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Differences between a Partner and a Designated Partner in LLP



Disparity between a Partner and a Designated PartnerPartner and designated partner in a LLP both are responsible for all acts, matters and things required to be done in a limited liability partnership (LLP). The duties of designated partners in a Limited Liability Partnership (LLP) are same as that of partners. Also they perform the same role as that of a director performs in a Company. They are governed by mutual rights and duties as provided in the LLP agreement. But there lies some disparities in the definition and functions of partners and designated partners in LLP and these are as follows -

1.  Partner is a generic term used to represent partners in case of General Partnerships while Designated Partner is a term used in case of Limited Liability Partnerships.

2.  The duties, rights and liabilities of a partner are generally laid down in a partnership deed where as in case of a designated partner; his duties, rights and liabilities are mentioned in the LLP Agreement.

3.  The liability of a partner to third parties is unlimited and extends to his personal property where as the liability of a designated partner is only up to the capital introduced by them or as provided in the LLP Agreement.

4.  The Designated Partners are solely responsible for the management and the execution of all the acts and things required to be carried out by the LLP including compliance of the provisions such as filing of documents/returns/statements as required by the LLP Act. On the contrary, partners in a LLP are not responsible for any such acts and are only required to make contribution in the LLP.

5.  The extent of liability on the partners and the designated partners for penalties imposed for any contravention of the provisions shall be governed by the Partnership Deed and the LLP Agreement respectively.

About: 

Alok Patnia founded Taxmantra.com, an expert in tax advisory & compliance. He is a Chartered Accountant having prior exposure with Ernst & Young & KPMG.

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