Mandatory Appointment Rule

• Every LLP must have at least two designated partners at all times

• At least one designated partner must be a resident in India

• Designated partners are responsible for all legal and compliance duties

• Failure to maintain this minimum is a breach of the LLP Act, 2008

• Immediate steps must be taken to appoint or replace designated partners

Penalty under LLP Act

• As per Section 7(4) of the LLP Act, non-compliance attracts penalty

• The LLP and every partner are liable for fines if no designated partner is appointed

• Minimum penalty is ₹10,000 and may extend up to ₹1,00,000

• Additional fine of ₹100 per day applies for continuing default

• Penalty is imposed by the Registrar of Companies (RoC)

Consequences for LLP Functioning

• LLP cannot file statutory forms without designated partner’s DSC

• Business operations and compliance filings are disrupted

• RoC may issue show-cause notice or initiate prosecution

• LLP may be classified as a “Defaulting LLP” on the MCA portal

• Non-compliance affects creditworthiness and public records

Liability of Existing Partners

• All existing partners may be held liable for the lapse

• They must ensure at least two valid designated partners are active

• Resignation of a designated partner must be followed by timely replacement

• Failure to act may lead to legal consequences for other partners

• Personal liability may arise if loss is caused by non-appointment

Corrective Measures

• File Form 4 to appoint a new designated partner immediately

• Ensure DSC and DIN of new partner are valid and linked

• Maintain updated LLP agreement reflecting partner roles

• Respond promptly to RoC notices regarding compliance gaps

• Timely appointments prevent penalties and business disruptions