner in an LLP, the individual must meet the legal requirements set by the LLP Act 2008. At least two designated partners must be appointed, with one being a resident Indian. They must also obtain a Designated Partner Identification Number (DPIN) and a Director Identification Number (DIN) for compliance.

5. What are the compliance implications for designated partners in an LLP?

Designated partners and partners in LLP both need to comply with statutory requirements. However, designated partners face stricter obligations, including the timely submission of LLP Form 8, Form 11, and ensuring that all business records are up to date. Non-compliance can lead to penalties, and designated partners can face personal liability for failing to fulfill these duties.

6. What happens if a designated partner resigns or passes away?

If a designated partner resigns or passes away, the LLP must appoint a new designated partner to maintain compliance with the LLP Act, 2008. The resignation or death must be reported to the Registrar of Companies (ROC), and new documents need to be filed. The absence of a designated partner can lead to compliance issues, impacting the LLP’s legal standing.

7. Can foreign nationals become designated partners in an LLP?

Yes, foreign nationals can become partners and designated partners in LLP, but at least one designated partner must be a resident Indian. Foreign partners are subject to the terms of the LLP agreement but cannot fulfill the compliance role of the designated partner unless they meet the required legal criteria.

8. What are the advantages of having a designated partner in an LLP?

Having a designated partner ensures the LLP remains compliant with statutory regulations, such as filing Form 11, maintaining accurate financial records, and making timely ROC filings. This role also helps mitigate legal risks, ensures business continuity, and provides limited liability protection for the partners. 

9. How does the appointment of new partners affect an LLP?

When a new partner or designated partner joins the LLP, the LLP agreement must be updated. New partners contribute capital and take on the agreed responsibilities. The LLP agreement formalizes this process, ensuring that all parties understand their roles, responsibilities, and rights, which is vital for partners and designated partners in LLP to maintain smooth operations and legal compliance.

10. What is the difference between a designated partner and a working partner?

A designated partner has additional compliance responsibilities under the LLP Act, such as ensuring statutory filings and maintaining records. A working partner, on the other hand, is actively involved in the day-to-day operations of the business, handling management tasks and contributing to the growth of the business, without specific legal obligations regarding compliance.

11. What is the difference between LLP and a partnership?

An LLP (Limited Liability Partnership) is a hybrid business structure combining the features of a partnership and a company. It offers limited liability protection to its partners, meaning personal assets are not at risk in case of business debts. In a traditional partnership, all partners are personally liable for the business’s debts, offering no such protection.

12. Can there be two designated partners in an LLP?

Yes, an LLP must have at least two designated partners. However, it is common for LLPs to have more than two designated partners, depending on the size and structure of the business. Designated partners ensure legal compliance and are responsible for statutory filings, so having more than one can help distribute these responsibilities.

13. Can a designated partner be removed in an LLP?

Yes, a designated partner can be removed according to the terms of the LLP agreement. The removal must be done formally, and appropriate filings must be made with the Registrar of Companies (ROC) to record the change. If the designated partner is removed, the LLP must appoint a new one to maintain compliance with the LLP Act.

14. Is DIN mandatory for LLP partners?

Yes, DIN (Director Identification Number) is mandatory for designated partners in an LLP. It is required for any individual who is appointed as a designated partner to ensure compliance with legal and regulatory obligations under the LLP Act. Regular partners do not require a DIN, but designated partners must obtain it to handle the LLP’s legal and compliance duties.